April 25, 2006

A few days back, I and my cousin, a management consultant, were discussing entrepreneurship. At one point he said, "As a rule I don't have entrepreneurs as clients. Professional managers are suckers for consultants. Entrepreneurs are a consultant's nightmare". Interesting, I thought. Though we didn't discuss it further, I started thinking as to why entrepreneurs are a consultant's nightmare.

Well, first of all, why professional managers are suckers for consultants? There are two reasons for this, as perceived by me.
  1. Transfer of responsibility
  2. Consultant's fees are not paid from a manager's pocket.
Whenever a professional manager hires a consultant, it is for taking advice on relatively bigger issues. These issues may entail high level of risk. By training, majority of professional managers are risk averse, thanks to excessive reliance on quantitative analysis and databaazi. They want to find comfort in data and analysis. And consultants provide ample doses of data and analysis. But the best part is that you take decision based on a consultant's advice and if any thing goes wrong, you can very comfortably pass the buck to consultant's advice. So a consultant keeps a reasonably good manager's decisions blemish free and even shares credit with him in case the decision clicks. And these boosters for a manager's career are available without a single rupee being spent from his own pocket. The consultant provides services to the managers while milking the manager's organization.

But why are entrepreneurs a consultant's nightmare? When entrepreneurs, if ever, go to a consultant for advice, they don't take everything at face value. Apart from being a rational activity, entrepreneurship is also a highly emotional activity. Entrepreneurs treat their ventures as their baby. So any decision proposed to them will go through a string of hard questioning and unless they are satisfied by all answers to their questions, they are not going to think that the consultant has added any value. This test by fire, that entrepreneurs put the consultants through, might be too annoying, uncomfortable, and wastage of their costly billing time. And to add to the trouble, entrepreneurs are stingy. In fact, they have to. An entrepreneur's limited money demands attention from myriad activities. As such, he can't blow the money like a professional manager. And when there is more demand for a consultant's costly time from a client that doesn't has deep pockets, it's natural that it will appear like a nightmare!