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Between 2005 and 2011, IMC published Daily Tips every weekday on consulting ethics, marketing, service delivery and practice management. You may search more than 800 tips on this website using keywords in "Search all posts" or clicking on a tag in the Top Tags list to return all tips with that specific tag. Comment on individual tips (members and registered guests) or use the Contact Us form above to contact Mark Haas CMC, FIMC, Daily Tips author/editor. Daily Tips are being compiled into several volumes and will be available through IMC USA and Mark Haas.

 

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#730: Prove That Your Consulting Practices Are Effective

Posted By Mark Haas CMC FIMC, Friday, December 30, 2011
Updated: Friday, December 30, 2011
How would you recommend management consulting as a whole improve its effectiveness?

The traditional definition says, "A management consultant is a professional who, for a fee, provides independent and objective advice to management of client organizations to define and achieve their goals through improved utilization of resources." Buried in this widely held definition lies the challenge for consultants. "Independent and objective" often ends up interpreted as thinking in novel ways about business and management, adapting a presumed "best practice" to a new situation or developing entire new management concepts to promote a portfolio of services with which we are familiar and practiced. Nowhere is the primacy of evaluation and proof that what we are proposing actually works. Many of commonly used and highly promoted consulting practices lack validation. To be sure, our approaches are logical, they align with other management theories and our client seem to have done OK after we applied them. Where is our proof of value? Evidence-based intervention is increasingly required in medicine, but not for consulting.

We as professionals need to develop a deeper capability to recommend and deliver to our clients only those practices and strategies that are provably effective. Proving effectiveness is hard, which is why it is rarely pursued. So we develop consulting approaches that are:
  • Too old - we propose approaches that were (maybe) effective a decade ago when the economy, culture and management practices were entirely different but are no longer applicable.
  • Too new - we propose something we just read about in a management journal (most of which these days are written by consultants) but that has only been tried a few times, much less proven effective widely or over the long term.
  • Too abstract - we propose convoluted and theoretical processes that we understand well but for which the client and staff have no realistic capability to adopt or sustain.
A healthy skepticism to consulting techniques is our best defense against obsolescence as a profession and as individual consultants. Look at most "standard" management concepts from the past thirty years and you can find legitimate and well researched evidence why they are inappropriate for consultants to apply in many circumstances and potentially hazardous in others. We are now fully into a VUCA world (volatile, uncertain, complex, and ambiguous) where the pace and scope of business exceeds the ability of any individual to think through improvement approaches by him or herself. The standard of proof for consulting effectiveness will continue to increase.

Tip: Seek out disconfirming evidence for every concept, process, approach or technique you have in your consulting portfolio. There are good resources available. For an overview of how to think critically about your consulting approach at a high level, read carefully Flawed Advice and the Management Trap: How Managers Can Know When They're Getting Good Advice and When They're Not. For a more specific critique of individual techniques, look at Calling a Halt to Mindless Change: A Plea for Commonsense Management. Being a true professional means that, before we promote approaches we assume to be effective, we make sure we can defend our current practices in the face of logic and evidence that they neither make sense nor really work all that well.

© 2011 Institute of Management Consultants USA

Tags:  agility  assessment  client service  consulting process  consulting skills  consulting terminology  consulting tools  diagnosis  education  innovation  learning  management theory  methodology  performance improvement  practice management  professional development  professionalism  quality  roles and responsibilities  sustainability  technology  trust  values  your consulting practice 

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#721: Use Cognitive Biases to Your Advantage

Posted By Mark Haas CMC FIMC, Monday, December 19, 2011
Updated: Monday, December 19, 2011
I would expect that all advisors want their recommendations to be judged fairly by the client and not be unduly influenced by either extraneous information or bad logic. How do we make sure that the information we present gets a "fair hearing"?

None of us is immune to cognitive bias, regardless of how much we'd like to believe we could impartially decide on the facts alone. Even where we take an oath of impartiality, there is an expectation that some biases are still present and the best we can do is to recognize them, disclose where possible, and compensate or recuse ourselves as appropriate. As a consultant, you have to sometimes work hard to avoid such biases.

When it comes expecting clients to judge your work impartially, it is up to you to understand the different kinds of biases and deliberately structure our presentations to use techniques to level the playing field. Note that deliberately introducing bias in client decision making to favor your position starts you down the path to unethical behavior.

We can't go over all the dozens of biases here but here are a few of the most important for consultants to be aware of:
  • Recency Bias - giving greater importance to the most recent event (e.g., the person who presents last before a decision is to be made has a slight advantage).
  • Anchoring - the tendency to overweigh in importance a dominant statement presented or experience already known (e.g., describing the problem in terms that discount alternative explanations or focusing on only one aspect of a complex problem before offering a solution that resolves only that aspect of the problem).
  • Normalcy Bias - discounting outcomes that rarely or have never occurred before (e.g., discounting a looming disaster even though the precursors to that disaster that have already occurred also are rare).
  • Confirmation Bias - The tendency to favor an approach or piece of information that is familiar or consistent with one's world view or history (e.g., a proposal to do "more of the current approach" has higher intuitive appeal than one based on a novel approach).
  • Halo effect - the tendency to attribute greater value to suggestions from a well-known entity rather than the merits of the item (e.g., giving greater credibility due to position or perceived market brand)
  • Loss Aversion - the tendency to place greater emphasis on avoiding the loss of something than the potential gain of the same amount of that thing (e.g., using fear to promote saving something in danger of being lost rather than using desire to promote the potential acquisition of something).
Tip: As you can see, each of these biases can be at work in how you approach your own work as a consultant but also are present in your clients when they are deciding on the merits of your recommendations. For a pretty good review of these biases and some practices to manage them, consider (among many other sources) Smart Choices: A Practical Guide to Making Better Decisions. Many of the best decision making work was done in the early 1990s and the best resources are from that era, one of those instances where newer is not necessarily better.

© 2011 Institute of Management Consultants USA

Tags:  assumptions  attribution  decision making  interpretation  learning  methodology  presentations  professional development 

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#715: Look Deeper Than Just the Headlines For Business Facts

Posted By Mark Haas CMC FIMC, Friday, December 9, 2011
Updated: Saturday, December 10, 2011
If small businesses are the principal source of job creation in the US, should consultants be focusing their efforts on small vs. large businesses?

A fundamental understanding of statistics is essential for every consultant to be able to tease the truth from the headlines. It is common to see articles, reports and pundits talk about how one segment of the economy generates most of the jobs. Recently either government, healthcare, small business, energy or technology are sectors with the most economic activity and thus job growth. Usually a graph or a single number will accompany that statement and a lot of philosophy about why the data will lead to a conclusion about the future of that sector.

If we took these proclamations at face value we would be possibly misleading our clients if we were advising them on where to invest. We need to bring a critical eye and logic to this interpretation. Consider the recent news that small businesses created all net job growth over the past decade. The NFIB published a graph on Page 1 of U.S. Private Sector Employment by Size of Payroll that seems to prove the point. Without further investigation, it seems clear: consultants should be looking more closely at small companies to support their active growth.

But looking a little deeper reveals the flaw in this interpretation. It is not small businesses that create most jobs but young businesses (by definition, most new businesses are small). But, we are not done yet. When we separate the newly formed from young businesses, it becomes clear that is new businesses that create almost all the jobs. Furthermore, the younger a business is the higher net job loss it creates. Far more complicated than the dominant headlines would indicate, right? See an enlightening analysis of these data.

Tip: Whether we are looking for new markets for our services or are advising clients on emerging (or declining) markets, consultants need to bring their skeptics hat and a competent statistical capability to interpreting reported data.

© 2011 Institute of Management Consultants USA

Tags:  consulting skills  market research  methodology  statistics 

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#682: Make Assumptions Carefully

Posted By Mark Haas CMC FIMC, Tuesday, October 25, 2011
Updated: Tuesday, October 25, 2011
Part of being a good consultant is being able to get through the diagnosis and to a solution as quickly as possible (but getting it right). To do that we must make assumptions, but where are assumptions potentially erroneous short cuts and where are they appropriate?

You know what they say about assumptions. We can't realistically base our diagnostic conclusions entirely on our empirical research done at the beginning of an engagement. We make what we consider to be reasonable assumptions based on discussions with the client and staff, market or technical research, our own analysis and any other information we collect - including years of our own experience with analogous or similar cases. It is a judicious combination of facts, intuition and experience that is the hallmark of a consultant's detective like skills.

However, professionalism compels us to be on watch for assuming too much, too fast. It is all too easy, after years of experience, to be impressed with our knowledge and comfortable with believing we "have seen this case a thousand times before." To keep this in check, a professional has processes in place, maybe even formal ones, to challenge and verify all assumptions made on the way to a diagnosis. What are the ways you make sure you are not assuming too much without knowing it?

Tip: Write out the steps you take in your normal process (or more than one) of scoping a project, collecting data, completing a diagnosis, and presenting findings and recommendations. Note the type and criticality of your assumptions at each stage. Finally, describe the implications on this diagnostic chain of each of your assumptions and what you could do to mitigate the risks of wrong assumptions. Now, when people talk about your assumptions, they will have only good things to say.

© 2011 Institute of Management Consultants USA

Tags:  analysis  assessment  assumptions  methodology  recommendations 

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#543: Be Sure You Are Measuring Your Client Correctly

Posted By Mark Haas CMC FIMC, Wednesday, April 13, 2011
Updated: Wednesday, April 13, 2011
Are there a set of best practice performance measures or do these vary by industry, region, type of organization, etc.? It seems that there is no agreement as to the "right" metrics (or do people just pick the ones for which they compare favorably)?

It does seem sometimes like performance measurement is a combination of art, science and public relations. Good practice suggests a consultant select a formal measurement and management model, develop a portfolio of metrics that can be used to compare progress over the long term (and with competitors or benchmarks), and compile and validate performance data. The dirty part of this exercise is the selection of metrics that are valid and actionable.

There has been some effort lately to rethink the traditional performance metrics. Financial metrics have a lot of history and may stay the same but measures like public trust, raw material sustainability, employee loyalty, innovation, knowledge asset growth, organizational agility, and process efficiency are being debated. The key is to find a set of metrics that are valid (measure what they say they do), reliable (measure consistently over time) and actionable (support fact-based decisions). Creativity may be necessary to develop a suite of metrics that support emerging strategic or tactical direction of the organization. They may not look like those of your client's competitors or that it used in the past but you owe it to your client to measure effectively.

Tip: If you are interested in this issue at a national scale, check out Mismeasuring Our Lives: Why GDP Doesn't Add Up. Joseph Stiglitz addresses the longstanding problem of making national policy on GDP, a fundamentally flawed metric that excludes some desirable value added activities (e.g., unpaid work, sustainability) and includes destructive activities as "productivity" (e.g., weapons production, pollution, and clear cutting old growth forests). This serves as a counterpoint of how you might discuss a new set of metrics with your client.

© 2011 Institute of Management Consultants USA

Tags:  consulting process  consulting tools  customer understanding  decision making  evaluation  innovation  methodology  performance improvement 

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