Attack of the Nerds

Strategy Consulting  

The attack of the nerds  

I’ve been reading the Lords of Strategy by Walter Kiechel III which is about strategy consulting – McKinsey, Boston Consulting, Bain and others.  The book was wildly interesting through the first half and disintegrated towards the end. Halfway through the book, he made a statement that made it sound like the book should end here. It wouldn’t have been complete, but from an interest standpoint, this was the end. The first section was about the wingnuts and those who invented consulting. The last section was more about academics and other less interesting stuff. Regardless, the obvious conclusion was never reached. If you have any idea what you’re doing, consulting is a waste of time & money. If you don’t, it’s probably a still a waste of time & money.

The book was terribly informative about the history of strategy consulting. It covers the entire gamut of American strategy consulting going back to the 1920s and 1930s when Alfred Sloan transformed General Motors into the first modern corporation and McKinsey began consulting the things GM did that made GM successful.  I was impressed by the breadth and depth of the book, but less impressed by consulting which is obviously not what it’s cooked up to be. I was looking for a bit more substance from the profession itself.

I was also disappointed my alma mater didn’t even warrant a mention. Andersen Consulting/Accenture. But, although they’re promoting strategy today, that has probably never been their strength.

Let’s face it, we’re talking about the people who grew up playing video games. Originally, most consultants were engineers, and they still are. But PhD’s and MBAs are also well represented. If there’s a difference between these people and everyone else, it’s their focus on formulas, and they’ve built up a long list of them. The problem is, they’re interesting & famous & well known, but none of them work.

I’ve waded through all the big business formulas brought to us by strategy consulting, from decentralization (GM’s move to break up the company into independent units or subsidiaries), Growth Share Matrix (cash cows, stars, question marks, dogs), experience curve (costs fall 25% as volume doubles), SWOT analysis (strength, weakness, opportunities, threats), three C’s, five factor framework, seven S framework, value chain, etc., etc., etc.

What I have come to realize as I read this book is that business consulting was the original ‘attack of the nerds’. It’s all an attempt to reduce success in business to a formula. A + B = C. Doesn’t work. Hasn’t ever worked, They’re all looking for the next big thing that will explain everything. But they never find it. They do however, keep changing their minds about what the big secret to is. Which of course keeps the cash register ringing and keeps a big hazy shroud around what they do and how effective their advice is.

Next to war, running a business is the most complicated & complex endeavor on the planet. Far more complex than physics or calculus or engineering, because these are all formulaic. They respond to a set of rules and axioms. But in business (and war) nothing is that way, everything is fluid and ever changing: the landscape, the players, the tools, the medium, etc.

But then, perhaps no one really expects consulting to work. Perhaps it’s just a smoke screen. The big clients of consulting firms are insecure CEO’s who pay big dollars to be reassured, albeit with a long term consulting contract.  Or executives looking for expert opinions to back them up. Which makes you wonder whether the results are dialed up in advance? In many cases, very likely. The book made the point, that consultants are leery of surprising C suite executives whose patronage they rely on.

In the final analysis, most consulting stuff doesn’t work; not in the way consultants wished it did. All of the breakthroughs I mentioned in the fifth paragraph were reverse engineered. They were the result of an observation and they’ve yet to be proven capable of directing the future, which is the ultimate goal of consulting.  This realization drives consulting to find another rainbow with another pot of gold which this time possibly will work.

But business success can never be reduced to a formula.  

Here is the secret sauce of business success, the one thing that will work every time, the one thing nobody will pay good money for, but the one way every company can add significant competitive edge – –

Be easy to do business with and do everything right the first time.

It isn’t like this is a new idea. This has been around since time immemorial. Both Steve Jobs and the Brazilian trio used this to make record making accomplishments. This is nothing but business processes, systems and customer service.  Or if you wish, continuous improvement & constant cost cutting in a full blown meritocracy.

Nothing else works. If you want to succeed, this is how to do it. Otherwise you’re just babysitting your customers until the day Amazon, or Apple, of Google, or Caterpillar or someone down the block (who came to see us) takes them away from you. They will, you know. They’re spoiling them right now.

“Good artists copy, great artists steal.” (Pablo Picasso and Steve Jobs).  What the heck. This stuff works and consulting doesn’t.

Apple has been proving this for years as they watched your customers sleep in the streets to get first crack at paying three times as much for their products. Everybody thinks it’s the innovation, but innovation is a flash in the pan. Today Apple’s innovation is old & stale and there are tons of imitators trying to beat them to death with price, without success. Apple is making it on its business processes, it’s reputation and its fabulous customer service.

Think Apple Stores and iTunes. Think Amazon. If there’s a formula, this is it. And it’s not something some nerds discovered in their garage.

Another example: The fact that GM outperformed Ford (first mentioned above) is a solid example that business processes & systems outperform innovation. Ford was first to the table and invented the assembly line, which you would think would make Ford unassailable, but GM brought processes & systems to the table and dominated Ford far a century.

Game theory

Or so to speak … One thing more that’s a little off track, but is oddly related to the foregoing conversation. “Game” is an attempt by the same nerds to reduce love to a formulaic approach. These people obviously love formulas. Push-pull, cocky funny, so on and so forth. Both strategy consulting and game have their strong points; they will improve an otherwise dismal record. Something is always better than nothing, but all in all, the approach is insufficient.