BackThe business of advice
The suspicion has always been that often, consultants are brought in to make pre-determined decisions more palatable
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Even as the boardroom battle at the Tata group heads towards some kind of denouement, it is amazing to see how much either side has relied upon external communication consultants to present their side of the story to the public. This is despite the presence of a strong in-house public relations team.
It follows the norm of Indian companies hiring multiple consultants—individuals and firms—to advise them on issues related to strategy and implementation. During its planning phase, Reliance Jio Infocomm Ltd is said to have used a number of telecom consultants. The Tata group has always been a great favourite for consultants of every hue. Even governments in states like Rajasthan, Haryana, Andhra Pradesh and Odisha have requisitioned external advisors both for strategic advice as well as for managing their image.
The trend is global. In fact, big consulting firms keep expanding their footprint across the globe. Where there’s a problem, there seems to be a consultant close on hand, whether it is in Bogota or Luanda. Perhaps the complexity of business, its global nature and of course the view that consultants bring in fresher perspectives, and make their presence inevitable besides keeping the business of advice booming.
Also read: Cyrus Mistry details hurdles facing Tata firms in letter to shareholders
Yet, consultants may not be the answer to all the problems a company faces. Strategy consultants, a business dominated by the big three — McKinsey & Company, Boston Consulting Group and Bain & Co.— have between them advised most large Indian business houses. In the years following liberalization, their presence has become almost ubiquitous in the country’s business landscape. At their best, they bring in blue sky thinking, best practices from across the globe and deep insights into corporate processes.
At their worst though, while consultants will put together great PowerPoint presentations with examples from across the globe and carve out fascinating trend lines, they may have little sense of a company’s culture and roots. In the Tata group for instance, getting rid of the European steel business based on numbers may have been an easy call to make, but only a man who had built that business coil by coil, would understand how germane it was to the group. As outsiders, consultants have little at stake besides of course not having to deal with the emotional and cultural consequences of decisions. And while the best firms deploy a combination of rookies and senior professionals to handle assignments, the initial heavy lifting is almost always done by comparatively younger and less experienced people.
In his book The Management Myth: Debunking Modern Business Philosophy published in 2010, author and consultant Matthew Stewart wrote about the absurdity of crusty industry professionals turning to fresh-faced B-school graduates to analyse for them the problems confronting their own companies. Stewart’s devastating critique of the profession as well as other books like Dangerous Company: The Consulting Powerhouses and the Businesses They Save and Ruin by James O’Shea and Charles Madigan, have pointed out the many flaws of the strategy consulting model.
The failure of consulting firm Monitor Group, which declared bankruptcy in 2012 after struggling for some time, would seem to suggest that even the brainiest of consultants don’t have all the answers. Before it was bought over by Deloitte, Monitor was considered truly chi-chi, counting among its founders strategy guru Michael Porter. When the firm began operations in India in the mid-1990s, it set up office in a farm house in Bijwasan on the outskirts of Delhi. Its consultants, including Manoj Badale, who subsequently went on to play a key role in the Indian Premier League when in 2008 he acquired the Rajasthan Royals team, assisted a number of Indian business promoters on strategic issues. But alongside, they also developed their own start-ups, something the firm actively supported. Such split roles might have been good for grooming individual consultants but they couldn’t have done much for clients paying top drawer fees.
Also read: Cyrus Mistry seeks government intervention in Tata Trusts
The suspicion has always been that often, consultants are brought in to make pre-determined decisions more palatable, either to justify a decision the top management has already taken or even to clean up a botched surgery. Under such circumstances, they end up sowing further dissension within the company. A single heart-to-heart chat between Ratan Tata and Cyrus Mistry may do more for the shareholders of the group companies than all the advice doled out by outsiders.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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