For all the hype and the management charts and the impenetrable language, ultimately what the product consultancies sell is brains; not the sort that have been schooled in a particular discipline, such as law or accountancy, but the kind that they hope could be set to resolving almost any business problem under the sun. No wonder, then, that brains are at a premium; and no wonder that consultants are excited by what they call” thought leadership”. Ideas, they are convinced, are a source of competitive advantage in the following ways :
They help to attract customers. According to Richard Foster at McKinsey, consultancies now need to offer not just independent advice, but alternative ways of seeing the world. Bosses are endlessly curious about management theory, partly because they are always looking for ways of beating the competition, partly because more and more of them have studied management of business school.

The most vivid example of the power of ideas to attract customers is the recent re-engineering boom which transformed CSC Index, a small consultancy, into the hottest firm in the business. But reengineering was unusual only in the scale of its success. BCG built up its market position by churning out a series of brilliant ideas at a time when McKinsey seemed to be snoozing. Gurus such as Gary Hamel and C.K. Prahalad have built meteoric consulting careers entirely on their ideas. However, re-engineering serves not only as an inspiration but as a warning too. CSC is now in trouble because it had nothing else in the pipeline. A big idea on its own will no longer do: what is needed is a constant stream of big ideas. Ideas are useful for attracting and keeping clever recruits. Many MBA students go into consultancy because they think it will be more intellectually demanding and varied than mainstream management. Mr. Gupta recalls that he joined McKinsey after Harvard because it seemed to be a sort of “super business school”. And many stay because they hope to produce a book or article that will turn them into gurus. Ideas are essential to corporate regeneration. Consultancies that merely apply people’s ideas rapidly go downhill.

The effort to generate client-winning ideas starts in small and humdrum ways within the consultancy itself. Many consultancies have appointed “knowledge officers” to ensure that learning circulates freely within the firm. Even more have created computerised networks that allow consultants to tap into the organisation’s collected wisdom from anywhere in the world. Yet such computer systems are still far from universal. A survey of American management consultancies, carried out by Consultants News in March 1996, found that more than a third did not use any form of computer networking.

When it comes to producing those ground-breaking ideas, consultancies rely on a variety of techniques. First, they encourage their own people to be creative, using sabbaticals, promotions, prizes and pay rises as incentives. Gemini has established a “thinking room” in its Morristown headquarters where consultants can sit in isolation booths, put on goggles and think deep thoughts. McKinsey is spending more money on intellectual capital, and is trying to impose some structure on its traditionally laissez-faire approach to generating ideas. It is establishing research programmes on subjects such as growth, globalisation and the future shape of companies, and has set up a sort of internal mental Olympics in which 150 teams of junior McKinseyites compete to impress their seniors with their management thinking.

Not to be outdone, BCG is trying both to accelerate the production of new ideas and to shrink the time it takes to get them to the public. Anderson Consulting is establishing a “thought leadership” centre near its technology centre in Palo Alto. A.T. Kearney is spending $60 m–70m a year on “centres of excellence”. Smaller companies are trying to make a name for themselves in particular areas of the management jungle: Bain, for example, is concentrating on loyalty and leadership, Mercer Management is emphasising growth.

The consultancies’ second line of approach is to form alliances with business schools and business thinkers. A.T. Kearney is sponsoring research on the future shape of companies at the Massachusetts Institute of Technology; Booz–Allen on the changing social contract at the London Business School; and Anderson Consulting on learning at Northwestern University, to name but three of hundreds of projects. CSC Index puts on seminars at which outside gurus ponder issues such as creativity or the changing role of chief executives. Monitor, which was confounded by a Harvard Business School professor, Michael Porter, has close relations with several other professors at the school, including Chris Argyris, Robin Cooper and Robert Kaplan.

Yet the path to thought leadership is strewn with pitfalls. It is all very well to develop an eye–catching product such as reengineering or Economic Value Added, and throw the weight of the organisation behind marketing it; but other companies,m many of them with more resources, may pinch the lead and improve on it, and eventually the market for the product will cool, leaving its inventor desperate for something else to sell. To back up their claims to intellectual preeminence, consultancies publish a flood of magazines, articles and working papers. Both Booz-Allen and Gemini have fathered management magazines. Establishing and retaining intellectual leadership clearly takes strong management skills. Curiously enough, in the management consultancy business these appear to be in short supply.

 Questions :

1. The author will be most unlikely to agree with the statement that :

(1) Booz-Allen and Gemini are giants in the field of management consultancy.

(2) Management consultancy is a booming business these days because of immense scope.

(3) H. K. Pinfield is a great consultant in American business.

(4) Gary Hamel’s stature is not based on corporeal achievements.

2. The ‘laissez-faire’ approach mentioned in the passage means that :

(1) the consumer is the king today.

(2) the market forces should be left free to operate amongst themselves.

(3) there is no public interference in the economy.

(4) None of the above.

3. The fact that a substantial segment of American consulting agencies do not use computer networking tells us that :

(1) those one third consultancies are bound to lose in the future.

(2) those two fifth consultancies are bound to lose in the future.

(3) computer use is not an essential and universally accepted ingredient of consultancies.

(4) future consulting can be done without any computer back up.

4. The four Harvard business school professors mentioned in the passage are :

(1) Michael, Porter, Chris, Argyris.

(2) Porter, Argyris, Kaplan, Robert.

(3) Porter, Argyris, Kaplan, Cooper.

(4) Hamel, Porter, Argyris, Gupta.

5. The appointment of “Knowledge Officers” by the consultancies shows that :

(1) knowledge has become the key to management.

(2) consultancies have grown aware of this concept and are encouraging the circulation.

(3) these consultancies are merely fashioning on these outlooks to draw in a consumer.

(4) categorization has crept in this job even though it is not required.

6. Ideas are considered to be the root of advantage in competition because :

(1) the customer is affected by them in a positive sense.

(2) various examples given in the passage show otherwise, which is wrong.

(3) they are necessary to keep useful recruits and are necessary to regenerate corporates.

(4) both (1) and (3).

7. The techniques used by consultancies to encourage production of innovative ideas :

(1) are supportive in nature.

(2) are basically monetary in nature.

(3) both (1) and (2)

(4) are just another farce on their part.

8. The threat to the concept of ‘thought leadership’ is that :

(1) the concept itself is transient in nature.

(2) it requires continuous change on the part of the market also.

(3) both (1) and (2)

(4) in absence of adequate resources the starter of the concept may eventually fall behind.

9. The second approach of the consultancies is that :

(1) they form cooperative arrangements with B–schools.

(2) they resort to the laissez faire approach.

(3) they never put out a concrete concept.

(4) their approach is always based on the individual.

10. The passage is an extract from :

(1) an analysis of what ails the corporate world.

(2) an article on ‘Ideas As A Survival Factor For Organisations’.

(3) an editorial questioning the ethics prevalent in industries.

(4) a reporting of the goings-on and happenings in the business world.

Categories: MAT Papers, MBA, Master of Business Administration
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