Hiring Consultants: When to hire General Management Consultants Versus Industry Experts?

In our previous post we spoke about the location trade off when hiring  consultants. The need for expertise and local intervention were the two attributes we looked into to support that decision. While determining if the expertise required exists locally or not is now clear, the question remains as to whether you need an industry […]

Fabrice
11/06/2019

In our previous post we spoke about the location trade off when hiring  consultants. The need for expertise and local intervention were the two attributes we looked into to support that decision. While determining if the expertise required exists locally or not is now clear, the question remains as to whether you need an industry expert  or a general management consultant.

Consultants have not taken the Hippocratic Oath, but they are operating in a similar fashion to doctors in the health sector. You have the GP (General Practitioner)  and you have the specialist. While many self diagnostic tools exist, certainty can be a matter of life and death before self medicating. Consulting is no different with the exception of the lack of regulation.

Things To Consider Before Deciding Which Route To Take

Before deciding which route to take, here are a couple of important questions to ask. First: how critical to my business is solving the problem? Second: how hurtful would the wrong diagnosis be to my business? And while these two questions bear some similarities they differ by introducing a notion of relativity in impact.

For example, you may think that your problem is customer service and you may decide to hire a customer service expert. After a while, the customer service expert may recommend best practices that you discuss with your team. The recommendations may bring incremental improvements but because you compete on price, it does not quite matter in the bigger scheme of things.

In that example, your diagnosis may be wrong but your business wasn’t hurt nor saw massive improvements. Now what would have been the consequence if you really did compete by providing better customer service and that new entrants knocked at your door? What would happen if you made the wrong decision? Or more importantly what if the problem was not customer service but service innovation?

The right diagnosis can be critical and therefore one should first understand how critical certain aspects of the business are to the overall outcome and second how much contribution these bring to success.

A good way for determining what to assess first is by drawing a strategy canvas. The tool, developed by professors Chan Kim and Renée Mauborgne (and famously revealed in their book Blue Ocean Strategy) allows you to map your position against competition on very specific dimensions. The higher the distance on a dimension, the bigger the differentiation.

To understand the second question you should ask yourself on how damaging the wrong decision could be. I would recommend to use Strategy Maps from Robert Kaplan. This will allow you to articulate how these parameters contribute to shareholder value and make it a bit easier to relatively quantify how much they each contribute.

If your assessment suggests that anything strategic and or with high contribution shareholder value is the problem my advice is to call a general management consultant first. Messing things up without a second professional opinion could be too damaging to spare the expense. 

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