Value created by Consulting firms deciphered

Many executives are reluctant to work with consultants, often because they don’t see the value they bring to their organization. But what value do consulting firms bring to their clients?

On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte gets us to decipher the value created by consulting firms

Key Takeaways

The value brought by consulting can be described as technical (hard) or political (soft). But it is complicated to measure the results of consulting.

The technical value is brought through in-depth expertise. Most operational projects fall in this category whether the consultants provide outside knowledge, help diagnose a problem and its solution, or assist in the implementation of the said solutions.

The political value is more difficult to appreciate. However, anyone that has been around for a bit knows the importance of company politics.

There is to date no standard in the measure of the value created through consulting. It sounds particularly ironic when you know that the consulting industry stemmed from the need for organizations to measure performance.

Transcript

Hello and welcome to the second episode of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.

My name is Hélène, and I’ll be your host today…

Each week I’ll give you the keys to better use, manage and source consulting services. In this second episode, I’ll talk about the value consulting firms bring to their clients.

I often meet people who tell me: “I don’t work with consultants, because I don’t see what they can bring me.” Now, let me tell you what consultants can bring you.

Last week, we chatted about the size of the Consulting Industry. We began to scratch the surface of this industry. Nevertheless, we can already see the complexity of the market. The diversity of the consulting entities in terms of size, footprint, and offerings seems all over the place. It is what makes buying consulting services so tricky.

Instead of looking at what these consulting entities offer, let’s first have a look at the value they help you create. Using the value prism, we can see patterns, and in particular identify two dimensions: technical and political. Most consulting projects will create value along these two dimensions.

What is the value created by consulting?

The technical value is brought through in-depth expertise. Most operational projects fall in this category whether the consultants provide outside knowledge, help diagnose a problem and its solution, or assist in the implementation of the said solutions.

Consultants can also provide an independent assessment of processes and policies that support improvement. The large majority of consulting projects will draw their value from this dimension.

The political value is more difficult to appreciate. However, anyone that has been around for a bit knows the importance of company politics. In troubled times, executives can look for support to legitimize a decision, to enforce unpopular changes, or to be the scapegoat.

It can also take the shape of facilitating the convergence between the stakeholders or acting as a sounding board or a trusted advisor for the top management. When you don’t perceive the value of consultants on a given assignment, maybe ask yourself if you are the actual client and if the value is not indeed on this dimension.

John Wanamaker once said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

How to measure the value?

The same applies to consulting if we cannot measure the impact. Indeed, all projects (should) bring value to your company. But how do you measure this value? When a service is intangible, like consulting, you cannot physically measure the results. You cannot pull out your tape measure to check if the project results are in the tolerance zone.

The technical value is usually easier to measure since it often comes with tangible results such as cost reduction or an increase in income. The political value, however, is more complicated.

How do you appreciate the impact of a culture and diversity project, or process and system optimization? Other fields have succeeded in measuring intangibles such as client satisfaction or employee performance.

There is to date no standard in the measure of the value created through consulting. It sounds particularly ironic when you know that the consulting industry stemmed from the need for organizations to measure performance.

So what should you look at when you are scouting for a consulting provider? That’s the topic I will explore next week: What are the different typologies of consulting firms? So stay tuned.

In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com

Bye and see you next week! Au revoir!

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Helene Laffitte

Hélène Laffitte is the CEO of Consulting Quest, a Global Performance-Driven Consulting Platform. With a blend of experience in Procurement and Consulting, Hélène is passionate about helping Companies create more value through Consulting. To find out more, visit the blog or contact her directly.

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