The Value of Consulting and the Challenges of Professional Fraud

Consultancy is often perceived as a beacon of expertise and innovation, where companies hire consultants to tackle high-level, niche, and field-specific problems. This article explores whether consultancy truly delivers value, or if it can sometimes amount to a waste of time or even professional fraud. As someone who has personally been a consultant, I will provide insights into the types of professionals one can encounter in this field and the value they can bring to clients.

Is Consultancy Worth the Investment?

The field of consultancy is not without its critics. Some people question whether consultants genuinely add value or if they merely pass the time or, worse, are fraudulent. My personal experience, along with observations in the industry, suggest that there is broad variation in the quality of consultants. However, it is my belief that the majority of reputable consultants do deliver significant value.

There are several types of professionals one might encounter in the consultancy field:

Highly skilled professionals: These consultants bring substantial value to the table, delivering tangible solutions to problems faced by clients. Inexperienced and overconfident professionals: These individuals may claim to bring value but often lack the necessary experience and expertise, ultimately failing to meet client expectations and wasting their time and resources. Professional fraudsters: These individuals pose as consultants and exploit the needs of clients in the pursuit of quick gains.

How to Hire a Value-Adding Consultant

If you are considering hiring a consultant, it is important to ensure you enlist a genuine professional rather than one of the latter two categories mentioned above. Here are some pointers to guide your hiring process:

Look for a consultant who has relevant experience in the field and can provide references or case studies. Understand the scope of the project and ensure the consultant's proposed methodologies align with your goals. Assess the consultant's communication skills and ability to adapt to your organization's unique needs.

A Case Study in Business Consultancy

To provide a more concrete example, let's consider a scenario where a consultancy firm was hired to address severe business issues in a mid-sized manufacturing unit:

No orders: The business was struggling with a lack of orders. Dead inventory: There was an inventory valued at $4 million that was not moving. Accounts receivables: Outstanding receivables amounted to $2.5 million. Employee unrest: The company was unable to pay salaries regularly, leading to significant employee dissatisfaction. Creditors' threats: Creditors were threatening to sue the company over unpaid invoices. Low morale: The overall company morale was at an all-time low.

The consultant was brought in to address these challenges. Despite not having previous knowledge of the client's business, the consultant was able to identify and address the root causes of the issues within a relatively short period. Through strategic interventions, such as improving product quality, negotiating better terms with suppliers and customers, and working on inventory management and cash flow, the business was back on track within six months and completely under control within a year.

Understanding the Role of Consultants

It's important to differentiate between business improvement projects and purely technical assignments. In technical assignments, a consultant must be subject matter expertise (SME). However, in business improvement projects, consultants do not need to be SMEs for the specific problem; rather, they should be capable of addressing the overall big picture from an outside perspective. Here are some ways consultants provide value:

Extrinsic perspective: Outsiders can offer a fresh and unbiased view of problems, which is often lacking in in-house teams due to emotional attachment or political considerations. Problem-solving expertise: Consultants have experience in diagnosing and solving complex business issues, which can be invaluable for organizations that lack the expertise to do so. Reduced risk and cost: Consultants can complete tasks more efficiently and cost-effectively compared to hiring full-time employees, while mitigating the risk of failure.

Compared to hiring full-time employees, the experience of a consultant is often more valuable. Consultants have a wide range of experience across different industries, allowing them to establish cause and effect relationships and predict potential outcomes of proposed solutions. This is a skill that is not easily replicated by inexperienced professionals or those deeply embedded in a specific industry or company environment.

Consulting is not only about solving technical problems but also about helping organizations navigate complex, business-focused issues that cannot be easily resolved by internal teams. As such, the expertise and value that consultants bring to the table make it a worthwhile investment for businesses seeking to improve their operations and achieve their goals.