Who Owns Whom

One cannot talk about management consulting without reflecting on the role of this sector South Africa’s state capture as well as what management gurus such as Peter Drucker consider important. He verbalised his views on the concept through several famous quotes

Let us look at two quotes that encapsulate some of his advice to the management consulting fraternity. The first states that “There is nothing quite so useless, as doing with great efficiency, something that should not be done at all.”

The inference made from this quote is subtle and two-pronged. One the one hand, it highlights the force-selling by management consultants of their own preferred models and strategies that in many instances are ill-suited to the client’s business and developed solely for the purpose of generating billable time and income. There are enough examples of instances where consulting services rendered did not add any value to the business instead destroyed value. 

The other side represents the ethical conflicts, on which the light shone brightly in recent times. The latest WoW report on Management Consulting & Business Advisory Services including Knowledge Management in South Africa, relates several blatant unethical behaviours by major consultancies that experienced reputational damage which might result in the loss of business now and for some time in the future.

Anderson Consulting in its heydays was one of the big 5 auditing and management consulting firms worldwide. Its advice and recommendations to Enron led to the audit and consultancy practice’s demise with the collapse of Enron.

The second quote by Drucker that is just as poignant for Management Consultancy is “Strategy is a commodity, execution is an art.”

This quote is quite curt. It reduces the overhyped concept of strategy to what it really is, a modern word for a plan, a series of intended actions to reach a certain goal.

In Dwight Eisenhower’s words “Plans are useless, but planning is indispensable”, which brings us to the second part of the quote: execution.

Many Management Consultants limit their involvement to developing strategies without ensuring proper execution of stated objectives.

What does emerge in the latest WoW’s report on Management Consulting & Business Advisory Services including Knowledge Management in South Africa is that management consulting is a challenging business for good reasons. Drucker’s view is that delivering performance in this sector demands exceptional skills, and they are not easy to obtain and retain, especially in South Africa.

The WOW report indicates that the definition of this sector varies widely depending on the source. Originally, activities were mainly under corporate advisory services (Listings and Mergers and Acquisitions), sometimes also included professional services such as engineering, architectural and project management. Consulting services however now embrace environmental, Information technology, data management, tax and legal, regulatory compliance, supply chain, and of course strategy and knowledge management consulting to name a few.

It is a fact that regulation engenders consulting. In South Africa, regulation adds complexity to our already interdependent business environment. The overwhelming share of consulting revenues generated by the Enterprise and Supplier Development element of the BBBEE legislation is worth noting. In the eighties banks made significant fees from consulting/advising business on maximising tax benefits from apparent tax loopholes is another example.

We have reached a point in South Africa where de-regulation on all fronts has to be seriously considered. Our president took this to heart in his most recent SONA speech. He emphasised the importance of implementation and removal of red tape.

In closing, it is important to re-emphasise the devastating reputation damage suffered by the consulting business in SA. Both government and private sector need to take responsibility for the corruption continuing to afflict the South African economy.

Another consideration to support the South African government’s policy, is to perhaps take a closer look at strengthening the local consulting industry by investing in the new skills particularly in the digitalisation or technology space. The graphs in the WoW report show the additional earnings potential.

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