Cati2006 Uroš Cvetko Bridging The Gap Between Mr And Management Consultancy

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  • Cati2006 Uroš Cvetko Bridging The Gap Between Mr And Management Consultancy

    1. 1. Bridging the gap between MR and management consultancy Uroš Cvetko SEEMAR 2006
    2. 2. Key question(s) <ul><li>Is marketing research industry ready to embark on a management consultancy track? </li></ul><ul><li>What are the obstacles that it might face? </li></ul>?
    3. 3. Short history of management consultancy 1890-1900 1910 - 1930 1960s - Three waves of management consultancy development Operational efficiency consultancy <ul><li>Models: </li></ul><ul><ul><li>Time and motion theory </li></ul></ul>Process techniques consultancy <ul><li>Models: </li></ul><ul><ul><li>Budgeting </li></ul></ul><ul><ul><li>Divisionalized organization </li></ul></ul><ul><ul><li>Merit based compensation </li></ul></ul><ul><ul><li>Forecasting </li></ul></ul><ul><li>Firms </li></ul><ul><ul><li>Frederic Taylor </li></ul></ul><ul><ul><li>Arthur D. Little </li></ul></ul><ul><ul><li>Henry Gant </li></ul></ul><ul><li>Firms </li></ul><ul><ul><li>Edwin Booz </li></ul></ul><ul><ul><li>McKinsey & Co </li></ul></ul>Strategic consultancy <ul><li>Models: </li></ul><ul><ul><li>Strategic matrices </li></ul></ul><ul><ul><li>7S </li></ul></ul><ul><li>Firms </li></ul><ul><ul><li>Boston Consulting Group </li></ul></ul><ul><ul><li>Bain & Company </li></ul></ul><ul><ul><li>Accountants </li></ul></ul>
    4. 4. The “boom” however happened in the last 20 years of 20 th century Global consulting revenues USD billion Source: Staffan Canback, 1998 <ul><li>For the last 20 years of 20 th century Management Consultancy growing at 20% CAGR </li></ul><ul><li>In the same period number of practicing management consultants increased from 18.000 to 140.000 </li></ul><ul><li>To great extent, the knowledge is institutionalized with more than 30 firms with over 1000 consultants </li></ul>
    5. 5. Consultants’ value added is based on expertise, methodology and problem solving skills Three models of consultation Purchase of expertise Doctor-Patient Process consultation <ul><li>Clients purchase knowledge that their organization does not possess </li></ul><ul><li>Consultant only transfers know-how and does not interact with client extensively </li></ul><ul><li>Consultant analyzes the client’s problems and assesses strategic and organizational blockages drawing on his/her extensive experience </li></ul><ul><li>Intimate trust based client-consultant relationship </li></ul><ul><li>Consultant’s role to scan organization for possible solution (already existing) and in structured form present solution to the management </li></ul>SCHEIN (1988)
    6. 6. <ul><li>Of all the businesses, by far </li></ul><ul><li>Consultancy’s the most bizarre. </li></ul><ul><li>For to the penetrating eye, </li></ul><ul><li>There’s no apparent reason why, </li></ul><ul><li>With no more assets than a pen, </li></ul><ul><li>This group of personable men </li></ul><ul><li>Can sell to clients more than twice </li></ul><ul><li>The same ridiculous advice, </li></ul><ul><li>Or find, in such a rich profusion, </li></ul><ul><li>Problems to fit their own solution. </li></ul><ul><li>Bernie Ramsbottom, 1981 </li></ul>Why do management consultants exist?
    7. 7. Why do management consultants exist? Management is neither a science nor an art, it is a practice learned through exposure to and experience with a wide variety of companies in a wide variety of industries Executives yearn for objective insights into their management problems. Two reasons for existence of management consulting Managers lack the exposure Managers need outside-in perspective DRUCKER (1979)
    8. 8. Market research data is just one patch in managers’ “Big picture” Internal sales data Business forecasts Intuition Market research Public data Personal Experience Organization and strategy The “Big Picture” Various data sources used for management decision making <ul><li>Managers use wide variety of data source in their decision making process </li></ul><ul><li>To make of sense of it all, data needs to be </li></ul><ul><ul><li>Simplified </li></ul></ul><ul><ul><li>Critically evaluated </li></ul></ul><ul><ul><li>Checked for consistency </li></ul></ul><ul><ul><li>Benchmarked with intuition </li></ul></ul><ul><li>Moreover, this needs to be done if tight time-constraints </li></ul><ul><li>Management consultants adopted their practice to these requirements </li></ul>Competitive intelligence ILLUSTRATIVE
    9. 9. Pareto’s 80:20 principle or “the rule of thumb” Distribution of wealth in Italy Vilfredo Pareto, 1906 Percent of population Cumulative land ownership <ul><li>Pareto realised, that 80% of Italian wealth was owned by 20% population </li></ul><ul><li>In 1930s Juran, pioneer of QM, observed that 20% of defects causing 80% of problems </li></ul><ul><li>Universal principal of “ vital few and trivial many ” </li></ul><ul><li>Generally 20% of something responsible for 80% of resutl </li></ul><ul><li>Implication to focus on vital </li></ul>Vital few Trivial many
    10. 10. But MR is a science! <ul><li>Marketing research has academic social science background </li></ul><ul><ul><li>Psychology </li></ul></ul><ul><ul><li>Sociology </li></ul></ul><ul><ul><li>Anthropology </li></ul></ul><ul><ul><li>… </li></ul></ul><ul><li>Faithful to two general principles: </li></ul><ul><ul><li>Being objective </li></ul></ul><ul><ul><li>Being scientific </li></ul></ul><ul><li>Developed a Code of Conduct to distinguish itself from “non-scientific” approaches </li></ul>ESOMAR 1 st RULE Marketing research must always be carried out objectively and in accordance with established scientific principles . ESOMAR 14 th RULE Researchers must not knowingly allow the dissemination of conclusions from a marketing research project which are not adequately supported by the data (…).
    11. 11. Dilemma facing marketing researchers 100:100 80:20 OR Science Management consultancy Two possible paths for marketing researchers
    12. 12. The future for MR is to reconcile science with consultancy PROs CONs Science Management Consultancy <ul><li>Guaranteed objectivity </li></ul><ul><li>Core business </li></ul><ul><li>Established code of conduct </li></ul><ul><li>Addressing clients’ needs </li></ul><ul><li>Better positioned within the company </li></ul><ul><li>Not addressing clients’ needs </li></ul><ul><li>Limited decision-making impact </li></ul><ul><li>Limited money / respect / value </li></ul><ul><li>Distancing from core business </li></ul><ul><li>Existing rules </li></ul><ul><li>Existing competitors </li></ul><ul><li>Lack of competences </li></ul>Actionably insightful marketing research Solution:
    13. 13. Research will be neither a science nor an art… <ul><li>Market research and management consultancy are two separate businesses </li></ul><ul><ul><li>Synergies exist </li></ul></ul><ul><ul><li>But “the other side” is also aware of them… </li></ul></ul><ul><li>Market research can learn from management consultancy </li></ul><ul><ul><li>Deep customer understanding and trust are key drivers </li></ul></ul><ul><ul><li>Research outputs needs to be actionably insightful </li></ul></ul><ul><ul><li>80:20 simplifications are necessary </li></ul></ul><ul><ul><li>There is always a “Big picture” </li></ul></ul><ul><li>Yet there are obstacles in current market research industry </li></ul><ul><ul><li>Codes of conduct are limiting </li></ul></ul><ul><ul><li>Data-gathering Vs. Problem solving mentality (clients and agencies) </li></ul></ul>
    14. 14. Tržaška 2 SI-1000 Ljubljana Slovenija +386-1-241-00-66 Info @ cati .si www. cati .si Gazela 2003 SPSS partnerji člani združenja ESOMAR
    15. 15. BACKUP
    16. 16. Dilemma facing marketing researchers <ul><li>Arguments in favour: </li></ul><ul><li>Core business </li></ul><ul><li>But </li></ul><ul><li>Limited money / respect / value </li></ul><ul><li>Limited decision making impact </li></ul>100:100 Scientists
    17. 17. Dilemma facing marketing researchers <ul><li>Existing capabilities in favour: </li></ul><ul><li>Rigorous fact gathering </li></ul><ul><li>Well understood insight (exposure) </li></ul><ul><li>Driven by objectivity </li></ul><ul><li>However </li></ul><ul><li>No longer a science </li></ul><ul><li>Need to understand the “big picture” </li></ul><ul><li>Change in the organizational mind-set </li></ul><ul><li>New competitors </li></ul>80:20 Consultancy
    18. 18. The role of management consulting is to bridge the gap from a challenge to a solution <ul><li>Management Consulting Definition </li></ul><ul><li>Practice of helping companies to improve performance through analysis of existing business problems and development of future plans ( www.wikipedia.org ) </li></ul>SOLUTION CHALLENGE <ul><li>Insight </li></ul><ul><li>Competence </li></ul><ul><li>Time </li></ul><ul><li>Independence </li></ul>Issues that top management face when overcoming business challenges

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