This post has been adapted from the A Leader’s Guide to Working with Consultants paper by Josh Atwell, Elizabeth Donaldson, John Esser, Ron Forrester, Ben Grinnel, Jason Hobbs, Courtney Kissler, and Jessica Reif.
Every year, thousands of executives seek to reinvent their companies through organizational transformation, and every year thousands of executives are disappointed by the results. According to a McKinsey report, just 26% of leaders say the transformation efforts they are familiar with have been successful at improving performance and equipping the organization to maintain improvement over time. Given the resources and organizational strife that typically accompanies such change efforts, this statistic is particularly alarming.
It is natural that, in the face of a high probability of failure, executives would want to have all the help they can get when embarking on a transformation. As such, they hire consultants with the alleged expertise to ensure the success of their efforts. The consultants come bearing sophisticated proposals, detailed project plans, and promises of results—assurances that offer comfort to leaders ahead of an inherently uncertain journey.
There are not readily available statistics on the success of transformational consulting engagements, but several high-profile incidents have shed light on transformational consulting efforts gone awry.
The FBI, for instance, paid SAIC $170M to develop its new virtual case management system—a project it ultimately scrapped, stating, “Even in rudimentary tests, the system did not comply with basic requirements . . . It did not include network-management or archiving systems—a failing that would put crucial law enforcement and national security data at risk.” SAIC was not entirely at fault, as they were subject to frequently changing requirements and timelines. In an interview, SAIC VP and Operations Manager Rick Reynolds said, “People forget the urgency that we were under and our customer was under.”
More recently, Hertz filed a lawsuit in 2019 seeking to recoup the entirety of the $32M in fees it paid to Accenture to develop its new website and mobile applications, which ultimately were never delivered. Accenture says the lawsuit is without merit and have declined further comment on the case.
If these now infamous digital transformation failures do not provide enough of a cautionary tale, consider the public instances of moral failures from the world’s most elite consultancies, such as McKinsey consultants proposing opioid manufacturer pharmacies offer “rebates for Oxycontin overdoses,” and the firm’s partners allegedly trying to cover evidence of their advice.
With the end of the COVID-19 pandemic on the horizon, leaders are looking to accelerate their digital transformation efforts. According to one survey, 80% of executives across industries are planning to accelerate their transformations, with 65% expecting to increase the amount they invest in digital.
Given that many companies will not be building their full set of digital capabilities in house, we expect consulting relationships will remain popular among companies seeking to reinvent themselves. We do not intend to discourage the use of consultants—there are many situations where consultants can provide tremendous value. Instead, we hope to help you identify those situations and maximize the value of your consulting relationship while minimizing the risk of the engagement.
The use of consultants is not going away. In fact, we are looking to embrace that reality and focus on increasing the chances of success as well as proactively working to mitigate risk. We hope that after reading this paper and completing our assessment you will be better equipped to address potential risks to your engagement.
We will focus on three specific factors in this paper: accountability, dependency, and disruption of change. While these are not the only forces that contribute to consulting engagement risk, they have derailed a disproportionate number of the consulting engagements we have collectively been a part of or observed.
- Accountability: Have you established clear ownership of the consulting engagement outcome and a mechanism for validating that the outcome is achieved?
- Dependency: Are you at risk of becoming dependent on an external partner for a core aspect of your business?
- Disruption of Change: Is the consulting engagement designed in a way that maximizes its likelihood of success? “Big bang” transformations seldom meet their desired objectives.
While quadrants we’ve placed in the top-right of each factor are considered “more ideal”—Each of these three factors are then further divided into quadrants. The quadrants are intended to “personify” engagement types and call out typical areas of risk for each. Our hope is that by exploring the quadrants and acknowledging the risks present in each you may find yourself better equipped to either make a shift to a more desirable quadrant or, at a minimum, remediate probable risks early and ensure that an upcoming or current engagement is more likely to succeed.
especially for large, disruptive changes where your expectation is the long-lived transformation of an organization and you have an expectation of expanded future capabilities—it should be noted that there will always be some element of risk present, regardless of the quadrant. It’s reasonable that engagements that sit squarely in quadrants other than the top-right may be appropriate as long as you’re entering them with an understanding of the risks and outcomes typical for that particular quadrant.
Each of the co-authors of this paper has found themselves and their organization “unintentionally” sitting in a quadrant that was not well aligned with the organization’s desired outcomes from a consulting engagement. By exploring these quadrants we hope you will create different engagements, with parameters that increase your chances of achieving the outcomes you’re looking for and that maximize benefits while minimizing pain.
The Assessment/Risk Scorecard
We have developed an assessment designed to measure your risk profile in terms of accountability, dependency, and disruption of change. The assessment will ask you to consider the extent to which you agree or disagree with twelve statements regarding your consulting engagements. The results will place you in one of four quadrants that will help clarify the unique risks of your specific consulting engagement. Each section of this paper contains a summary of the risks associated with that profile, a short case study, and several recommendations for how you can mitigate risk.
To take the Assessment/Risk Scorecard, please download the full A Leader’s Guide to Working with Consultants paper.
Next, we’ll dive deeper into the Accountability Quadrants of working with consultants.