Many of today’s management consulting firms promise business performance. “High Performance. Delivered” assures the motto of one of the top business management consulting firms in the world.
And just how do these consultants prove the success of their methods? They benchmark existing performance and then demonstrate a performance increment after their intervention. Straight forward and hard to argue against. Or is it?
How about asking a next level question: how is the benchmark itself derived? Well, let’s take a quote from the same company with the motto: “XYZ draws upon research and our experience across industries and business functions to help our clients improve their business performance”. And so, to paraphrase this consulting company’s approach, an average of indicators associated with high performing enterprises in a certain market sector is used to create “best practices” benchmarks.
So, in this consulting model, what does the client really pay for? Well the client pays the consultant to help them emulate the best in the client’s respective market sector. But a successful outcome is dependent on a few assumptions: first is the assumption that the best do not move forward, and second there is the assumption that the emulation effort is designed and executed flawlessly. Even if ignoring the validity of these assumptions, the “performance” consulting model is at best a mediocre way to seek progress, or a good way to seek mediocre progress. That is because the “emulation” model is not just flawed in terms of its underlying assumptions, but also presents a logical paradox: how can progress be even possible in a model where all everyone does is benchmark? Eventually entire market segments would converge to a set of religiously accepted best practices and progress would stagnate to a halt. And we know that’s not true: we know that markets are not that predictable and well behaved and that disruptive new entrants can unseat established incumbents. So this “linear” model of increasing one’s performance by emulation is at best incomplete and at worst flawed.
And yet, why is it so successful? Well maybe because as a global society we have a deeply embedded quantitative mindset bias. What is abstract and not easily measurable is deemed as not rigorous and not actionable, and so, not necessarily as valuable as the concrete and measurable. In other words performance trumps creativity, even though markets have repeatedly proven that significant leaps in business value are usually based in a disruptive innovation itself inspired by creative insights.
In Part II of this post I will present a model based in personal experience that sheds light into how increments in qualitative, hard to measure attributes can lead to significant leaps in performance, not otherwise achievable through the benchmarking model. I will look to elucidate the connection between some of the most abstract attributes of an enterprise such as its identity and vision and its overall capacity to produce and leverage value. Please stay tuned…