This document provides an overview of the management consulting industry and how it may be impacted by the economic downturn. It discusses: 1) Management consultants will need to clearly demonstrate their value proposition to clients to survive the downturn as discretionary spending is reduced. 2) The downturn provides an opportunity for consultants and clients to re-evaluate the role of consultants and ensure work is focused on direct outcomes rather than activities like training. 3) Some analytical work like strategy development that was outsourced may be brought in-house by clients during difficult economic times. Consultants specializing in direct client work will be less vulnerable.

1. Planning for profit and success
The business end
The business end
46| Physician heal thyself
Consultants brace for the downturn.
47 | Leo D’angelo Fisher
Time to reconsider consultancy role.
Emerging companies
48 | Here comes the grooming
A sticky business goes international.
49 | management update
Trends, issues and ideas.
49 | neil Shoebridge
Turn on the advertising tap.
The BRW list management
50 | Hotels and serviced apartments
Rooms to boom in spite of the gloom.
physician heal thyself the organisation and to innovate,” he says.
With just two employees – himself and
business partner Kev Babakian – Epstein
Professions Management consultants must demonstrate they believes 360i is nimble and flexible
can add value if they are to survive the downturn. enough to weather the storm ahead.
52 | gilt by association Report: Leo D’Angelo Fisher As is fashionable in management
Accounting merger a happy union. consulting, the firm has a range of
proprietary programs and processes.
54 | What women want Paul Epstein ran his first consulting “We do it because clients expect
Change of status will reap rewards. business, a marketing firm, 10 years and respect good, solid processes and
ago. After four years, he went corporate frameworks,” Epstein says. “We’re
55 | ethics of service and worked as a brand and product offering more than our collective
A step beyond simple commercial ties. development executive. Then the experience. We have upfront products
business bug bit again and in 2007 this is a – that’s our intellectual property.”
Epstein decided to hang out his Although confident about the
wonderful
Lifecycle shingle as an innovation consultant.
opportunity
firm’s prospects, Babakian, whose
Two years later, Epstein, founder and advertising-agency background is
56 | adjustment chief executive of Sydney consultancy to focus on in brand strategy and design, adds
Mark Sheldon, Group GSA. 360 Innovation, is staring at the prospect what is the that nothing is taken for granted.
of the deepest recession in living memory. The firm generally targets
57 | Commitment But as agent 86 Maxwell Smart would
value offer multinational companies such as
Rangan Srikhanta, say: “And loving it!” of using a former clients Asteron, Kimberly-Clark
One Laptop per Child Australia. Epstein is not fazed by the downturn. management and Pfizer but its business strategy
A healthy client list including Tourism consultant also ensures that it has exposure
Australia, brewer Lion Nathan and to potential success stories.
biotechnology company Novogen Peter Fuda, “I work with a lot of online business
Nic Walker
bodes well for 2009. alignment start-ups with the scope and potential
“We believe now’s the time to reinvent Partnership to make it big and it may as well be
46 February 12–18 2009 | www.brw.com.au

2. the business end
management
pro bono work,” Babakian says. “The Peter Fuda, founder and principal
pay-off for us is that we learn a lot of Sydney management consulting
about new industries and we have the
relationship with these businesses
before they make their impact.
firm The Alignment Partnership, was
29 and a former Westpac Banking
Corporation executive when he set
d’angelo fisher
“If we stuck to one particular direction up his firm in 2001.
and one industry, we’d be starving.” He describes TAP, which has a staff Contact Leo D’Angelo Fisher:
The management consulting sector of 10, as a boutique firm, “which is ldangelofisher@brw.fairfax.com.au
is in a conundrum. While some firms another way of saying we’re small, but
can expect to play an important role our impact is big.” His clients include
assisting businesses to steer through Telstra, Suncorp and Foster’s Group. a farewell to hams
the current maelstrom, others will Fuda sheds no tears for competitors
find themselves as susceptible to the unlikely to survive the downturn. He It has been a golden era for consultants. Flatter organisations
downturn as any other business. believes it is an ideal time for consultants riding the crest of unprecedented prosperity have merrily doled out
It is an irony not lost on the national and their clients to review the role lucrative consulting contracts for work that once would have been
president of the Institute of Management of management consultants, and for done internally, if at all. Fees were no object. Neither were quality
Consultants, Martin Farley. He consultants to adjust to a new market. or relevance, in most cases.
acknowledges that some of his member “There is a far greater imperative for Addled by its own success, the hard-nosed yet gullible corporate
firms will be hit by the downturn. great consulting,” he says. sector, while monitoring costs in the tea room assiduously and doing
“If clients see expenditure [on “This is a wonderful opportunity away with receptionists, has frittered away unspeakable amounts on
consultants] as highly discretionary and to focus on what is the value offer of pointless workshops based on the latest management fad, irrelevant
take the view that they can do without it using a management consultant. Those “training” and nebulous strategy documents too dense in every
– for example, expenditure on training consultants who can’t do that are the sense to have any applicability.
– then that will be the case,” Farley says. ones who are going to get annihilated.” Government departments have also been big spenders. Like
“What we’ve seen as recently as six Fuda sees changes in the way their private enterprise counterparts, they have been open houses
months ago is businesses succeeding companies use consultants. for facilitators, moderators and other assorted hams for hire.
at a rapid rate of growth as a result “One big shift that I’m seeing is Radically denuded of internal expertise
of increases in price and demand, that in times of prosperity, scrutiny and corporate memory, government
and these businesses have been able can be relatively low. But in this departments have also been prodigious
to demonstrate the attributes of environment, consultants are going users of consultants to write reports,
successful businesses. But it’s when to be scrutinised very heavily.” usually of such appalling quality and rigour
times are tough that the relationship He expects chief executives to that they are either filed away quietly, never Radically
between companies and management become more involved in the use to be seen again, or are knocked into denuded
consultants really bears fruit.” of consultants. Human resources shape internally or by other consultants. of internal
The prospect of management managers and general managers of Speak to demoralised public servants
consultants succumbing to the downturn business units who previously had in moments of candour and they will
expertise,
is not good news for the IMC, which is the authority to engage consultants admit that not only are tens of thousands government
already seeing a decline in membership. may find chief executives taking of dollars spent on these useless reports, departments
With 700 members, compared with a responsibility. but the offending consultants will go on have been
high of 1150 in 1997, the IMC is losing Fuda believes the use of management to write others.
members who became consultants in consultants will favour direct It is no different in the private sector,
prodigious
the 1980s and 1990s and are reaching outcomes rather than “activities” where parades of “passionate” consultants users of
retirement age. such as training and development. in management, human resources, consultants
“A lot of the management consultant Some “analytical” work such as organisational and personal development,
population that came into the industry strategy development, which has been marketing, innovation and branding
during previous periods of recession farmed out routinely to consultants, are greeted with open arms. Perhaps it is the hypnotic effect of
and downsizing are retiring and they’re is likely to be taken in-house. interminable PowerPoint presentations of slide after slide of circles
not being replaced at the same rate,” “In the main, right now my clients and arrows, multi-coloured pyramids and other dynamic graphics that
Farley says. are saying they’re not paying for compels organisations to sign on the dotted line.
Concerned about his sector’s strategy work,” he says. “They have Or is it the persuasive pitches offered by these purveyors of pap,
prospects over the next few years, the experience in-house and they’re such as one currently doing the rounds from a well-known consulting
partly because many businesses doing it themselves, which I think group that promises that its proprietary product “acts as a starting point
that should be looking to external is a good trend. for a strategic conversation amongst your leadership team and helps
expertise aren’t, he believes the “The CEOs I’m dealing with at the them prioritise the key challenges facing your business”.
federal government has a role to play. moment want to hear about alignment Let us hope the downturn gives organisations the breathing
He would like to see federally funded [of strategy, structure and company space to reconsider the role of consultants. If organisations become
programs that provide small and resources], execution and returns. more judicious in their use of consultants, more demanding in their
medium enterprises with free access to “Hand-to-mouth consultancies that expectations and less susceptible to fads, this will be a plus to arise from
management consultants. The IMC is specialise in things like leadership the coming business catastrophe. Another will be the weeding out of
preparing a submission to the federal and culture, who are dealing at two the dross from the sector, one hopes to be replaced by a new breed of
government calling for such a scheme. or three levels from the CEO, are very professional proud of the contribution they can make as consultants.
(See ‘Consultants seek lifeline’, page 9.) vulnerable in this environment.”
www.brw.com.au | February 12–18 2009 47