Lessons from Enron: Pick the right consultants

COMMENTARY--The collapse of Enron did more than damage the reputation of Andersen and land it in court. It openly brought into question the value of proximity between companies and their consultants, a proximity that technology has enhanced. The Internet and a host of supporting applications allow virtual working that extends and deepens a company's relationships "outside its borders." These seamless connections may break down the physical barriers that normally encourage consultants to retain their independence and objectivity.

We can only surmise that technology will continue to facilitate companies seeking out consultants and building close relationships, simply because it makes good business sense. But how do we select and nurture these partners in a post-Enron era? Let's consider three guiding arguments that traditionally carry the most weight.

Clients should use the same set of consultants over the long-term
Of course, long-term relationships make sense. Both client and consultant obtain a deeper understanding of one another, the client knows what to expect and the consultant can develop more creative, tailored and impactful solutions. Unfortunately, these relationships don't work on automatic pilot. You need to carefully manage the relationship to guard against stale thinking. If a large company continues to underperform after a long relationship with the same consultant (as has happened in several instances), the client needs to start asking questions. It's fine for your consultants to become "part of the furniture", just make sure they don't think like furniture or lose their creative edge. Whether or not you are shopping, look for consultants that maintain freshness in their work, who do not take client relationships for granted, and who can work effectively with an organization while still challenging it with new ideas and approaches.

Clients should use growing consultants as a method of selection and indication of success
Intelligent, managed growth is a sign of a consulting firm's health. Rapid, ill-thought growth is not. In the late 1990's boom some consulting firms hired heavily and then laid off personnel just as quickly. Retain consulting firms that have been growing in a sustainable way -- meaning growth enhances, rather than dilutes, the consultant's culture and improves, rather than reduces, the quality of the work that they provide. Measure growth in clients and revenues, not headcount or footprint. Smart clients smell the confusion of unconstrained growth and retain a thoughtful grower instead. When meeting with consultants for the first time, see if they really know each other and their firm, and are used to working together.

Companies should use consultants with well-tried frameworks and approaches
Frameworks and methodologies are useful tools. Consultants capture and enhance their thinking and clients feel that they are getting something proven. Unfortunately, methodologies can be overused. One of us recalls participating in a meeting as a general manager to evaluate a potential consulting project when this comment was made, "I am not sure how smart these guys are but it looks like they have a good process and methodology."

Over-dependence on methodologies can have two downsides. They can sometimes constrain thinking, or worse, they can mask skill gaps among their practitioners. Smart clients hire skill and expertise, and see through "buzz words" and "proven timelines and models" to genuine value. Put simply, avoid consultants who come to you saying "I have a screwdriver and bet that your loose screw fits." Look for people who understand loose screws, have the tool kit to fix them, and can adapt or create new tools as needed. Look for consultants that use smart people and arm them with methodologies to use if problem warrants, but recognize that there is no substitute for creative thinking tailored to specific client problems.

In the end, companies need to craft their own methodologies for working with consultants. Fortunately, some fairly old-fashioned ideas, like trust and honesty, still remain relevant and are frequently practiced by better consultants. Building strong, healthy partnerships with your consultants will not only address the problems you need to solve now, but will prepare you for future ones as well.

Paul Bromfield and Sarah Wigglesworth are principals at Katzenbach Partners LLC, a New York-based consulting firm that works at the intersection of strategy and organization.