This podcast is linked to the article about recent recruiting problems at BCG. We elevate the problem here and discuss the basic elements which lead to the decline of great firms or why smaller firms never become great.
There are many lens through which to analyze this and we have chosen two.
First, we want to distinguish between the health and performance of consulting firms. We look at what drives both and how it it possible to increase performance while damaging the health of the business. Any action which aggressively pursues revenue/profits typically will hurt the health of a consulting firm.
Second, we examine the 5 broad areas where consulting firms must engage and how they can end up doing this in a detrimental manner:
Revenue – a consulting firm must generate revenue to survive and can either do this in a healthy manner or unhealthy manner, such as hiring external people to drive sales.
Engagements – the firm must deliver what it has sold, and again, many firms tend to select experienced consultants or sector specialists first, without seeking generalists or strong cultural fit.
Hiring – this is probably the most important area for consistency and most firms get swayed by the need to cut down on training costs and having consultants who can be immediately staffed.
Training – this cost is largely neglected by firms who delegate training to junior employees or training specialists. Partners should train.
Intellectual property – unless a firm can generate new ways to solve problems, it will always slide down the scale of value it can generate, conversations it can start, relevance to clients and ultimately its brand value.