Management consultancy

Nothing is without alternatives

With us – not like this!

Do you work in a large company?

In the following, I would like to share my personal experiences and observations from countless projects in a wide variety of industries and also deal with the role of consultants – an admittedly daring undertaking, as I have belonged to this guild for more than 20 years.

“Houston, we have a problem” …

Restructuring projects are often triggered by acute crises or situations in which management realises that “things cannot go on like this”. It is not uncommon to become “driven” – the capital market in particular can be a merciless driver: from a slump in sales to profit warnings. These are all triggers for restructuring and often “five to twelve”. The reflex reaction then: we need a benchmark! “How do we compare with the competition? This applies both to complete corporate transformations and to “functional issues” (such as the restructuring of finance, sales or marketing areas).

… a “benchmark” has to be … 25% always go …

Then the well-known consultant contacts will be happy to make an effort – and they basically have a “use case” or, even better, a “benchmark” for each topic. The top management presentations then usually promise 25 – 30% savings potential (actually no matter what) … ingenious thing. Consulting bought. Project started with a lot of “tadaaa”.
The conception phase is then still a real pleasure – especially for “head-heavy headquarters functions” – meetings, control circuits, various templates, traffic light reports (which are usually reported “green” anyway – much has already been written about the so-called “melon traffic lights”) are just some of the elements that make up a “good project”. And of course as many subprojects as possible that move Excel lists and PowerPoint presentations back and forth.

… the potentials are melting … or: just not realizing …

However, the closer one gets towards “implementation” (i.e. the promised potentials must also be realised), the more one realises that “somehow the benchmark did not fit so well” or “we are somehow different”. And the potentials are consistently melting down … but that doesn’t matter, because the next project is about to start.

Side effect: Shock rigidity … and exactly one winner …

A further side effect – especially from restructuring projects – is that the entire company falls into “shock rigidity”. “How can I best position myself in the new organization? Am I a political winner or loser?” to the point of real existential fears – “Am I meant by the 25%, too, or will the chalice pass me by, because the project won’t take hold anyway?”. – This is sometimes also a reason for the low commitment values in companies regularly observed by Gallup. Many employees are then conditioned to this: “Mind your head and let the wave pass – because the next restructuring is due in 2 years anyway and then everything will be turned around again”. I have already witnessed projects in which it was decided today on the basis of a benchmark by Institute X to completely decentralize one area – then 1.5 years later (driven by a change in management and a new benchmark from the same institute), but again to centralize everything. The good thing, however, was that the decentralization decided 1.5 years earlier had not even really started – a crazy world in which only one deserves, namely the “benchmarking institute” and the advice that should help to advance the comprehensive concept of decentralization.

Meaninglessness is increasing …

And this effect is intensified. While many industries were operating in a fairly stable environment 15 years ago, we are seeing increasing uncertainty and unpredictability in the future. The dominance of digital business models, exponential growth curves and the simultaneous elimination of barriers to market entry are leading to a complete shift in the balance of power on markets or the creation of completely new markets overnight. The number of so-called Black-Swan events (cf. Nassim Nicholas Taleb) is massively increasing as a result of ever stronger networking and dependence on markets as well as political instability – “Disruption” is the new mantra of successful companies. Paradigms of the “2nd Machine Age” are e.g. “The winner takes it all” and a continuous change of markets.
And in this environment do you orient yourself on benchmarks? After all, these are empirical values from the past (albeit often from the recent past) or at most from the present.

Learning from the past for the future?

But exactly this does not provide an answer to the challenges of the future, but often means: to make the mistakes of others again or (implementation costs time) to adopt a model that works today at the competitor or peer, so that after two years of implementation it is outdated again or not suitable.
A frequently observed example from my point of view is the topic “Business Center” – one decides on the basis of benchmarking (and cost reduction wishes) to relocate certain processes to another (supposedly cheaper) location – on paper there are enormous cost saving potentials. The catch, however, is often: the original structures cannot be dismantled directly (e.g. personnel reduction in Germany costs a lot of time and/or money), new systems have to be introduced and quality problems arise at the new location (e.g. due to lack of language skills). In addition, you have followed a benchmark (i.e. others already do so) and then wonder after the implementation that the personnel cost advantages have suddenly increased due to increased wages in the target country. And then, one year later, you find out that many of the activities could also be well automated or replaced by robots – and that is better controlled by the HQ. In case of doubt, you then mirrored the activities redundantly several times – an absolute efficiency and productivity grave. The beneficiary of this action – see above.

Call for more personal responsibility and courage to break new ground …

Imagine that you would do without benchmarking and perhaps “tap” into another source, a much cheaper (and more competent) one: your employees! And just play through new models – what if, for example, you were to completely do without staff reduction programs in the next few years (which in Germany often only cost a lot of money and reduce productivity – think of severance pay, toxic business environment, consulting support, …)? Or what if you involve your customers in this process (keyword: Customer Centricity)?

At this point, I don’t want to deliver a patent recipe (nor do I have one), but only a thought-provoking impulse.