BOSTON (06/15/2000) - Consulting Demonsby Lewis PinaultHarper Collins Publishers, New York City, 2000, $26 The perpetrator of many of the unethical practices he describes. In the following excerpt from Chapter 11, Pinault gives an example of some of his own trickery. He also offers some cautionary insight for would-be clients, noting various tactics consultants use to create further need for their services.
(Names in quotation marks, following the book's convention, are pseudonyms.) Lewis Pinault's new book, Consulting Demons, offers a none-too-flattering view of the consulting trade. Consulting Demons certainly is not the first attempted expos of management consulting malpractice--1998 alone brought us The Witch Doctors: Making Sense of the Management Gurus and Dangerous Company: Management Consultants and the Businesses They Save and Ruin. Pinault's entry into this genre is interesting because of his firsthand experience as One of the more extreme examples of stretched truths and utter fabrication in the name of practice group pride, in my experience, came during my own brief interval with Arthur D. Little in Singapore, a time in the mid-1990s when I had left Gemini Consulting in Japan and impatiently awaited Gemini's continued expansion to Southeast Asia.
"Bruce Bingham" called me early one hot and wet Singapore morning. We did not get many unexpected phone calls in our pleasant little outpost.
"Dr. Pinault, how long have you been our steel practice representative in Asia?"
"Lewis is fine, really. And it's mister, anyway, unless I can finally figure out a way to get back to school."
"Really? Seems like everyone around here is doctor somebody."
"I can imagine. And to answer your question, since never, as far as I knew, but I could certainly be wrong."
"Well, I have you down here in the new directory as our steel practice rep.
Your capsule biography says you worked for Nippon Kokan, the steel tube maker."
"Well, that's true. I was with NKK about 10 years ago, but I worked as a business analyst for new marine projects, mostly heavy engineering, that kind of thing. I toured the new integrated steelworks at Keihin a couple of times.
Pretty amazing. Man-made island, iron ore in one end, sheets and tubes out the other. Big furnaces. It's all supposed to be ultramodern, but it still struck me as awfully hot and dangerous."
"Good enough! At least you know what an integrated steelworks is. How close are you to Bangkok?"
"Not far. We cover it occasionally and have a new job coming up there soon, the city waterworks I think."
"Well look, Lewis, I have a presentation to make there in a few weeks, and I'm wondering if you could help me a little with the logistics and help me work the crowd."
Yuck. Escort services for visitors rarely turned out productively. Bangkok was sown with land mines for the would-be visit manager: Demands for the rare, lewd and exotic could get out of hand. Oh well, a duty for the homeland, I reasoned.
"Yes, well, sure, let me know the dates. Try to bring a little library of steel materials we might use as handouts. We'll set everything up from here. Look forward to seeing you and all that."
Two weeks before Bingham's talk, we were on the line again.
"Look, Lewis, there's no reasonable way to say this, but I can't make it. We have a new proposal here at National Steel, and we're all over it. It's very hot, competitive as hell."
"I'm really sorry, Bruce. I think you might have gotten a lot of mileage for your practice out of the visit. I'll work on all the cancellations, maybe we can find something similar for you elsewhere in the region in the next couple of months."
"No, no. No cancellations, except for me. We've been booked at this thing for almost a year. All the investment banking steel analysts and experts are going to be there. Metal Bulletin's doing this huge piece on it. We can't miss this chance; our credibility will be totally shot."
I started to get a very bad feeling.
"Are you planning to send someone else, Bruce?"
"We really can't from here. Lewis, I'm sorry, but we've got to ask you to cover. I'll send you all the materials; we can have a couple of teleconferences and drill everything. You can charge all your time to the practice, take a week to get up to speed, more if you need it."
I knew I would do it. There was even a certain perverse thrill that went with pretending to have any understanding of this at all. But I had to at least try to be rational.
"Bruce, really, you've got to be kidding. 'Peter Lynch' and all those other steel gurus are going to be there, like you said. And from what little reading I've done so far, minimills are all the rage now. They're going to tear into the presentation, whoever gives it. The questions will be murder."
"You'll do fine. I'll coach you on everything. When you can't answer, just have them get back to me."
Reluctantly, I agreed. I received a faxed copy of Bruce's presentation that night. It was full of arcane process diagrams, unfathomable vocabulary and calculations, names of companies and products I had no idea existed. I nearly puked.
I began leaving constant messages for Bruce, which were invariably never returned, unless at some weird hour when only a voicemail capture was possible, and then only to say we'd talk later. I was sorely tempted to drop the whole impending fiasco but knew that my unsympathetic local managing director would delight in the failure of the time he felt I'd already wasted, and I did not want to lose my only line of support back in the States. I would simply be a good soldier, I decided.
I flew to Bangkok on the last flight the day before the presentation, only half prepared to pull off the sham.
The next morning was a deeply satisfying exercise in theatrics. I tried to ease my own tension by telling the audience that as a substitute speaker I was about to learn what my grandmother's vaudeville ventriloquism profession must have been like, but not a soul seemed to comprehend the concept. I plunged on, giving a breezy, authoritative run through all the presentation material, perfectly timed, doubt and certainty expressed in all the right places, excitement and enthusiasm delivered with utter authenticity.
The reporter from Metal Bulletin fairly glowed. Even the famously critical Peter Lynch looked friendly.
"Lewis, that was a really helpful review of miniprocess applications. But how well would they work here? Who are the key players that might help interested investors in Southeast Asia?"
Bruce had prepared me on both these questions, the first because of my own prompted curiosity. I gave a full-length review and handily disposed of the audience's other, easier questions.
Then I got a scare.
"Dr. Pinault, could you give us just a few examples of minimills in the Asian region that might be suited for the kind of approach you've modeled? Who are some of the players today that might begin looking more closely at this?"
Yikes. I did not even know the name of a single small mill in Asia, much less which might make use of the dynamics I had just explained in blind ignorance. I was inspired by a trick-of-the-trade I learned from my mentor at Gemini.
"Well, I would love to share some examples with you, but frankly, several of these are our own client situations under development now. Under a more formal arrangement, however, I could disclose some of the names and even details of their operations, with their agreement, of course."
In a few days I would learn that I had just made a sale for Bingham.
I got off the stage as quickly as I could. I felt as if I had been possessed, speaking ancient tongues in complete demonic control. Peter Lynch came up to say good-bye.
"That was either the greatest pinch-hitting job I ever saw, or the greatest [B.S.] artistry ever." He clapped me on the shoulder and began to walk off. "I don't want to know which."
Neither did I.
Lewis Pinault's accomplished management consulting career included positions at the Boston Consulting Group, Gemini Consulting and Coopers & Lybrand, where he was a financial institutions partner. After earning new credentials in law, planetary science and futures studies at the University of Hawaii, he is now pursuing applications of international public law and policy to both outer space and cyberspace, in the formal context of alternative futures. Currently, he is at work on a new book detailing the adventures of Internet-driven consulting.
CLIENT BEWARE! Lewis Pinault offers seven examples of consultant trickery 1. Consultants seek to make clear that they do not have inconvenient conflicts of interest. While attorneys, auditors and even investment bankers confront heavy internal regulation and some external regulation and scrutiny in the course of their work, consultants ride free, with virtually no accountability for their actions--beyond getting paid or not. In the course of building one-stop shopping for professional services, consultants become a natural, relatively risk-free wedge for aggressively introducing a full gamut of more technically complicated services.
2.Firms are prepared to position every member of the team as a consultant and have every consultant prepared to avow any needed practice group affiliation.
When strained for manpower and talent, firms can very effectively draw on their enlarged nonconsultant ranks to fill out the team. Using the mainline consultants as the opening wedge, other professionals can be brought in to play as consultants themselves when the clients' appetites focus on the size and quantity of the core consulting effort. A qualified attorney may know more about international joint ventures than her consulting cousin, for example. But there is a world of difference in introducing her with a consultant's business card and title as a consultant who happens to carry legal qualifications than as just another lawyer looking to exact transaction costs from a deal. Every member of the team is likely to have capsule biographies prepared to attest to experience in any practice area, making liberal use of others' case experiences.
3.Consultancies purvey information systems strategies with abandon. While IS continues to require years of intensive training to master, and conforming a given system to a given client's needs remains largely a sophisticated art form, trust in generalist consultants runs high enough to piggyback the principle of an enormous systems sales on the back of a general consulting engagement. Expert-to-expert sales, with technology consultants selling to client information officers, are generally discouraged.
4.Consulting houses highlight that accountants and lawyers are risk-averse by nature. Clients continue to be attracted by the unpredictable character and charm of the presumed-to-be adventurous consultant. With a wave of the hand, consultants can invoke the necessity of a deeper technical expertise as a necessary but boring, naturally resulting component of their own work. The fact that such work may well be 10 or a hundred times the consultant's cost need not be confronted till far into the engagement. When the client's own maximum risk threshold is approached, the more risk-averse members of the team are then invoked as an assurance of disciplined control.
5.Consulting firms trample accountants' natural mistrust of consultants and their instinct to protect clients. In a large merger of consulting and accounting talent, the accountants stand to gain from the consultants' profitability, but not from their skills or referrals; no one will switch accounting services just because they have engaged a given consultant. The reverse is true for the consultants, however: Returns on accounting manpower are unattractive, but the accountants' goodwill with clients can represent a gold mine of new sales opportunities.
6.Consultants' high client-hiring eligibility is used to further infiltrate and penetrate the sale site. In extension of the approach of seeding client sites with a firm's own alumni to better anchor future sales, professional services conglomerates infiltrate the management ranks of their largest clients with strategy consultants. Increasingly, under the influence of consulting propaganda that information systems are key strategic differentiators for a client's future success, the decision-making power for the highest-budget strategy-and-systems assignments rests more within the CEO and corporate planning groups than with the information managers themselves.
7.Consultants' experience in flexible, extensible fee structures is used to price the whole larger deal. Pricing a strategy engagement has always been an art form, one enabling its master practitioners to expand task definitions to neatly encompass the last ounce of available manpower and lap at the exact threshold of client budget tolerance. Information and accounting systems have an unfortunate transparency to their task definitions, resisting ready expansion, and the dollar-for-output costs of each micro task are almost unavoidably general knowledge. For these reasons alone strategy consultants are typically put in charge of technology sales. Leaving it to the selling professionals to scope the work and regroup the tasks in a way that defies early technical scrutiny is a typical ploy. Including high-billing-rate consultants on every technical task sub-budget in a show of strategic integration ensures they get out of the way and share their budget excess to enable the work to really get done, with plenty of inflated fees to go around for all the consultants.