Outsourcing Risk

I saw this post from Simon Powers about McKinsey consulting and consultants. Here’s a section from Simon’s post. I’ve highlighted a few things—

Strategy without execution is just theory.

Starbucks didn’t fail because of bad ideas.
They failed because they chose advice over ownership.

I don’t consider myself the smartest person in the room.
And my company is better because of it.

I hire people who know more than I do.
I listen to the ones closest to the work.
I stay allergic to my own ego.

Leadership isn’t about being right.
It’s about building a room where the right answers can surface.

Execution beats strategy every time.

There is such truth in this section—especially the parts about execution, beating strategy, and the importance of ownership.

However, there’s a comment thread that I want to highlight here, pulling out Simon’s reply to Sven—

Sven Müller I have also had great experiences with former McKinsey people. It seems the really good ones leave and start their own thing a lot of the time. I have never met a stupid consultant, intelligence is not the problem, it is the environment and cultural arrogance that creates the business model of being right and this sells nicely into client’s need for outsourcing risk and understanding.
The people are usually great individuals with lots of potential.

I want to emphasize this part of Simon’s reply to Sven—

I have never met a stupid consultant, intelligence is not the problem, it is the environment and cultural arrogance that creates the business model of being right and this sells nicely into client’s need for outsourcing risk and understanding.

And I wanted to react to the “outsourcing risk” part. Like Simon, I’ve spent the better part of the last two decades cleaning up the messes of Big 5 consulting firms. It’s always the execution that their clients struggle with, and usually, the consultants are nowhere to be found.

Part of the reason is that they’re not interested in the execution bit. Another factor is that clients usually can’t afford to engage consultants for that long.

It’s like what happened in school when a teacher said this was an exercise for the student to figure out, then stepped back and left me totally on my own.

I’m just saying that this seems to be “business as usual.”

Risk

But I want to poke at this notion of outsourcing risk.

As an organizational leader, I don’t want someone else to assume the risk for me. In fact, that’s a flawed view. No matter what I do as a leader, I inherently own the risk. It’s how I mitigate it that’s the real key.

Do I – shop it out to consultants?

Or

Do I – OWN it. Leveraging perhaps a bit of consulting, while leaning into the great people I’ve hired to help me Co-OWN the Strategy and SHARE the execution.

For me, it’s the latter. It’s certainly not the easiest path, but it's the most accountable. That said, I see so many organizational leaders trying to shift their risk onto consulting firms. The following story is all too commonplace…

A Story

I was talking to a senior leader the other day who was tasked with Digital and AI Transformation in a large organization. They had been in this role for about a year and was incredibly excited by the impact the transformation efforts could have on the overall organization.

That said, the CEO and the COO were new, and they brought in three of the Big 5 consulting firms to help with the strategy development. In fact, at times, the three were providing competing ideas that were contradicting one another. All that said, the consulting firms were in the driver’s seat.

When I asked the leader why, they felt it was primarily to balance the risk. As new leaders, the CEO and COO weren’t comfortable driving strategy with the staff alone and felt the board really wanted a more consultative approach to broaden and isolate the risk.

The real thing that captured my attention was how disempowered the leader felt and was. Every major strategy decision and approach had to be vetted with the consulting firms. Here, you had a top-notch, experienced, and capable change leader whom the consultants were undercutting. And, to make it even worse, couldn’t really challenge them where they were obviously making strategic errors, given the organizational context.

To compound the impact (and risk for that matter) this leader would be the very one in charge of rolling out the execution of the consulting groups’ strategies. Imagine how much buy-in and passion they would have.

Wrapping Up

To be clear, I’m not anti-consultant or consulting firm. I think they have a significant and meaningful role to play. Especially in large companies. I’m simply emphasizing—

Strategy without execution is just theory.
…
Leadership isn’t about being right.
It’s about building a room where the right answers can surface.

Execution beats strategy every time.

And I’ll add Owned Execution to the above.

Sage advice, Simon!

Stay agile, my friends,

Bob.

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