Consulting knowledge and its management

Published on February 29, 2016   27 min

Other Talks in the Series: Management Consultancy

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My name is Andreas Werr and I'm a Professor in Management at the Stockholm School of Economics in Sweden. My research has focused extensively on management consulting, but also more broadly on professional services, study both the production of consulting services as well as their consumption, how they are bought and used in client companies. But the focus of today will be the production arts and especially this key resource in consulting, which is knowledge. As we'll see, knowledge is kind of at the heart of management. Consulting, it's really what clients buy. And if managed well, it is a key asset for the success of consulting.
In this talk, I'll address two main questions, really. The first one, we'll look at the nature of knowledge in management consulting, what it is and what the role of this kind of key resource is in the consulting firm. And second, we will turn to the question of how to manage this knowledge. Given that it is so important, how do consulting firms go about managing this key asset. So let's start with the first theme, the asset part of consulting.
Few would argue against the claim that management consulting is a knowledge intensive business. But let's explore in some more detail, what we actually mean by that. The first aspect is, of course, that when clients buy consultants, they do that with expectations of buying individuals with certain knowledge and expertise. These expectations have changed with the development of management consulting from expectations regarding rather general problem solving methodologies and skills to expectations regarding much more detailed knowledge about industries, best practices, and process benchmarks. This thus possess high demands on today's consultancies to both generate this knowledge but also to make it available to the entire body of consultants, which is what knowledge management to a large extent is about. Second, against this background, knowledge has increasingly become a wave of competing for consulting firms. As clients are becoming increasingly sophisticated buyers, they are moving from buying consultants they have a relation with whom they've worked with before to more systematically looking for consultants that are experts in the specific problems they need to tackle. They're looking less for general analytical ability and more for experience and documented expertise in specific areas. Knowledge also becomes a way of proactively marketing consulting services where the development of specific management concepts tools or insights provides a basis for approaching potential clients. Third and important, particularity of knowledge in consulting is that is closely intertwined with the ongoing work with clients. Learning and consulting takes place in client assignments, new concepts and ideas are developed in the work with clients. So a typical way of developing a new consulting approach is in response to a client request. In that specific project, a new approach may be created, which may then be formalized into a marketable concept. As we will see later, projects also serve as an important way of continuously developing methods and concepts in consultancies. Now this is in contrast with more traditional organizations where knowledge development and production are typically separated. Knowledge development takes place in a separate part of the organization, typically in R&D department. And first, when they're done, production gets involved in consulting, production or product development for simultaneous and interacting processes. Now this peculiarity creates the condition that knowledge and management consulting has increasing returns, which means that the more knowledge you have, the easier it will be to gain further knowledge. The logic behind this goes as follows. As clients will hire those with the most expertise in a specific area, those already knowledgeable firms will gain further opportunities for learning and knowledge development in their specific area of expertise. And thus become even more attractive, earn clients, creating further projects from which to learn and so on. But this of course presupposes that the firm is able to leverage the knowledge created in a single project, which in essence is what knowledge management is about. This will be the focus of the second part of this talk. Now given that knowledge is a strategic asset in consulting firms, let's dig a little deeper into how we could understand what we mean by consulting firms knowledge. Obviously, people can know things, but how can we say that organizations know things?