As the controversy surrounding consultant fees at Irish Water continues, what’s been forgotten is that the investment required to build a new utility will always be huge. It’s not consultant services which organisations pay over the odds for, but a false illusion of certainty.
Athletes invest in consultants to improve performance, musicians take master-classes with top professionals to improve their talent, but there’s a huge misunderstanding around the issue when it comes to organisations hiring external consultants, especially those in the public sector.
Lets be clear: hiring consultants is not a poor decision, in fact it is often a vital part of a successful business process. What ends up looking like poor conduct often begins with a lack of knowledge on how to use consultants. In many cases this results in overspend and resulting public disquiet.
Establishing a new utility business like Irish Water require significantly more work than putting a few meters into the ground. It needs technology infrastructure, financial and legal structures, and efficient operating and support processes. These things need to be designed and implemented and people need to be hired and trained. What appears to have happened is that many people expected Bord Gáis simply to set up a new water utility on its own initiative. The expertise required to set up a new business is specialised and this was never a viable option.
There is a difference between skills required for everyday management, for setting up a new business and for transforming the performance of an existing organisation. When faced with a challenge of setting up a new organisation, such as Irish Water, not only do we need additional capacity (i.e. people who can do the job) we need experienced designers and implementers (i.e. those who have expertise in building new and efficient enterprise). Building new water utility systems and processes cannot be through trial and error.
For me the question should not be why did Irish Water use consultants or why did they spend so much, the question needs to be how did they use the consultants who they employed? When facing an enormous challenge, half of the battle is to know how to use the experts who’ve been employed.
Consulting is a multi-billion euro industry. Consulting organisations invest heavily in building expertise, sales and marketing and their own IPR in terms of business models and methodology. They thrive in environments of change and their knowledge, experience and expertise can sometimes create the illusion of certainty in what is a very uncertain world. They are a necessity to the future growth of the business but many organisations don’t have the skills to maximise their value. There is a simple approach in dealing with this but which require some shift in the way business leaders think.
When facing a business challenge which we don’t have the capability and/or capacity to resolve most of us define the output and give a fixed price contract to a consulting firm. This works well when we are looking for a tangible item which we have very clear view what it looks like, what to do when we get it and how to cost it. This method doesn’t work well when it comes to hiring a consultant to implement a change programme or improving business performance.
A change initiative or establishing a new business works well when it’s being done by the organisation instead of to the organisation. We can always box off a few tangible deliverables but the organisation need to have the capability to decide when to do so, evaluate what the good looks like, manage the supplier to ensure they get what they need, ensure they get long-term value for their investments and above all the ability to connect all the discrete elements together to obtain the business target. However, we often hire consultants without appropriate internal capability and structures to ensure external costs are minimised and overruns are eliminated.
To use consultant effectively we need a small number of experts who have one single objective; to achieve business results and to provide maximum value for investments. The capacity issue is nothing more than a red herring. Most teams and initiatives don’t need more than a small number of experts to design and lead the transformation – the others are just good committed skilled people which we have plenty available on the market.
The key decision is to either take full responsibility and to accept the fact you’re operating in an uncertain environment, or to pay a few millions more to have the comfort of the illusion of certainty.