DBM 633

ENTREPRENEURSHIP AND
BUSINESS CONSULTANCY
TOPIC 2: THEORIES OF
CONSULTANCY

By Lecturer: Lillian Bertha Chimungeni

TOPIC 2: Theories of Consultancy
In consultancy, theory is a means by which practise has a way of opening up
opportunities for organizational order by creating concepts that encourage new
possible realities and real possibilities for organizational learning and
innovation.

1. The fundamental argument here is that an organizational structure should

be associated with better performance in economic terms and that the task
of organisation theorist, qua consultant, is to chart the contours best able to
deliver this, to advise on misfit and generally assist in the achievement of
better performance.

2. Theory is a means of representing or predicting possible organisational

realities such that they can be changed. The processes that might lead to
such change and learning are not ready-made solutions and simple how-to-
do-it recopies that offer characterized consulting, rather they facilitate an
organisation being able to redefine and reframe the ideas and visions that
inform its existence such a consulting process would involve:-

3. Defining a problem.
• Identifying a language which the organization can recognize and
manage this problem.
• Disrupting the boundary between organization and disorganization
(Muuno 2001)
• Enabling organizations to cope with the rapidly shifting complexity in
which they operate.
 
4. Theory advocates for desire to dissect, analyse and positively advise
organisations on how their managers can rather operate rather than what
managers should do. A theory of consultancy describes a consulting practise
that acknowledges that one must do so without the possibility of final
knowledge of whether in any ultimate sense, one’s choices are correct (Cherry
Holmes 1993)

5. Theory seeks a position that provides a novel and more or less organized
way of understanding the world that can be used to generate new
opportunities for practise. It seeks not to tell people what to do but rather to
open up possibilities.

2
2.1: Expert Theories
The expert (or telling and selling) model of consultation assumes that the
client purchases from the consultant some information or expert service that
she is unable to provide for herself.

1. The buyer, usually an individual manager or representative of some group

in the organization, defines a need and concludes that the organization has
neither the resources nor the time to fulfill that need. She will then look to a
consultant to provide the information or the service.

2. The client expects expert help and expects to pay for it but do not get
involved in the process of consultation itself.

3. The extreme pure model is the television repairman or auto mechanic.

Other examples:
• Purchase of a market research;
• The hiring of a consultant to develop a computer program for a given
problem;
• The hiring of a lawyer to determine whether a given course of action
will run into difficulty or not.

4. The essence of the message from the client to the consultant is “here is
the problem, bring me back an answer and tell me how much it will cost.”

5. Psychologically, the essence of this relationship is that the client gives

away the problem temporarily to the helper, which permits the client to relax,
secure in the knowledge that an expert has taken it on and will come up with
a solution.

6. This model is, almost by definition, totally content oriented.

Expert-model Assumptions
1. Whether or not the manager has correctly diagnosed his own needs
2. Whether or not he has correctly communicated those needs to the
consultant
3. Whether or not he has accurately assessed the capabilities of the
consultant to provide the information or the service
4. Whether or not he has thought through the consequences of having the
consultant gather such information or the consequences of implementing
the changes that the information implies or that may be recommended by
the consultant
5. Whether or not there is an external reality than can be objectively studied
and reduced to knowledge that will be of use to the client.

3
 This model of consultation is
appropriate when clients have;
1. Diagnosed their needs correctly;
2. Correctly identified consultant
capabilities;
3. Done a good job of communicating
what the problem they are actually
trying to solve;
4. Thought through the consequences of
the help they have sought.

Figure 2.1: Expert Consultancy. This model is “client intensive” in that it

Source: Bastin M. 2004 puts a tremendous load on the client to do
things correctly if the problem is to be
solved. If the problems are complex and
difficult to diagnose, it is highly likely that
this model will not prove helpful.

2.2: Problem-solving Theories

As its name implies, this model is the road map to follow to solve problems.
What makes something a problem?
a) When the process isn't doing what it is supposed to and people don't
know why.
b) When things keep going wrong no matter how hard everyone tries.
c) When everyone believes that there is a problem to solve.

2.2.1 Philosophy of problem-solving theory

Here are a number of ideas that are part of the philosophy:-

1. Problem solving should occur at all levels of the organization. At every

level, from top to bottom, problems occur. Everyone is an expert in the
problems that occur in his or her own area and should address these
problems. Problem solving is a part of everyone's job.

2. All problems should not be addressed with the same approach. There

are some problems that are easily and suitably tackled alone. Not all
decisions need to be made by teams nor do all problems need to be solved
by groups. However, groups of people help to break mental sets (i.e.,
figuring out new ways of doing things). In addition, people are more
committed to figuring out and implementing a solution to a problem if they
are involved in the problem solving.

4
3. Problems are normal. Problems occur in every organization. In excellent
companies people constantly work on solving problems as they occur.
Problems are opportunities to make things better and should be viewed as
such.

4. Be hard on the problem and soft on the people involved. When working

on a problem, we should focus on solving the problem, not on whose fault the
problem is. We should avoid personalizing the problem and blaming others.

5. People should address the problems in their own areas. Everyone has

problems associated with their work area, and they should take ownership for
trying to solve these problems instead of waiting for their supervisors or
another team to tell them what to do.

Figure 2.2: Problem-solving theory steps. Source: Baaij M. 2013

5
Step 1: Define the Problem.
Step 1 is a critical step; it determines the overall focus of the project. In this
step, the team defines the problem as concretely and specifically as possible.
Five SPC tools are helpful in defining the problem: brainstorming the problem's
characteristics, creating an affinity diagram, using a Pareto chart, creating an
initial Process Flow Diagram of the present process, and Control Chart data.
The process flow diagram (PFD) will help the team identify "start to finish" how
the present process normally works. Often the PFD can dramatically help
define the problem. After the problem is well defined, Step 2 helps the team
measure the extent of the problem.

Step 2: Measure the Problem.

Baseline data are collected on the present process if they do not already exist.
This permits measurement of the current level of performance so future gains
can be subsequently measured. The team needs to make a decision on how
to collect the present baseline data. In general, if data are collected daily, the
time period should be a month. This way a standard control chart can be used.
If data are collected weekly or once a month, baseline data will have only
three or four points. Data collected less than once a month are of limited use;
in such cases, historical data, if available, should be used. At this stage, the
team must have measurable evidence that the problem exists. Opinions and
anecdotes are a sound place to start, but eventually there needs to be
concrete proof that there really is a problem.

End Product = A graph or chart with present baseline or historical data on how
the process works; a collection of the present job instructions, job descriptions,
and SOPs/JWIs (standard operating procedures and job work instructions).

Step 3: Set the Goal.

Goals provide vision and direction and help the team make choices and know
which path to take. Be sure to state your goal(s) in terms that are measurable.
This way, the team can evaluate its progress toward the goal. As the team
imagines the goal, it will identify benefits of achieving the solution to the
problem. This inspires a higher commitment and support from all.

End Product = A goal statement that includes the what, when, where, why,
who and how of the ideal solved problem situation.

6
Step 4: Determine Root Causes.
In Step 4 the team studies why the process is working the way it is. If a control
chart was developed in Step 2, determine whether the process is "in control"
or "out of control." If the process is "out of control," the team should pinpoint
the special causes and move to Step 5. If the process is "in control," the team
will need to use tools such as cause and effect analysis (fishbones), scatter
plots and experimental design formats to identify root causes currently in the
system producing common cause variation.

End Product = A list of most probable root causes of the problem (common
and special cause variation); selection by team of the primary root cause of
the problem to be eliminated.

Step 5: Select Best Strategy.

The purpose of Step 5 is to select the strategy that best solves the problem.
From the list of causes generated in Step 4, the team should brainstorm and
strategically plan solution strategies. Fishbone diagrams and benchmarking
can be helpful for this step. Then the team must reach consensus on the best
possible strategy to solve the problem. This strategy should have the highest
likelihood of success.

End Product = A well defined strategy to solve the problem is selected.

Step 6: Implement Strategy.

An Action Plan is developed by team. This includes who will do what by when
to implement the solution. The team sees to it that the Action Plan developed
is carried out and documented.

End Product = The Action Plan is implemented.

Step 7: Evaluate Results.

In Step 7 the team evaluates how effective the solution has been. Data must
be collected to determine if the implemented strategy did, in fact, improve the
process being studied. Performance must be clearly measured and
evaluated. The team needs to monitor control chart data where appropriate
and assess improvement; the process flow diagram should be checked for
appropriate SOPs and JWIs. Additional feedback strategies such as
histograms, process FMEAs, customer surveys and informal polls may also
prove useful. What are the "customer" reactions (internal customer
feedback)? What has produced measurable results? What hard data are
available?

7
Do people perceive an improvement? How have results matched customer
needs? If the process did not improve, the team needs to discover if the
wrong root cause(s) was identified or if the wrong solution was utilized. In
either case, return to the steps above, beginning with Step 4. If the process
improves, but the results are disappointing, there may be other root causes
affecting the process. Again, return to Step 4 to further examine additional
root causes. When the problem is solved (i.e. the "loop closed"), the team
proceeds to Step 8.

End Product = The problem is solved; results of the improvement are

measured.

Step 8: Implement Appropriate Changes in the Process.

Step 8 develops an ongoing process to assure that the gains stay in place
for the long term. Sometimes a problem is solved and then later resurfaces.
This happens when a solution is determined, but a system or process to
keep the problem solved has not been successfully adopted. Permanent
changes need to be implemented. This means revising the existing
procedures. The new improved process will need to be tracked over time; the
process must be checked frequently to maintain improvement. This also
helps everyone to stay aware of opportunities to continuously improve the
process where the problem occurred.

End Product = A permanent change in the process, Quality Improvement,

and people "closest to the job" monitoring the change.

Step 9: Continuous Improvement.

This step is staying committed to continuous improvement in terms of this
model - to remain actively alert to the ways the improved process can be
made even better. This step is a conscious decision to allow others to
innovate and to point out "red beads" in the process which the team has
worked hard to improve. All involved, particularly those closest to the job,
need to be encouraged to give constructive feedback and adjustments.
Internal audits will monitor some processes to ensure effectiveness.

End Product = Commitment to continuous improvement.

Step 10: Celebrate.

This last step includes a recognition celebration and the disbanding of the
team. Always take time for this maintenance function; people have achieved
an important goal. They have earned this moment of recognition and closure.

End Product = Closure for the team members; disbanding of the team.

8
 2.3: Expert expatriation theories

Management consulting is all about expertise in shared values and

relationships.
In recognition of the organisation, this entails redesigning the organisation
around its vision. It’s about initiatives in discussing new ways of doing
business by reconfiguring the existing structure. That is: -
1. Analysing generic business processes
This entails studying real businesses if the customer interaction with the
client organization and data collection on value issues.

2. Working collaboratively with client staff

This is executed by using extensive series of workshops throughout the
organisation; involving a cross-section of staff from each area.

3. Use of specific core processes

That is, processes common to all departments of the entity services

4. Ideas tailored to the needs/wants of the client organisation

Hence each workshop should be driven by, the desire to ‘walk in the shoes
of the customer’.

5. Specific situational responses

The consulting team needs to produce detailed descriptions for each
process, together with definitions of required responsive times, hours of
access etc.

6. Process models should be developed

In this regard, to include an interface between the service centre and the
other company functions of specialist areas; ensuring a seamless and
secure end-to end process.

7. Validating and customising processes

Each department is key in saving time and money, e.g. practise in some
services might demand that a customer receives a decision within three
working days; this can be improved to be a few hours a day.

9
 Figure 2.3: Expatriation consultancy process. Source: Wright D. 2004

Management consulting is a dynamic and rapidly changing sector of

professional services. To be relevant and useful to clients, consultants
have to keep abreast of economic and social trends anticipate changes
that may affect their client’s businesses, and offer advice that helps the
client to achieve and maintain high performance in an increasingly
complex, competitive and difficult environment.

The knowledge-based economy is generating growing demand and

creating new opportunities for consultants. Management consulting is
affected by
- Information and communication technologies
- Globalization
- Market liberalization
- Major changes in geopolitics
- The advent of regional economic groupings demographic changes
- The progress of education
- Shifts in consumer tastes and behaviour
- The changing role of government and the public sector etc
 
In this regard consultants need to ‘reinvent themselves continuously to be
able to advise clients on theses increasingly complex and challenging
issues.
As professional service sector management, consulting also interacts
closely with other progress. This interaction has many facts, including both
cooperation and knowledge transfer in the client’s interests and fierce
competition in national and international markets.

10
The borders between professionals are shifting, professional firms merge
or split and new models and techniques of service delivery emerge.
State-of the-art consulting practises are emerging i.e. issues of major
concern to consultants and clients alike, current emerging trends and
approaches likely to enhance the value of these services provided by
consultants.
Others are topics of consulting in knowledge management and the use of
knowledge management by the consultants themselves, total quality
management, corporate governance, the social role ad responsibility of
business, company transformation and renewal and the public sector.
 

Recap your knowledge

1. Briefly explain the importance of consulting theories

2. Explain the problem-solving theory
3. When is it appropriate to use the expert theory in consultancy?
4. Explain the expert-expartriate theory

Click on the video below on problem-solving in consultancy…

https://www.youtube.com/watch?v=CJCCdBFfnbY

11
THE END: THANK
YOU
12