| | By Mick James
When the great US
president Franklin D
Roosevelt assured his
population that “the
only thing we have to
fear is fear itself” I’m
sure he was trying to
calm people down. But
those words have had the
opposite effect on me.
I’m irrationally afraid
of fear. I’m
phobophobic. When I look
back at all the terrible
things that have
happened to me as a
result of my own foolish
actions they pale into
insignificance compared
to the consequences of
inaction prompted by
self-doubt, excessive
caution or plain old
funk.
It’s as true in the
world at large as in
one’s personal life. We
live in a world which is
literally paralysed by
fear. For what is the
so-called “credit
crunch” but an outbreak
of fear on a global
scale? Fear rules every
aspect of our lives. The
“war on terror” and its
associated propaganda
has been so effective in
scaring the living
daylights out of the
Western population that
the terrorists can put
their feet up. It
doesn’t matter what
you’re afraid of—be it
global warming or bird
flu—as long as you adopt
the required
position—whimpering,
head between your knees,
humbly hoping that the
powers that be will save
you. We may not be able
to guarantee you a
pension or your children
an education anymore,
but by God we can give
your body cavities a
thorough search before
we fly you to Marbella. | |
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So it is with the
(allegedly imminent)
recession. Economists,
bankers and every
columnist has been
jumping out from behind
pillars and shouting
“recession” at every
opportunity for the last
couple of months. What’s
the matter with these
people? Don’t they
realise children might
be reading the business
pages? The fact that
we’re not technically in
recession yet doesn’t
seem to deter these
professional doomsayers
one bit.
There’s a terrible
tendency to talk about
recession as if it were
the Black Death and will
consume all before it,
but it’s worth keeping
at the front of your
mind that all it means
is two successive
quarters of negative
growth. That’s by no
means good: jobs will be
lost, investments will
underperform. But it’s
all too easy to forget
that this negative
growth comes after a
very long period of
strong growth. And while
there are some obvious
casualties of
recession—and people
whose incomes fall under
the category of
“discretionary spend”
such as consultancy,
advertising and
training, arguably have
most to fear—there are
other, longer term
shifts underway.
The MCA is just about
to publish its latest
report on the industry,
a look back on what I
suppose we must now
regard as the heady days
of 2007 (it’s available
from publishers PMP,
www.pmp.co.uk, with an
“early-bird discount” if | |
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| | ordered before the end
of the month.
The headline result
is that—true to its
reputation as a
bellwether of the
economy—consultancy
growth was already
slowing in 2007.
But even so member
revenues still grew
overall by 10% and by
13% even in financial
services, the first
sector to be hit by the
current turbulence, and
where banking revenues
actually did decline. So
we’d need a considerable
shrinkage to get the
industry back to
2006—itself a year of
bumper growth. It’s like
house prices—people are
getting all bent out of
shape at having to shave
£20k off their asking
price, completely
forgetting the hundred
grand or so the tooth
fairy left under their
pillow last year. And
even if inflation
shrinks to zero, petrol
will still be £1.20 a
litre.
Let me stress again,
this isn’t good. But
it’s by no means clear
that we are even at that
stage yet. But even if
we are, is it
apocalypse?
One of the things
I’ve noticed as I’ve
followed the consultancy
industry through its
recent golden years is
that the industry is
very different from the
one that hit the last
down turn in 2002-3.
Even when the
opportunities seemed
limitless, firms have
talked of “cautious
growth”, the need for
“balance”, the
importance of getting
the right staff on board
rather than just making | |
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| | sure they can jump on
every project. I’ve seem
more variety and
innovation business
models in consultancy in
the last five years than
in the previous decade.
But consultants haven’t
taken the opportunity to
jack up their rates or
build empires on sand.
The industry is not
largely staffed—as it
used to be—by a high
proportion of recent and
disposable graduates.
The typical consultancy
professional nowadays is
a hardened professional
with a decade or so of
experience under his or
her belt, a wide range
of skills and a highly
entrepreneurial attitude
to their job. This is a
resilient industry made
up of resilient
individuals. It’s not
about to fall apart or
dismantle itself
overnight.
Another interesting
headline from the MCA
report shows a marked
shift towards IT
consulting and
programme/ project
management, which now
make up more than half
of all MCA fee income,
with PM work growing by
44%. Reports earlier
this year from the
recruitment industry
suggest that demand for
IT staff is holding up
despite all the talk of
recession. It seems
highly likely to me that
many companies that have
been putting the phone
down on consultants will
begin to look again at
the opportunities
offered by technology
and outsourcing as
growth stalls and the
costs rise. One of the
negative aspects of a
long period of growth is
that it can also be | |
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| | accompanied by a lot of
corporate jerrybuilding,
as corporations use
rising revenues to paper
over the cracks in their
own structures.
2008 has started out
as a tough year, but it
doesn’t have to be a
desperate one if we
don’t want it to be.
There’s plenty of
positive work to be done
that can allow companies
to get through this
period without the sort
of mindless job-cutting
and retrenchment that’s
gone on in the past. And
there’s a highly
effective consultancy
industry out there just
ready to help them.
Already consultancies
are reporting that
companies are deferring
projects—this is an
industry in which
uncertainty can be as
dangerous as genuine
disaster. And what is
“uncertainty” in this
context but a euphemism
for fear?
It may take a bit of
courage to get the
chequebook out for
outsiders while
tightening the belt
internally. Consultants
need to reach out to
their clients and help
stiffen their resolve,
before the consequences
of inaction are too dire
to be remedied. Those
companies that start
exploring their options
now will fare far better
than those that remain
frozen in the headlights
of the oncoming
“recession”—particularly
if it turns out there
isn’t going to be one
after all. | |
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