Evaluating Value Created by Management Consultants

The next time you are in a with management consultants hired by your organization to provide support, bring up this question and listen to the different answers: “What is your value proposition?”

Before you can begin to answer this question, it is important to distinguish between the actual value provided and the perception of value. A consultant may perceive that the service they provided offered real value to the client and be able to quantify the value but the client may not have the same perception of the value.

The perception of value derived from services provided by consultants can be impacted by the level of involvement (skills, risks, cost, timeline and complexity) and the importance of the project to the client.  

How would a manager who decided to hire consultants describe this value?  

How would the consultants perceive the value provided?

Merriam-Webster dictionary defines value as “a fair return or equivalent in goods, services, or money for something exchanged.”   The services provided by consultants should create real and perceived value for their clients. Consultants should remain focused on value creation when executing engagements.  Providing complex solutions that clients cannot easily understand, implement and sustain is an example of non-value-added outcomes.

The term “value” is often used by consulting firms as a major differentiator when marketing diverse services to global clients. Yet evaluating the value chain for consulting is not a straight forward process.  It can depend on clients pressing needs (which can change during the course of the engagement) and other subjective factors that can’t be easily measured.

How is value created and perceived?   

Consultants create value for their client if:

  1. they enable the client to provide the same or better quality good or service at a lower cost, or
  2. they enable the client to improve existing processes for the same costs.  

The perception of value however is constantly evolving. What we value today could be significantly different from what we value tomorrow.  

The strategy for value creation is no longer a matter of positioning a fixed set of activities along that old model, the value chain. Successful organizations increasingly do not just add value, they reinvent it.  As a result, an organizations strategic task constitutes an ongoing reconfiguration and integration of its resources and capabilities to constantly create value for customers. What an organization does with those resources and capabilities is just as important as what resources and capabilities it possesses.   

Evaluating the value of management consulting services should not be different.  This also applies to projects managed by internal consultants. Such services are often measured in cost saving opportunities, increased revenue generation, return on investments, payback, etc. to the customer.  Not all value created however, is captured by the traditional methods.

Let us know your thoughts on the issues raised in this blog, and check in next month as we continue exploring ways to provide value-added solutions to clients.  

The content in this blog should not be considered advice and is provided for informational purpose only.  For additional information on the issues outlined, please contact us at information@synergy-ia.com.

1 – From Value Chain to Value Constellation: Designing Interactive Strategy by Richard Normann And Rafael Ramírez.

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