After 7-8 years of management consulting, there are several things that are common among clients. Most clients have internal political issues. For instance different teams have different compensation incentives (market share vs gross margin) which leads to internal feuds and disfunction. Others are in an industry that used to be growing quickly but has slowed or a new powerful competitor has entered (think any retailer competing with Amazon). However, one problem that seems to be universal is an inability to master, or even achieve in some cases, basic internal reporting.
The conversations often go like this : how many man hours did you spend doing X last quarter? How much money did you make from this product last month? Frequently the answer is an explanation about how so and so is working on that and it will be ready in 3, 6, 12, etc months. This is the less bad version. At least there is an understanding that things are broken and need work.
The really bad ones are when there is internal reporting and end users don’t trust it or don’t like the output. In these situations, the company is actually allocating resources to the effort but they are either ineffective or being used by savvy internal politicians to undermine firmwide efforts and feather their own bed. At one client, a law firm, there were various firmwide initiatives to introduce automation to their business. Many of the attorneys were concerned about how this would affect their fiefdom and would spend their time picking apart the internal reporting so that they could postpone any deadlines that affected their business area. This meant that internal meetings were spent questioning the veracity of the reports instead of planning how to take appropriate action.
Sadly, depending on the situation, this is usually not a problem that can be fixed by external consultants. The conflict of interest is a very strong weapon for the internal questioners, that is frankly not unjustified. If we’re selling automation work to a company and we’re also responsible for measuring whether it’s working or providing value, that is a bad situation. I certainly would not want to invest in a company like that.
The best solution would be to define how success is measured before any project is under way and make sure that the decided metrics are available and trustworthy to the satisfaction of all stakeholders. This saves many wasted hours in the middle of an active project, bickering over performance and how to measure it. A secondary solution, would be to hire or allocate an internal resource to focus on fixing the reporting issue so that a person with ties and incentives aligned with the company’s success is at the helm.
Finance Nerd 