Friday, April 21, 2006

Strategy Consultants Strike Again? ... This time at eBay

In today's WSJ story about Ebay's co-opetition dance with Microsoft, Yahoo and Google, consultants are given some responsibility for laying a faulty foundation that lead to Ebay's predicament
  • "Few at eBay initially saw reason to fear Google, say people at the company, in part because of a 2003 study it commissioned from McKinsey & Company concluded that Google wouldn't use its search capabilities to break into e-commerce. That made Google a manageable threat, say people familiar with the study."

Obviously, Ebay wants to put the blame for this on someone else; when in doubt blame the consultants. Good in theory, but seldom are strategy consulting recommendations baked without CONSIDERABLE input and direction from the client. I don't know the details of the Ebay study mentioned, but I bet it consisted of 3-4 consultants and 1-2 ebay employees. The findings were probably thoroughly baked with Ebay executives. I'm not defending a study that so obviously was incorrect. But as an Ebay shareholder, I hold management responsible for making that incorrect call. Consultants are, at best, a tool. Consultants are not responsible to share holders, most don't have equity ownership in their clients and most will not work at the same client more than once or twice.

Having been a strategy consultant and worked at companies that employ strategy consultants, I am amazed at how they are utilized. Fortune 500 companies would be well advised to have an internal consulting management group, which does nothing but manage consultanting engagements. The ROI of consulting projects is consistently under attack. Some of the problem lies with the consultants. Some of the problem lies with the executives who don't know how to engage with consultants, wasting considerable budget on their services.

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