Konstantin Y. Smolentsev
Ph.D., the Academician of IIA, ÑÌÑ
Chairman of Board of directors
IC “SMOLENTSEV & Partners”
After our publication with the President of the Russian Association of Consultants for Economics and Management Mr. A. Prigozhin of the article « From the consultant’s point of view…» many meetings with different categories of managers have passed. Anyhow, all conversations were about administrative and investment consulting. This theme was causing very active and interesting discussions. I have decided to generalize typical questions of top-management and the owners of commercial banks, the industrial enterprises, the building organization, trading firms, the investment and insurance companies, legal and lawyer offices, agency of a real estate, gambling, restaurant and service businesses, the representative of show business, the high-ranking employee of law enforcement bodies and to continue a discussion.
We all know everything!
- Do you really think, dear Consultant, that we do not know the reasons of painful points of our business described in Your article, or did not guess them, or intuitively them felt, but simply could not formulate precisely? Can You tell me in 2-3 weeks something what I, working a lot of years for 12-14 hours and communicating almost with each key employee, do not know?
Naive self-deception. Can every parent be sure, that he knows everything about his child? What does he do, when there is no « all-seeing eye » beside, what does he think of, making this or that act, what criteria is guiding him when choosing friends and how does he see his “ancestors”? Or can every employee, even a member of Board, is capable to tell at daily meeting all plain truth? And whether he has this desire or a purpose, except for the moment of being fired, of course. And aren’t the Heads terribly far from people, from the ordinary client that is?
Example. In November, 2003 the International Financial Corporation (IFC) has given the research of quality of corporate management of the Russian banks. On its data (as well as by our experience) boards of directors of many banks experience difficulties at distribution of functions between board of directors and board. Bankers admit these problems.
What is the reason of such position? Bankers don’t have the answer.
And the consultant has an indifferent look from the side, he is that «fellow traveler in a train » to whom it is possible to lay out everything that has been bothering you for the past 3-4 years just in 30-40 minutes on conditions of anonymity. He has an opportunity to bypass all « cars of a train », to glance in each "compartment", « to have a drink sincere tea with conductors » and to compare to that picture which is represented during movement to the «machinist» about "structure".
Is there a different way to get an objective and independent information?
The time has not come yet…
- Organizational diagnostics, attract-function (attracting clients), strategic planning, optimization of organizational and functional structures, formation of a command, organizational culture, the resolution of conflicts (smoothing of contradictions) between proprietors and top-management, creation of investment appeal, risk management – certainly is very important. But later, not now. First, it is necessary to put the automated system of the account, to construct a new office, to buy more advanced computer techniques. Today that is more important!
Only for some reason, people buy Russian furniture with the badge ISO-9000 less than imported furniture, and extremely expensive automated systems rarely work, and there are not many clients in the brand new office. Maybe it is time to stop underestimating management-factor and to stop replacing one with another? And within the limits of ISO it is possible to make imperceptible furniture, and it is possible to enter into the automated system mechanically data and to not use given opportunities, and on more advanced service computer it is possible to put a new toy, that will completely eat all added memory. Not casually, today the most effective Russian companies develop not only a material base, but, first of all, or in parallel solve problems of management and organizational development, understanding, that in uneasy conditions of existence the organization of manufacture – the most powerful competitive advantage before corruption, the patronage and unpredictability.
Dentists recommend to be checked once in 6 months instead of when in the telephone directory the address of 24 hour dentistry is feverishly searched and it is time to not treat any more, but to insert an artificial tooth. Think, the problem will just disappear?
Do your competitors think the same?
One can do it himself
- Well. We are less clever than you are. And there is no problem with special literature nowadays. It is possible to read, understand and do everything ourselves!
Certainly. Only for some reason at the presence of Tax and Criminal codes people go for consultations to auditors and lawyers, and at first symptoms of a flu it is recommended to call a doctor at once though deficiency of febrifuges in drugstores it is not observed. And on construction of any building masons, electricians, sanitary technicians work. Certainly, if I am not building a "dugout" in a prairie. When constructing your own organization one is « the reaper, and on a pipe player »?
Let’s once again understand what is an organization? It is the numb relic structure, or a live organism which passes stages of birth, the childhood, a youth, a maturity, and can die? The answer is clear. Each organization is unique. It is created by a concrete person or a group of people who have specific goals, styles and ways of management, the history and the traditions, the developed collective during concrete time on concrete territory. What book wrote about that?
No one has promised to work for you!
If you invite an expert or include a consultant in Board of directors of the enterprise, you listen to his opinion, get the development plan till 2015 and then you are free to accept it, or not. But you have to work. And to work independently.
If you invite a process consultant, then he together with you, top-management and key employees develops decisions for problems, directing energy of search, forming special methods and ways of a crew spirit, a synergy when the decision is born from each employee, is accepted by each employee and is effectively realized after acceptance. Again, you should work. But it is a different work. It is a productive work, professionally structured, charged by energy of development even after the consultant leaves the enterprise.
A doctor does not treat your organism for you. He helps to struggle with illness.
Perfect is the enemy of good
- What if suddenly, having begun changes, that fragile balance which allows to live today and earn money to buy food will collapse?
This question is very important. DO NOT HARM! This medical precept is fully used also for consultants. Therefore the consultant will never will begin his work, not having organizational diagnostics (like a medical examination) before. Only after a discussion with the Customer about the results of diagnostics, only then comes the process of developing a plan of needed changes. The head gets acquainted with each technique in advance, the result of each stage is discussed, and correction is made if necessary.
Changes should be positive!
Where do I get people?
- And where do I find new people who are capable, vigorous, ready to generate ideas and to incur the responsibility for their realization?
Problem of the staff is a global problem. There are not enough Specialists (from the capital letter “S”) in the world. It is a rare and expensive good. In Russia it is felt especially. There are no traditions of preparation market focused professions, there is no business culture, these is a lot Russia doesn’t have!
Example. According to the accepted law by the State Duma « About insurance of contributions in banks of the Russian Federation » the Central Bank of Russia rewrote very actual instruction for the law « About an estimation of a financial condition of the credit organizations » on the basis of which it will make a decision on "validity" of concrete bank to participate in the system of insurance. In a basis of the document the international technique of the analysis of CAMELS banks which includes not only an estimation of the capital or actives, but also the analysis of the management quality .
So how should we act? It is possible to entice one or two high specialists. But what’s next? Next, or all over again, it is necessary to work with those who are already beside you. Try to create a command, instead of list structure. Stimulate and give the possibility for everyone to show their opportunities, help organically and independently (skillfully modeling process with the consultant) to redistribute duties, and even better – to generate collectively the official functions aimed on concrete, assessable and mutually coordinated results. Then it is possible to speak about the realized acceptance of the responsibility!
Is there another output?
And where are the guarantees?
- How can we find out how highly qualified the consultant is? And where are the guarantees, that the information which will be given to the consultant during his work, will not leave in the third hands?
I think that these questions rhetorical and they are questioned, probably, only in Russia. As the head one organization (woman) has said, to choose a consultant – is like to find a husband. And what guarantees can your future husband/wife give before the wedding? Look at the work experience of the consultant (the consulting company), participation in professional associations, publications, performances on the congresses, have a talk with him not once personally, ask more concrete questions. It doesn’t matter if it is a Moscow, Petersburg or a Tyumen consultant. Professionalism is not adhered to any concrete territory. Or only Saint-Petersburg is a head of our state, whether only Siberians operate the most successful Russian companies, were Mikhailo Lomonosov a native Moscow citizen?
Guarantees? A consultant is a profession, consulting is business. That is clients first of all. In a consulting community there is a Code of a professional etiquette. Is it enough? And, employing a financial director, or having quarreled with the chief accountant knowing about the organization and you everything or nearly everything, what guarantees do you have?
Why not change the accent and try to structure the organization, to prevent or minimize external and internal threats?
Risks are able and needed to be managed!
- How can we count the profitability of investments in consulting services? To compare with …, then ….
To compare to what? With the cost of norm-hour not qualified worker? Then yes, very expensive! With the salary of a top-management? Comparably. Is it cheaper to not have the opportunity to have a vacation or a business trip at growing business and an amplifying competition, or to fear to go to bed, trying to keep in memory and under the control all the smallest nuances of business? And how to estimate the work of a consultant and that as a result there is a direct increase in a sales and an expansion of client base, top-management or owners receive in coordinated working administrative command, it is more than time for the analysis and acceptance of strategic decisions, more than opportunities for work with perspective clients, an output on the new markets, eventually, there is more than time for communication with your family and simple soul balance? Why not estimate not only working costs of the consultant, but, first of all cost of the direct and indirect benefit received as a result of carrying out of consulting works?
One successful person said: « I am not that rich to buy cheap things »!
As a result…
Heads and owners feel need and do not doubt the necessity of consulting services. Even for the state structures. One of the heads has said: « a Consultant is a doctor in business. There are no absolutely healthy people, and there are no absolutely healthy organizations. Only people who íàäåþòñÿ íà ñëó÷àé ask for the help during the critical moment, and far-sighted people are engaged with the doctor in preventive maintenance and improvement of an organism ».
Any other opinions?
The Siberian Suburb, December 23-30, 2003