Knowing Through Consulting in Action E-Book

Francesco Ciampi

• Herausgeber: Firenze University Press
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2019

Beschreibung

Management consulting firms are often discussed as being the firms whose core product is knowledge itself. However, despite the fact that consulting firms are generally aware of the value of knowledge for their own organizations and for their clients, the empirical evidence shows that even today the (economic and, above all, cognitive) value-creation potential related to the transition from consulting approaches geared to the transfer of “best practices” (consultant as expert) to consulting approaches geared to the cooperative creation of new knowledge and managerial capabilities (consultant as a facilitator of new managerial knowledge and capabilities creation processes) is rarely consciously perceived and, consequently, is not adequately planned for and exploited. This book interprets management consulting from a knowledge perspective, and proposes a general conceptual framework for investigating and interpreting that potential. Francesco Ciampi is an Associate Professor of Management at the Business Science Department of the University of Florence. He has been teaching post-graduate courses in Management Consulting since 2004. His current research focus on management consulting (with an emphasis on client-consultant relationships and consulting knowledge-creation dynamics), financial management (particularly on qualitative variables for default prediction modelling), and small and medium-sized enterprises.

Leseprobe

STUDI E SAGGI

– 184 –

Francesco Ciampi

Knowing Through Consulting in Action

Meta-consulting Knowledge Creation Pathways

Firenze University Press

2017

Knowing Through Consulting in Action : meta-consulting Knowledge Creation Pathways / Francesco Ciampi. – Firenze : Firenze University Press, 2017.

(Studi e saggi ; 184)

http://digital.casalini.it/9788864536439

ISBN 978-88-6453-642-2 (print)

ISBN 978-88-6453-643-9 (online PDF)

ISBN 978-88-6453-662-0 (online EPUB)

Graphic design: Alberto Pizarro Fernández, Pagina Maestra snc

Front cover photo: © Jozef Micic | Dreamstime.com

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Peer Review Process

All publications are submitted to an external refereeing process under the responsibility of the FUP Editorial Board and the Scientific Committees of the individual series. The works published in the FUP catalogue are evaluated and approved by the Editorial Board of the publishing house. For a more detailed description of the refereeing process we refer to the official documents published on the website and in the online catalogue of the FUP (www.fupress.com).

Firenze University Press Editorial Board

A. Dolfi (Editor-in-Chief), M. Boddi, A. Bucelli, R. Casalbuoni, M. Garzaniti, M.C. Grisolia, P. Guarnieri, R. Lanfredini, A. Lenzi, P. Lo Nostro, G. Mari, A. Mariani, P.M. Mariano, S. Marinai, R. Minuti, P. Nanni, G. Nigro, A. Perulli, M.C. Torricelli.

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This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0: http://creativecommons.org/licenses/by/4.0/).

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Printed in Italy

Table of contents

INTRODUCTION

Chapter I

Bridging the gap between scientific research and management consulting

Chapter II

Management consulting: a conceptual definition

Chapter III

Knowledge creation through management consulting: a literature review

Chapter IV

Management consulting as a process

Chapter V

Management consulting models

Chapter VI

Meta-consulting knowledge creation pathways

Chapter VII

Knowledge management approaches in management consulting firms

Chapter VIII

The future of management consulting

REFERENCES

INTRODU­CTION

Management consulting firms are often discussed as being the archetypes of knowledge-intensive firms (e.g., Alvesson, 1995; Crucini, 2002; Heller, 2002; Werr, 2002), or as the firms whose core product is knowledge itself (Sarvary, 1999). However, despite the fact that the literature offers a wide selection of studies into enterprise knowledge management (Abrahamson, 1996) and management consulting (Whittle, 2006)1, the subject of knowledge creation potential that can be activated through the concrete implementation of management consulting interventions still remains a largely unexplored research area.

Consulting firms are generally aware of the value of knowledge for their own organizations and for their clients2. However, notwithstanding the official claims of some consulting firms3, the empirical evidence (e.g., Linnarsson & Werr, 2002) shows that even today the (economic and, above all, cognitive) value-creation potential related to the transition from consulting approaches geared to the transfer of ‘best practices’ (consultant as expert) to consulting approaches geared to the cooperative creation of new knowledge and managerial capabilities (consultant as a facilitator of new managerial knowledge and capabilities creation processes) is rarely consciously perceived and, consequently, is not adequately planned for and exploited.

This book interprets management consulting from a knowledge perspective, and proposes a general conceptual framework for investigating and interpreting that potential.

After presenting some reflections about the current and forward-looking relationships between academic research and management consulting (Chapter I), I propose a definition of management consulting (Chapter II) which aims to identify the distinctive ontological (real, essential and relatively stable) features of this particular service and emphasizes the mainly cognitive nature of its value-creation potential.

I go on to present a review of the literature regarding the relationships between knowledge creation and management consulting (Chapter III), and discuss two approaches to interpreting management consulting: the consulting process approach (Chapter IV), and the consulting models’ approach (Chapter V). I use these approaches to outline the essential variables of the consulting relational dynamics.

In the Chapter VI, I make use of the theories interpreting knowledge creation processes as knowledge conversion processes (Nonaka & Takeuchi, 1995), and apply them to the specific context of management consulting relationships. This allows me to propose a possible framework of the cognitive pathways along which knowledge can be created through management consulting. It highlights the fact that in ‘meta-‘ (i.e., advanced) consultancy contexts the knowledge creation potential of consulting lies in the possibility that it can generate not only explicit knowledge but also (even, mainly) new tacit managerial knowledge, such as new interpretative abilities (vision of the firm’s structure and of the competitive environment), new experience-based diagnostic skills, and new capabilities to gain insights into solving managerial problems. The value of this knowledge for both the client and consultant goes far beyond the solution of the specific problem for which the consultant was engaged. The aim is not to demonstrate the absolute validity of this model, but more simply to highlight its internal theoretical consistency and to discuss the supporting evidence of a number of anecdotal cases4, which are used to better clarify the conceptual framework, rather than serving as empirical evidence for the validity of the model5. Perhaps a better understanding of the knowledge creation paths that can be activated by management consulting projects following the meta-consulting approach will allow both clients and consulting firms to increase their awareness of the entrepreneurial knowledge generation potential engrained in the dynamics of the consulting relationship. Clients and consultants might be better placed to consciously define knowledge creation goals for their consulting projects, to effectively design and manage the related cooperative learning dynamics, and to evaluate the cognitive value (rather than only the economic value) of the consulting intervention results. Client firms might come to regard the management consultant’s work not simply as ‘seeking a solution to a specific problem’ but also as ‘facilitating the endogenous development of their cognitive capacities’ (and hence of their distinctive capabilities). They could then select the consultant and, above all, plan their active cooperation in the consulting process on this basis. Similarly, consultants may be encouraged to interpret the consulting relationship as an opportunity for cooperative learning. This may not only increase the client’s cognitive resources, but also enable consulting firms to develop new and unique knowledge (which only the specific consulting context can induce), and, consequently, new distinctive consulting capabilities that may be fundamental for their competitive success. The proposed conceptual model may have two major limitations. First, it may be subject to the limitations that some authors (e.g., Gourlay & Nurse, 2005) attribute to Nonaka and Takeuchi’s theory of organizational knowledge6. The second, and more important, limitation is that the individual knowledge creation pathways and the whole conceptual framework from which they stem still need to be more thoroughly investigated, so as to test their interpretation potential in diverse consulting settings (in terms of the consulting firm’s size, structure and sector/specializations, and in terms of the client firm’s size, structure and industry, for example).

Finally, after discussing two alternative knowledge management approaches typically adopted by management consulting firms (Chapter VII), in the last Chapter I outline the main dynamics of change that characterize today’s demand for management consulting, and suggest that client firms are becoming increasingly aware of the real cognitive (rather than only the economic) value generation potential that can be activated through the consulting relationship. I also look at the possible pathways for evolutionary transformation of consulting practices, models and roles that consulting firms could follow if they want take advantage of the important changes that are taking place.

1Over the past ten years management consulting has been one of the most dynamic industries within the context of the advanced tertiary sector (in terms of revenues, new business start-ups, number of employees, range of services offered, etc.). The aggregate turnover in this industry reached about $229 billion in 2017 (with an average annual increase of 3.6% in the 2012-2106 period) and in the next four years it is expected to see an annual growth rate of higher than 4 percent (IBIS World, 2016; Kennedy Information, 2017).

2The increasing awareness among consultancies of the knowledge creation potential of management consulting is confirmed, for example, by the progressive and empirically detectable change in the range of management consulting services offered and their modes of delivery: creating and sharing knowledge (in terms of exploration, development and exploitation) have now become key-channels for transferring value to clients (Davenport & Prusak, 2005). Moreover, many of the top consultancies now «offer knowledge management services for their clients, focusing on how they can develop their internal knowledge management practices» (Buono & Poulfelt, 2005, p. IX).

3In the communications to the market made by the big consultancies that offer «high knowledge creation potential» consulting services, we may often notice such claims as «Our clients outperform the market 3 to 1» (Bain), or «We are successful if our clients have built in-house capabilities to solve their own problems the next time around» (McKinsey). See Poulfelt, Greiner and Bhambri (2005, p. 14).

4The brief empirical evidences provided in this book are based on interviews by a group of researchers who have explored (under my guidance) the emerging issues in knowledge management within the context of the European management consulting industry. This research project has been conducted with two samples of firms; one comprising fifty management consultancies of various sizes, and the other with over one hundred large and medium–sized corporations.

5This approach is frequent in management literature. See, for example, Normann (2001).

6To my mind, however, Nonaka and Takeuchi’s organizational knowledge creation theory does still remain a very powerful tool for interpreting knowledge creation managerial processes.

Chapter I

Bridging the gap between scientific research and management consulting

Management consultancies like McKinsey and BCG are nearly always at the top of the first job wish list of young US and European MBA graduates. Over a third become management consultants (Cox, 1997).

In the course of the last thirty years, the relationship between management consulting and management education1 has become more complex, and the dividing line between the two has become less stable and increasingly difficult to define. The business world is in a state of continuous change; and education systems cannot always keepup.

One major development is the higher level of complementarity between academic education and consulting. The big consultancies are increasingly taking on the role of ‘postgraduate business schools’. Many MBA graduates from the most prestigious business schools, such as Harvard and the Insead, start their careers in a leading consultancy firm (e.g. McKinsey, Booz Allen, Ernst & Young, BCG) before going on to take up high level positions in one of the largemultinationals such as American Express, Westinghouse, or Lufthansa. That’s how Henry Mintzberg, at the end of the last century, described the best strategy for a young graduate who aimed to become part of the top management of a large corporation: «After the MBA, you work as a consultant with some prestigious firm for a time, skipping from one client organization to another. And then you leap straight into the chief executive chair of some company, making judicious moves to others in the hope that you may one day end up running a company like IBM» (Engwall, 1998).

There is to some extent also greater integration between the two worlds. In the US, and also in Europe and in Japan, the main business schools have started to run executive development programs, i.e. tailor-made training programs for middle and top managers, which are designed to meet the specific requirements of the firms that have commissioned the courses. At the same time, the main consultancy firms are taking an increasingly active part within academic institutions. They provide funds for special training projects, for master’s degrees and for complete undergraduate degree courses. McKinsey has long been a key sponsor of Harvard Business School, and the British Management Consultancies Association has given financial backing for the London Business School. And the representatives of the big consultancies are on the boards of many businessschools.

Another major development is the higher level of competition. The big consultancies are, in fact, increasingly setting up and developing their own training centers, or even ‘corporate universities’, which aim to provide new employees (and client firm executives) with the type of specialist, mainly process-related, knowledge (for example the knowledge concerned with handling change management processes, which is an essential part of management consultants’ work) that is rarely included in university curricula, even in universities outside Europe. Though consulting firms will no doubt continue to recruit the new graduates of the most renowned business schools, there is a growing risk that even these schools may stop being real educators and may end up acting as mere selectors, while the people selected will be trainedelsewhere.

At the same time, there is no clear sign of spontaneous change in the attitudes of academic research toward management consulting.

Those engaged in developing business theory have always been aware of the essential, and vital, effects that practice has on theory.

Management teachers should not shut themselves off from the real world. Indeed, they should take an active part in it so as to enrich their ideas and obtain a sound background that goes well beyond information from books or superficial, sometimes even futile, so-called ‘research projects’…. They should remember what Galileo said: «You don’t learn to play the organ from people who build organs but from those who know how to play them» (Fazzi, 1982).

In 1977, as a result of the discussions that took place the previous year during a conference concerned with management consulting, the Academy of Management approved the following Position Statement on Professor-Consultants: «The Academy of Management is supportive of professional consulting activities by its members when these activities are conducive to the professional growth of the individual and contribute to the management discipline through the enrichment of teaching, research, and understanding of the field» (Gore & Wright, 1979).

Yet in the academic world, both in the US and to a greater extent in Europe, there continues to be the idea that research and consulting are essentially two distinct and separate worlds. Research is seen as having the role of creating new knowledge, while the role of consulting is to apply existing knowledge to concrete corporate contexts (Savall, 2001).

We may need to ask ourselves if such a dichotomy has much value in today’s world. The results obtained in research work, and their validity, depend on researchers being really able to observe, analyze and penetrate the object studied as it really is. Physics or chemistry researchers do experiments in their laboratories; but management researchers must find laboratories outside the university, since firms cannot be reproduced within the walls of academic institutes. Nowadays, firms are characterized by a high (and increasing) degree of complexity. External observation consequently becomes an increasingly inappropriate method if one is to adequately grasp the increasingly wide and articulated, heterogeneous and changeable dynamics involved in the corporate evolution, be they structural, relational, competitive or technological, etc. One recent research shows that firms consider consultancies, competitors, suppliers and clients far more useful as sources for new management ideas than the literature and the academic world (Table 1).

Table 1 – Views on the Role Played by Different Sources in the Diffusion of New Ideas. Interviews by the author in 2015 with 15 Italian medium and large firms.

Sources for new management ideas

Extremely Important

Very Important

Somewhat Important

Scientific literature

20%

35%

28%

Academia

10%

12%

72%

Clients

31%

40%

20%

Suppliers

33%

41%

13%

Consultancies

25%

31%

29%

The scientific approach to management needs to change radically and move its observation point towards the inside of the object studied. The discovery, analysis, and validation of the existence, intensity and direction of the (cause-effect, circular, etc.) relationships between the many significant variables involved would be made much easier if it were possible to use experimental research tools. For instance, by excluding a hypothetical cause and testing to see if a particular effect did (or did not) persist, it would be possible to exclude (or confirm) that the main cause had been identified. The firm is not a laboratory, however, and such experiments are hardly ever feasible. Paradoxically, students are given training placements in firms (whatever the limitations of such internships may be) but placements for researchers are practically non-existent.

Bringing the two worlds of research and consulting closer together has consequently become highly desirable. Management consultants need to know the theoretical bases of management disciplines, and their evolution outside the constraints of day-to-day business. And it is equally important for researchers to be able to adopt an «intervention view»2 through research projects that include periods of real consultancy work. This allows them to experience, face and attempt to solve real management problems, to question the dominant theoretical assumptions, to develop new ideas, to produce (together with the client firms) new knowledge (which is specific to the consulting setting), and to externalize this knowledge (by changing it into explicit new scientific concepts), thereby helping to renew the knowledge held in management disciplines.

The hope is that this book will be a small step in this direction.