| | By Mick James
As the (intended)
double entendre of this
book’s title suggests, it
is one of a number of
recent books that suggest
there is something
vaguely unrespectable and
unwelcome – if not
outrightly fraudulent –
about the consulting
industry. From this
perspective consultancy
is viewed as a vaguely
mysterious, if not
necessarily malignant
growth on the body
economic, whose very
existence demands
explanation. “Why
management consultants?”
is the author’s repeated
question to himself, and
the answers he gets are
certainly not those he
would get from a roomful
of consultants.
The central thesis of
this book is that
management consultancies
were only able to prosper
in and dominate their
professional niche
because of specific
changes in the US
regulatory environment,
specifically anti-trust
initiatives which kept
accountants and bankers
out of the advice
business in the 1930s,
and the Consent Decree of
1956 which kept IBM out
of IT consultancy and
smoothed the way for the
rise of Andersen.
It’s a novel thesis
and certainly one which
separates this book from
most histories of
management consultancy –
indeed the author rejects
the Taylorean scientific
management movement’s
role in consultancy
history as akin to that
of the Neanderthals in
human evolution.
However, it does require
a rather sweeping
dismissal of what most
people would consider the | |
|
| | bulk of the consultancy
industry. A quick glance
through the index
confirms this: 88
references to McKinsey,
40 to Booz.Allen,
compared to just seven
for Accenture/Andersen
Consulting, and one each
for KPMG and Deloitte
Consulting. Checking up
this last reveals that
the author cannot exactly
be accused of having a
deep or broad
understanding of the
consultancy industry:
“Deloitte Consulting
completed a management
buyout and reverted to
its legacy name Braxton,”
to which the only
response is a pantomime
roar of “oh no it
didn’t!”
Howler though it is,
this assertion is less
worrying in my view than
sweeping generalisations
such as “Management
consulting firms fall
into two camps: those who
provide advice on
corporate strategy...and
those who provided advice
on information systems”.
Central to this book’s
thesis is that the
history of consultancy is
really only the history
of the strategy firms,
and McKinsey in
particular, but this in
turn is based on a view
of consultancy that so is
narrow that even the
strategists might not
recognise it.
Basically, it is that
consulting offers
“economies of knowledge”,
cheap access to expertise
but particularly
information that it would
be too expensive to
acquire or keep in-house.
Most people would accept
this as an accurate if
partial account of one of
the ways in which
consultants deliver
value. Even McKenna | |
|
| | accepts that this in
itself would not explain
what he calls the
“institutionalisation of
management consulting in
the United States”. But
he must stick to this
narrow definition to
support his thesis that
“widespread employment of
consultants was an
unintended consequence of
anti-monopoly
legislation...consulting
might represent only one
of many potential
solutions for the
institutional transfer of
best practices, but in
the United States, most
of the other modes were
illegal.”
I think this reveals a
very profound cause of
the unease which many
business theorists (and
journalists) have with
the consultancy industry,
particularly in the
States (it also reveals a
very shallow one, which
is that they see
consultants as knowledge
brokers, like themselves,
only grotesquely
better-remunerated): for
people who go the full
three cheers for
free-market economics,
American capitalism
shouldn’t need
consultants—it should be
self-sufficient and
self-regulating.
Therefore if something as
intrinsically wrong as
the consulting profession
appears within the
American economy, it must
have been imposed from
outside. And given that
American, and by
extension, global
capitalism should be
self-supporting, then,
equally, corporate
collapse must be the
result of outside
forces—possibly those
same outside forces that
created the consultancy
industry, vectored | |
|
| | through its malign
embedding in the business
world.
And so it proves to
be: “The worldwide
scandals in corporate
governance, culminating
in the failures of Enron,
WorldCom and Parmalat
were a consequence of two
decades of surging demand
for accounting and
consulting services by
directors and officers
attempting to offset
corporate liability for
potential managerial
malfeasance”. This is
where the book’s thesis
gets decidedly murky.
True, Arthur Andersen’s
involvement with Enron
became the touchstone for
the alleged conflicts of
interest that led to
consultancy divestment
and Sarbanes Oxley. But
it’s always worth
reiterating that Andersen
at the time was anything
but a typical “Big Four”
accountancy-cum-consultanc
y firm, and any conflicts
of interest certainly
didn’t come from the
award of monster SAP
contracts (it’s also
worth pointing out that,
as a major accountancy
firm rapidly building up
a consulting unit after
the divestment of a
technology consulting
arm, Andersen would be
precisely a typical Big
Four firm). McKenna
doesn’t really take
account of this, despite
the fact that the only
thing Andersen was
convicted of was
obstructing justice
through shredding
documents, and that this
act was carried out by
accountants (plus of
course, the conviction
has been overturned, but
too recently to be noted
in the book).
This makes the book’s
concluding chapter – a | |
|
| | heartfelt plea for the
consultancy industry to
fully professionalise
itself so that “ethical
standards... become the
norm in consulting” –
rather baffling. I can’t
see that a group of
accountants feeding
documents into a shredder
makes a case for or
against the
professionalisation of
consultancy: if you’re
going to blame Andersen
for the Enron affair it
doesn’t make much of a
case for
professionalisation per
se. Nor does the book
begin to examine the
horrendous difficulties
involved in
professionalising
consultancy. Consultancy
is a moving target,
exemplified by the
struggle to write a book
such as this without
being constantly
overtaken by events. This
book made me wonder if it
really was possible to
write a history of
consultancy, or whether
the industry’s constant
remaking and reinvention
of itself leaves it
without a past in any
meaningful sense. In
which case, the challenge
for the industry is not,
as McKenna would have it,
to stop evading “adult”
responsibilities by
claiming to be the
world’s newest profession
but to ensure that it
remains precisely that.
The World’s Newest
Profession, Christopher
McKenna, Cambridge
| |
|
Previous Page 