Does consulting help companies to improve their performance?
Consulting helps companies to improve their performance and to succeed in the competitive environment. Modern businesses require reliable and experienced consulting services to solve problems and to implement solutions that have a positive effect on sales, profits and productivity. Looking you further suggestions :)
When in doubt, trust academics... I don't have the study itself with me, but the only decent study done in the field (that I know of) shows that yes, there is a correlation between consultants and more successful businesses.
I think everyone on this forum would caution you around correlation doesn't mean causation, but if I recall correctly it was a pretty robust study (done in india I think).
That being said, I think the biggest deterination of whether consulting improves the business is how well the advice fits the situation (can it be done, can the company actually follow through on it) and how well it is implemented. If we consider the stats that between 50%-70% of all major changes in organizations fail to realize their benefits, then it would appear implementation and execution are huge challenges to most companies.
Reputable firms will leave at least basic directions for how to implement within the client's organization, and likely will offer assistance on implementation (follow-on work).
On a different note I believe most companies that implemented six sigma (following GE) then trailed the S&P500, because they didn't think about what to apply it to - they just applied it everywhere (i.e. R&D, Organizational Development) which impeded their ability to innovate (business model and products). This is why world class firms provide custom solutions from scratch or heavily modified versus out of the box tools.
Then again, there are no doubt different opinions on this forum far more valuable than mine :)
TT
Like TylerT said, the majority of major transformations are not successful. The number I've seen thrown around at my firm is a 70% failure rate (for business overall, not for my company).
However, when transformations are successful, they can be VERY successful. The first study I did when I joined my firm successfully quadrupled the operating profit of our client in about 8 months (I keep up with them on Google Alerts to track whether it is sustained).
I've heard anecdotes of some other pretty successful efforts. I've also heard some horror stories of massive time and energy investments with very little to show in terms of impact. Overall, I'd say that the degree of impact achieved on the successful studies more than compensates for the unsuccessful ones (though the clients that are unsuccessful probably wouldn't agree).
Check out this Freakonomics podcast, which delves into the value of consulting. They discuss a study done in Asia (I think, it's been awhile since I listened) in which they gave a handful of companies heavy operational consulting and the rest light operational consulting and concluded that the companies with heavy consultant involvement drastically improved efficiency over the other firms. They also concede that it's virtually impossible to gauge the value of strategy consulting.
http://www.freakonomics.com/2012/11/26/i-consult-therefore-i-am-a-new-f…
Well, mainly because consulting firms don't stay for 1-2 years until strategy is fully realized.
Reiciendis qui rerum in vel. Nobis consequuntur enim itaque maxime odio.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...