Most consultants reckon that about 70 percent of projects fail to meet their objectives.
Reasons for this are wide-ranging. Many issues are project specific. They may relate to specific management issues or special situations that limit consultants’ effectiveness. Some of the problems with consulting projects happen ALL the time.
1. Non-implementation
The first problem is that the company simply doesn’t implement the consultants’ strategy. This could happen for a variety of reasons.
- Administrative capacity. The company doesn’t have the coordination to implement the consultants’ modifications. Managing change at scale is an arduous and difficult task. The company may be too sprawling and de-centralised to effect serious change.
- No value. It may also be that the company can’t see the benefit of what the consultants are proposing. Sometimes, when consultants are called in unnecessarily, their solutions don’t add much value. A company is perfectly within its rights to discard advice if it isn’t going to help them become a better company.
- No Money. Most frequently, a consultancy’s clients just run out of money. They liked the strategy, but they aren’t able to raise the up-front cost to make it happen. This is one of the reasons why consultancies are increasingly trying to do the implementation phase themselves.
Beyond these three easily understood reasons is the fact that businesses simply don’t agree with what the consultants suggest. This is a tricky one. Obviously the consultants have been called in because the company was unable to fix its own problems. However, this doesn’t stop some employees from rejecting their proposed changes.
Businesses can also lose faith in a proposed strategy because innovation follows an S curve. It doesn’t happen all at once and it certainly isn’t steady. Instead, it takes place in big leaps of momentum. A business can’t know when these will take place, and often nor can the consultancy. It is therefore difficult to keep faith that another upward curve of progress or profitability is just around the corner. Rather than subjecting an entire firm to this level of uncertainty, it can be easier to pack the whole project in.
Scott Keller, Senior Partner at McKinsey, likens this to the morphing of a caterpillar into a butterfly. Not only is it irreversible, but it is sometimes hard to believe that change will happen. Across the span of the S curve of a caterpillar’s evolution into a butterfly, anyone would struggle to maintain faith.
2. Evolving project
The second main obstacle to a project’s success is that projects evolve and change as they are in motion.
When consultants get their teeth into a business, they often see problems that they weren’t asked to fix. Analysing, recommending and implementing changes to these problems might be added as a “bolt-on” to the project’s main drift. Consultants are inclined to say yes to these extra bits of work because it feels like a good step to building a relationship with clients.
These additional modifications can also be huge revenue drivers for consultancies but they can also result in project failure. They can require different expertise, new team members and a completely different approach. The addition may align poorly with the project’s main thrust, or waste time and delay project completion. The addition may also be something the consultancy agreed to spontaneously or informally, leading to raised client expectations and an inability or unwillingness on the part of the consultants to make good on the promise.
Consequences for clients
There are two main dangers associated with project failure. First, and most obviously, there is the performance side. A failed project will not deliver the operational and financial results that you’re looking for. Second, there’s the health side. A failed project could damage the overall health of a business by pointing the organisation in the wrong direction or weakening its competitive position within its industry.
Consequences for consultancies
The issue for a consultancy is typically reputational rather than financial. So long as the consultancy doesn’t hang its fees on a project’s success in the manner McKinsey does, it should still get paid. However, if their solution was not sufficient or workable, future clients will probably be made aware or gradually become aware. Moreover, internally, consultants on the project will experience a hit to their own prestige, simply because they have conducted a project that did not have the intended results. Therefore, while there is a myth that consultants don’t mind if their solution is implemented or not, they certainly do! In fact, this is highly likely to be a contributing factor to their bonuses, especially if they are only staffed on a small number of projects.
Will is the founder of The Cambridge Consultant, a site which focuses on everything consulting – how to get in and get on!
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