L1 - What is Consultancy? Flashcards
What is the general view of consultancy?
Help clients make important decisions around problems and issues
What are the two views of consultancy?
Functionalist view - emphasizes the functionality of management consultants’ expertise and knowledge
Critical view - questions their functionality and instead posit that their main function is to alleviate managerial anxieties
In theory what do consultants do?
Help organisations after facing disturbing events
What are disturbing events?
Events which disturb the desired or expected results
Positive disturbing event - when the desired results increase with achieved results remaining the same
Negative disturbing event - when the desired results remain the same but the achieved results decline
What is the results gap?
The difference between the clients desired result and achieved result
This is the gap in the market or demand generation for a consultants work
What are the characteristics of consultancy work?
A service to aid decision-making Directed at managers Knowledge intensive labour Project work Work independent to an organisation
Difference between consultancy and a service?
Service involves implementation
Consultancy involves decisions
What is the difference between business and management consulting?
Business consulting focuses on business processes, is more quantifiable and involves implementation (operational)
Management consulting focuses on business decisions such as strategy and organisation (strategic)
Types of decisions in consultancy?
Strategic
Operational
Formal roles in consultancy?
Expert: clients know the problem and solutions
Doctor: clients think they know the problem or opportunity
Facilitator: builds client capabilities to solve problem
Informal roles in consultancy?
Hired hand: when a client is under-staffed
Legitimator: used to verify decisions (rubber stamp) or as a political weapon
Scapegoat: take blame for unpopular decisions (pass the buck)
Name the division of responsibilities of a consultant?
Problem identification Problem diagnosis Developing a solution Decision making Implementing a solution
How does a consultants division of responsibilities tie into their roles?
Each role will possess some amount of the responsibilities
Management Substitute: all responsibilities
Bogus consulting: no responsibilities
Name some problems with managerial decisions?
Overreliance on anecdotal evidence (heuristics and intuitions)
Rely on too few sources of evidence (confirmation bias)
Pay little attention to the quality of evidence (fail to test hypothesis)
Why do managers use quick fixes?
Career enhancing: work within the existing environment
Speed valued over accuracy
Bounded rationality: do not want to think too hard
What are the 3 fields of consultancy? Possible fourth?
Operations consultancy
Organisation and strategy
IT consultancy
AI and machine learning
What are the 3 major drivers of change?
Technological change
Regulatory change
Institutional change
Where do the 3 fields of consultancy fit within history?
Operations: started with the industrial revolution (1870)
Organisation and Strategy appeared with the rise of large corporations (1930)
IT consultancy appeared in line with the advent of the computer (1950)
Why is it hard to estimate the industry?
No standard definition for consultancy
No obligation to professional registration (no codified body)
How can you segment in the management consulting industry?
Consultancy services
Client sectors
Client geographies
What are the demand drivers for client organisation?
Change
Complexity (scale and scope)
Weak competencies
Financial resources
What are the demand drivers for Client sector?
Legislative and political changes
Technological change
Competitive dynamics
What are the demand drivers for client geography?
Stage of economic development
Structure of economy
Culture
What is the breakdown of consultancy services?
Strategy and HR ~ 10% each
Operations and Financial Advisory ~30% each
Technology ~10%
