The 2000’s will be looked back on as the decade of the business school professor as corporate guide. The past few decades have successively (and sometimes concurrently) belonged to big consulting firms (like McKinsey’s), big auditing companies trying to get into “advisory” (Deloitte, KPMG, Accenture), the guru (e.g. Peters), the researcher turned guru (e.g. Collins, Buckingham), the celebrity CEO turned conference speaker (Welch, and wait for Blair-the-PM-turned-conference-circuit-king) and now the professor turned business coach (Hamel, Kottler, Ghoshal, Sachs, Porter, et al).
There is nothing new about all of this. Business leaders have consistently looked for help from outside. They need outside inputs to see context, make decisions, get clarity, drive change and grow their businesses. Too often, however, these requests for help have been abrogations of responsibility as the corporate herd chases the “next big thing”.
A few decades ago, there was a technology department mantra: “nobody got fired for buying IBM”. Sure, maybe IBM machines were not the best. Maybe they weren’t perfect for the job you needed doing. Maybe they cost too much. And maybe you didn’t get the results you were hoping for. But, you wouldn’t get fired, because everyone was buying IBM, and everyone can’t be wrong. Right?
So, now the trend in management circles is to get professors of business management (a slightly loftier title than the more accurate: experts in a specific aspect of business administration) as business consultants. This is a dangerous trend – entrusting the future of your business to an academic with a limited scope, who reads a specific set of prescribed textbooks (that everyone else is reading) and who’s personality lends him or herself to mental philosophical experimentation (on the one extreme) or micro-dissecting of statistical data (on the other).
I have nothing against academics (I have been on the receiving end of 5 graduation ceremonies, after all). Nor do I have anything against consultants (I am one, sometimes). And I don’t have a problem with business bringing in outside help (that’s how I earn a living). But I do have a problem with the way in which most businesses simply play it safe and go with the crowd when it comes to strategy, leadership development and training. Right now the crowd is running with the clone-like business schools. They all have a few really top-class specialists who get involved right at the start of the process (to impress the client, and lend their “patronage” to the programme). They then employ “programme directors”, many of whom are not much more than administrators to cobble together a programme that the client will like. By this they mean that delegate feedback forms will be filled in, and the lecturers (“external faculty”) will receive a minimum good approval rating. Long-term results be damned. What the client really NEEDS be damned. Give them what they want, roll it out over a few years with lots of activity, and advertise the “investment” widely in the press, and everyone will be happy.
Everyone, except the long-term shareholders, that is. Because this is a recipe for disaster.
- OK, as I reread this post, it feels a bit doom and gloom. Read on for an extract from the article that sparked this thought flow for me…
Say no to consultants
By: Malini Bhupta
February 1, 2002, The Economic Times of India, sourced at Kellogg Management School website
WHEN in a downturn, go back to school. It’s not true only of executives across the globe, it’s true for companies as well. The initial rush and some bad experiences later, Indian companies have now become savvier when it comes to buying consulting services.
There was a time when a company enjoyed relationships with more than one consultant. Today, companies are looking at long-term relationships with business schools and professors to provide strategy and direction to the company’s top brass.
Gone are the days when consultants played God, and came in and taught companies what to do. Today, the Big Five are worried about competition from strategy shops of a different variety – the B-School professors – who have also attained celeb status in the past few years. Many companies also have professors on their boards. This practice, which is common in the US, is now finding favour in Corporate India. Professors like Bala Balachandran of Kellogg School of Management, Jagdish Seth of Emory University, Sumantra Ghoshal of London Business School, CK Prahalad of University of Michigan, and Nitin Nohria of Harvard Business School, are either on the boards of several Indian companies (like Godrej, Wipro and HLL) or are actively involved in providing strategic direction to companies.
Recently, Godrej Sara Lee got some of the best brains from Kellogg School of Management to provide a highly customised programme for their senior managers, which was also attended by group chairman Adi Godrej. Seeing a tremendous response the course generated, Godrej Sara Lee has decided to forge a long-term relationship with the profs, who will coach the teams and review progress of projects every six months.
The Big Five had better watch out. The managing director of Godrej Sara Lee, S Mahindran, says that it makes more sense to have an academic consulting with a company as they don’t just come, offer their advice and go.
They spend time with the management and understand their issues and review projects on a regular basis. He says: “Godrej Sara Lee spent a total of Rs 10 crore in consulting fees over five years. This is not just true for us, companies spend astronomical amounts as consulting fees. In bad times, one must boost organisational learning using thought leaders.”
There’s the employee motivation angle as well. When companies tie up with B-School professors, employees feel more secure as the best brains in the world are backing them. Says Adi Godrej: “The association between businesses and academicians has always been there. What has changed is that there are more customised programmes now from academics to suit individual needs.
That was not the case before. It suits companies too, since they get advice from specialists at a much lower price compared with international consultants.”
But the benefit is not just in terms financial viability. Godrej believes that learning is a continuous process in his group companies. He says: “Though we will continue to use consultants, our relationships with B-schools are long-term in nature. They bring a lot of value to the company. We have a relationship with University of Michigan and Wharton Business School, and Professor Bala Balachandran of Kellogg is on the board of Godrej Consumer Limited.” The company has signed an MoU with IIT recently for an exchange programme.
Godrej isn’t the only one to enjoy this kind of a relationship with B-School professors. The Tata group and Wipro have been doing it for many years. Management guru Sumantra Ghoshal of London Business School has been involved with Wipro for nearly a decade and has helped the company to define its infotech vision. The results of that vision are for all to see. Ghoshal continues to provide direction and strategy to the company on broader issues.
According to Ranjan Acharya, corporate vice president human resource functions of Wipro: “People who have a rich academic background can add to our business. Jagdish Seth of Emory University is on the board of Wipro and provides suggestions online on a regular basis.”
In January, Wipro organised a strategic leadership programme for its top brass, which was conducted by professor John Stopford of London Business School and professor Harbir Singh of Wharton Business School. Such programmes are conducted on a regular basis at Wipro and some of them eventually become term-relationships.
Wipro also has an ongoing relationship with the Indian Institute of Management, Bangalore. Professor Thirunarayana is a Wipro-chaired professor at IIMB and he spends a few days annually entirely at Wipro. Adds Acharya: “Academics are people who have a strong conceptual base as they are in touch with latest trends globally and companies must utilise this knowledge resource.” On a lighter note, he says, professors teach companies to fish instead of just giving them the fish.
If professors come, can Group Tata be far behind? The group recently brought in Krishna Palepu and Nitin Nohria, renowned professors from Harvard Business School, to conduct a special training for their top managers from across the group. Says Satish Pradhan, group HR head at Tata Sons: “A slowdown is the best time to go back to learning, and these thinkers add tremendous value to our thinking.”
Endorsing this sentiment is Dipak Jain, dean of Kellogg School of Management: “Companies must have links with B-schools. Consulting is a short-term solution to a problem. Investing in your people is a long-term strategy. Consultants don’t teach companies how to run businesses efficiently, they provide solutions.
If companies invest in their people in the long term, they need to invest less in consultants.” An additional benefit of this is also the fact that it earns a company the goodwill of its people. According to Jain, good managements always strive to improve team performance.
Corporate Dossier spoke to consultants to see if they perceive this trend as a possible threat. Here’s what Narayan Seshadri, head of business consulting at Arthur Andersen, has to say: “It’s a cause of worry in a small way because they are competition. But the competition is in certain areas, which becomes more relevant if you are a pure strategy service provider like McKinsey.” In the west, he says, all large corporations have a relationship with professors of noted B-schools.
CEOs interact on a one-to-one basis with the profs because they help CEOs in strategic thinking. This trend is becoming prevalent in India as well. Companies are now asking consultants to work and collaborate with a particular professor with whom they have a relationship.
For instance, IDBI brought in expertise from IIT when it was planning to buy new technology. The consulting firm in question was asked to work with the IIT profs and the final decision on technology buying was done on the basis of their advice. Most consultants believe that CEOs need a sounding board to bounce off their strategy decisions – which these professors provide.
So will these professors and thought leaders take the place of consultants? Most agree that a healthy balance between the two is critical because neither should be given a free rein. Says Mahindran: “Both bring value in their own way, but they need to be controlled. We’re eventually trying to cut our dependence on consultants by using these professors more.”
Godrej believes that though consultants will continue to be used on a project-to-project basis, the trend of professors’ involvement with companies will only grow. He says when consultants are roped in, it’s made clear to them that their advice should result in benefits that are ten times the consulting fees.
Sharing his views on the subject, Santrupt Misra, group human resources head of AV Birla, says: “If it is a large project I would go to a consulting firm, which has resources across the world. But if it is an idea that involves no implementation then I would consider individuals. Ultimately, it all depends on the comfort level of the decision maker.” For example, if it’s business restructuring it would have to be a consultant, but if it’s training managers then profs make sense.
Though Reliance has a long-term relationship with Wharton Business School, Anil Ambani, managing director of Reliance Industries, is of the opinion that both are needed. “There’s no way consultants can be replaced by academicians,” he says. Wharton’s dean, Patrick Harker, however, has his own reasons to believe that this trend will only grow: “It’s happening everywhere that companies are going to academicians to seek advice. Since companies need to develop their management leadership, and academicians are well equipped to do that, it’s happening increasingly.”