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Kipping, M. 2002. Trapped in Their Wave: The Evolution ofManagement Consultancies.
The article is about three different waves of consulting, and the emergence of each wave.
1. Scientific Management
- The second industrial revolution asked for external advice, mainly on bankers, engineers and lawyers.
o Greater scale enterprises complex work more management
- No management consulting yet. This only evolved when Taylor identified a new approach towards the
management of workers.
o an art of knowing exactly what you want your men to do and seeing that they do it in the best
and cheapest way
o This led to people trying to identify other/new approaches to management that competed with
Taylors approach and aimed at gaining more financial success.
Payment by result systems emerged. Consultancies developed very rapidly.
- Diversifying into different consultancy methods, but all focussing on the efficiency enhancement.
o Production cost reduction, increase productivity by corporating machines, increased quality and
monitoring of products,
- However, eventually they started to lose market share, and a lot of the big firms merged.
- From the late 1950s and onwards these firms were increasingly displaced by a new generation of
management consultancies, which focused on issues of corporate organization and strategy.
2. Organization & Strategy
- Due to changes in size and structures of companies, more consultancy on organization and strategy was
necessary.
- The structures namely changed to more decentralized structures with independent divisions that were
controlled by one corporate office Multidivisional structure, or the M-structure.
- But besides advising on spreading the M-structure, the consultants also offered other kinds of advice to
the top management of large corporations. For example: technology strategy and operations research.
- McKinsey became the biggest firm ate one point, in terms of revenue and prestige.
o His way of thinking evolved from Budgetary Control, based on the idea that insights in costs
gained in-depth insights into the whole organization.
- Again, a change in organizational structures enabled a new wave to occur:
3. IT-based networking
- Large, diversified corporations (M-structured) under pressure due to economical crises, repeated oil
stock price increases, new competitors from Asian countries etc.
- Some fell victim to these external factors. Therefore, the focus on core competencies and management
structures increased and became more important coordination of activities internally and towards 3 rd
parties (suppliers/customers/stakeholders etc) became a competitive advantage.
- Shift in focus of management: from organization and strategy to value chain and internal and external
relationships management.
o The increased technologies and data enabled managers to manage the value chain and multiple
relationships properly. (Technology has enabled managers to obtain the necessary data to
maintain control over such a networked organization)
- The pressure has stagnated the revenues in most consultancy firm, and mergers followed, so now there
were only 5 left (the big 5).
- An opportunity for the big accountancies (emergence of multidisciplinary practices including law, tax and
management advice) Why? they had advantage they had already access to this type of
technologies. Auditing (financial controlling) and accountancy firms were already increasingly relying on
hard and software over the last years.
o Conflict of interest: audits were not always happy to introduce consultants to their clients, as a
unsuccessful advice would lead to the loss of the audit contract, and thus revenue.
, They were followed by hardware manufacturers like IBM as well as computer and
software services firms (since consultancy offered higher margins than their traditional
business model)
o Organisational consequences: higher leverage, bureaucratisation
o Is that really management consulting
Debatable, only appliance of software IT. Advice on how to use it management
Almost no firm has been able hop on each wave and prevail, because:
1. Overlap in the waves
o Difficult to distinguish the waves and identify needed changes to your firm.
o Difficult to see the danger of the next wave
2. The intangible nature of the advisory service, which requires the establishment of a measure of signalling
quality
o There is no way of knowing the quality of the advice beforehand, and thus is it based on the
reputation of the consultant.
o The reputation is very hard to change, once well-established.
The reputation also includes their specialization
So a once scientific management firm that has done well, would be able to give
advice on e.g. IT or the M-structure, but clients don’t really know if they have
expertise in it.
3. The skills of the consultants that must match the requirements of the client
- Each wave requires different skills
- In Europe, no Master in Business Administration second wave rapid expansion US firms (with MBA
students)
- Third wave more specialization required in e.g. biotechnology or telecommunication.
- The training and backgrounds of consultants have a big impact on the possible attempts of consultancy
firms to remain pre-eminent in new waves.
4. The structure of project teams which determine the economic viability of the consultancy
- The leverage (the ratio between specialized senior consultants, able to carry out ‘brains’ projects, the
somewhat experienced consultants, able to carry out ‘grey hair’ projects and the standardized junior
consultants, able to carry out ‘procedure’ projects) should be in good balance to match the employees
with the amount and types of projects carried out.
o Wave 1: high expertise brains
Consulting was new (not much knowledge about it yet) it required much expertise to
be able to understand it and carry it out successfully
Only one focus point efficiency enhancement (specialization)
o Wave 2: limited standardization grey hair, offering opportunities to inexperienced junior
consultants
Mainly focussing on spreading the M-structure, but general advice to top management
also made a way into the wave
o Wave 3: standardized projects procedure
More elaborate hierarchy it takes more time to move up, otherwise the ratio
becomes unbalanced.
Advising on technology to maintain internal and external relationships properly and to
monitor the value chain.
Brain projects.
“In the first type (Brains), the client’s problem is at the forefront of professional or technical knowledge, or at least is
of extreme complexity. The key elements of this type of professional service are creativity, innovation, and the
pioneering of new approaches, concepts or techniques: in effect, new solutions to new problems. The firm that
targets this market will be attempting to sell its services on the basis of the high professional craft of its staff. In
essence, their appeal to their market is, “Hire us because we’re smart.”
,Grey Hair projects.
“Grey Hair projects, while they may require a highly customized “output” in meeting the clients’ needs, involve a
lesser degree of innovation and creativity in the actual performance of the work than would a Brains project. The
general nature of the problem to be addressed is not unfamiliar, and the activities necessary to complete the project
may be similar to those performed on other projects. Clients with Grey Hair problems seek out firms with experience
in their particular type of problem. In turn, the firm sells its knowledge, its experience, and its judgment. In effect,
they are saying, “Hire us because we have been through this before; we have practice at solving this type of
problem.”
Procedure projects.
“The third type of project, the Procedure project, usually involves a well-recognized and familiar type of problem.
While there is still a need to customize to some degree, the steps necessary to accomplish this are somewhat
programmatic. The client may have the ability and resources to perform the work itself, but turns to the professional
firm because the firm can perform the service more efficiently, because the firm is an outsider, or because the
client’s own staff capabilities to perform the activity are somewhat constrained and are better used elsewhere. In
essence, the professional firm is selling its procedures, its efficiency, its availability: “Hire us because we know how
to do this and can deliver it effectively.”
, Gadiesh O. & Davis-Peccoud J. 2021. Why Sustainability Is the
New Digital.
In 2000 digital revolution. Only hiring a web developer was moving too slow and was an inadequate response to this
big challenge (reshape organizations, products and industry)
2022 a sustainable revolution, and again, many companies are moving too slow:
‘We need to transform a global economy founded on the principles of unlimited access to resources and the primacy
of shareholders to one that recognizes the limits and consequences of everything we extract, manufacture, consume
and waste, and the impacts on the people involved in doing so.’
Rapid Disruption
Sustainability gets more attention, but still a lot of firms are wary of the costs. To lead, they need to think not just
about the short-term costs, but the long-term benefits. Sustainability is opening billions of dollars of new profit
pools. Yet many companies fail to account adequately for such huge opportunities during their planning.
Decisive Action
1. Make bold strategic choices
- The scope of change is extensive, so leaders should adopt a “disrupt or be disrupted” mindset. Just as
the emergence of innovative fintechs forced banks to shift their strategies, food companies need to get
out ahead of their customers’ changing habits.
2. Reinvent products
- Sustainable innovation is creating new products that can be produced with fewer carbon emissions, less
waste and an emphasis on enhancing wellness.
3. Rethink operations
- Digital technologies transformed operations across industries; now sustainability requires the same.
These insights helped Walmart identify ways to mitigate emissions by reducing split shipments and
encouraging a shift to the most carbon-efficient channel when possible.
4. Form innovative partnerships
- Sustainability issues are broad and complex—beyond the capacity of any single company to manage—so
teaming up is essential.
As the sustainability revolution expands, accelerates and disrupts, it is forcing companies to reassess themselves
with an unwavering honesty in order to deliver a future that few imagined. Keeping the digital parallel in mind can
help guide them to move quickly and boldly through the coming transformation.
Kiron D & Unruh G. 2018. The Convergence of Digitalization and
Sustainability.
Two massive influencing trends in business and society: digitalization and sustainability. However, the
convergence/overlapping/interaction between these two remain unexplored territory. Example: from clean
technologies to greening production processes to transforming a company’s brand equity as a sustainable company.
The digitization-sustainability convergence
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