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Knowledge Creation Through Management Consulting
Prof. Francesco Ciampi, Florence University, Florence, Italy
Mobile Phone Number: (0039) 3355893497
ABSTRACT
The paper proposes a conceptual framework that enables to identify and draw the map
of the cognitive paths through which the potential of entrepreneurial knowledge creation of
management consulting intervention can express itself.
The proposed model represents an original application of Nonaka and Takeuchi’s
theory of organizational knowledge creation to the specific context of consulting
relationships. It is mainly grounded on the author’s reasoning, consulting experience and
speculations, but it is also supported by significant albeit concise anecdotal evidences.
The model proposed here highlights that in advanced (i.e., “meta-”) consultancy
contexts this potential lies in the possibility of generating not only explicit, but also (and
mainly) tacit, new entrepreneurial knowledge (such as new experience-based diagnostic
capabilities and new abilities to gain insights into solving entrepreneurial problems).
In the first section the paper proposes and thoroughly discusses two ways of
interpreting the activity of management consulting: the defining (conceptual delimitation) and
the synchronic (consulting models) interpretations. The adoption of the consulting approach which is referred to as "meta-consulting" model - is essential for the entrepreneurial
knowledge-creation to be fully expressed through management consulting in all of its facets.
The proposed conceptual framework may enable both consultants and their clients to
more clearly and consciously define the knowledge creation goals of consulting projects, and
hence to more effectively design and manage the ensuing consultant-client relationship. The
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intuition of the meta-consulting paths for new entrepreneurial knowledge generation
(socialization, externalization, combination and internalization) may also stimulate further
theoretical development of the conceptual framework as well as its empirical validation as a
way to further investigate the entrepreneurial-consulting cognitive dynamics.
INTRODUCTION
Over the past twenty years management consulting has been one of the most dynamic
segments of the advanced tertiary sector in terms of turnover, new business start-ups, number
of employees, range of services offered, etc. According to Kennedy's most recent annual
survey on the global consulting market (Kennedy Information, 2007), the aggregate turnover
in this sector was about 285 billion dollars in 2006 and is expected to reach about 375 billion
dollars by 2010.
This paper adopts a knowledge-perspective for interpreting management consulting.
The model developed here is an original application to consultancy relationship of the theories
that consider knowledge-creation processes as knowledge-conversion processes (Nonaka and
Takeuchi, 1995). Aside from criticisms (e.g., Gourlay and Nurse, 2005), Nonaka and
Takeuchi's theory remains, in the author's opinion, an effective tool in interpreting knowledgecreation entrepreneurial processes.
More specifically, this paper proposes a conceptual framework designed to draw the
potential cognitive pathways of entrepreneurial knowledge-creation through management
consulting, and the consultant-client relational dynamics it triggers. The proposed model
highlights that in advanced consultancy contexts the entrepreneurial knowledge creation
potential lies in the possibility of generating not only explicit, but also (and mainly) tacit, new
entrepreneurial knowledge, including new diagnostic (problem finding), therapeutic (problem
solving) and interpretative (understanding of the company structure and competitive
environment) capabilities, whose value for both the client and consultant goes far beyond the
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solution of the specific entrepreneurial problem for which the consultancy relationship was
originally activated.
The design of the conceptual framework proposed here is based on the author's
reasoning, consulting experience and speculations, although it is corroborated by a number of
concise, but significant, anecdotal evidence. In this regard, the paper provides concise
empirical evidences based on interviews by a group of researchers currently exploring under
the author’s coordination emerging issues in knowledge management within the context of the
management consulting industry. This research project is being conducted on two samples of
companies, one comprising 50 European management consulting firms of various dimensions,
and the other with over 100 European medium and large industrial corporations. The
interviews, which are still in progress, will be completed by the end of 2007, and the gathered
data will form the basis for a detailed statistical analysis. We expect to publish the results by
the first half of 2008.
The first part of this paper proposes and discusses two keys for interpreting
management consulting: the defining (conceptual delimitation) and the synchronic (consulting
models) approaches, emphasizing that, when compared to the diachronic (consulting process)
approach, the synchronic interpretation can better identify the explanatory variables of the
cognitive dynamics which characterize the consulting relationship.
LITERATURE REVIEW
Knowledge is considered the main resource for underpinning the development
processes of entrepreneurial organizations (e.g., Drucker, 1995; Grant, 1996). Knowledge
management has consequently become a key theme both in corporate practice (Abrahamson,
1996) and in management literature. Traditional knowledge management literature interprets
knowledge as something that people own (the “knowledge as possession” view), which has an
essentially explicit nature and that is relatively easy to transfer (e.g., McElroy, 2000; Ruggles,
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1998). Hence, the “knowledge as possession” view mainly focuses on practical techniques for
gathering, disseminating, imitating and exploiting knowledge (in essence, transferring best
practices). Conversely, the most recent literature (the “knowing-in-action” view) interprets
knowledge as being mainly tacit, socially constructed, embedded in practice, contextdependent (Johnson et al., 2000), and difficult to transfer (Szulansky, 1996). According to this
stream of literature, therefore, knowledge is actually valuable only when it is generated in a
specific context (from which the “knowing-in-action” metaphor), thus shifting the focus of
analysis from transferring best practices to creating and maintaining ideal conditions to fully
realize the knowledge-generation process potential (Blacker, 1995; Buono and Kerber, 2005).
Currently, not only does knowledge play a critical role in the competitive strategies of
companies in all industries, it has also more specifically demonstrated its strategically central
role in knowledge-intensive sectors. This is confirmed, for example, by the progressive,
radical and empirically detectable change in the range of services offered by management
consulting firms and their modes of delivery: creating and sharing knowledge (in terms of
exploration, development and exploitation) have now explicitly become key-channels for
transferring value to clients (Davenport and Prusak, 2004); nowadays many top consultancies
offer their clients knowledge management services, focusing on how their internal knowledge
management practices can be can develop (Buono and Poulfelt, 2005).
Despite the vast amount of literature on company Knowledge Management and the
fact that management consulting firms are commonly discussed as the archetype of
knowledge-intensive firms (e.g., Alvesson, 1995; Crucini, 2002; Heller, 2002; Werr, 2002),
and notwithstanding the common awareness among consultancy firms of the value of
knowledge for both their organizations and their clients (as well as the fact that knowledge
itself is the core product of management consultancies; Sarvary, 1999), the subject of
knowledge-creation through management consulting intervention (and more specifically
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through the consultant-client relational dynamics it triggers) is a research area still largely
unexplored and consequently “our understanding of what actually happens with consultant
knowledge (in essence their main product) and the knowledge of the client organization is
murky at best” (Todorova, 2004).
The literature on management
consulting is
extremely wide-ranging
and
heterogeneous (Whittle, 2006), but only occasionally and partially, it covers the subject of the
potential of knowledge creation of management consulting intervention “in action”. On the
one hand, there is a great deal of literature on management consulting practical techniques
(Kass and Weidner, 2002), offering recipes on how to consult (e.g., Armstrong, 1993;
Bellman, 1990; Block, 2000; Freedman, 2000; Schaffer, 1997), start (e.g., Biech, 1998; Biech
and Swindling, 2000), manage (e.g., Maister, 1993), protect (e.g., Shenson, 1990) and develop
(e.g., Bly, 1998; Lambert, 1997; Shenson, 1994; Shenson and Wilson, 1993; Weiss, 1992) a
consulting practice. On the other hand, if we turn our attention to the main literature dealing
with the scientific interpretation of the management consulting process, two main
interpretative paradigms with totally distinct visions can be identified.
The first group of studies interprets the role of the consultant as a problem-solver
and/or a supplier of expert knowledge (the “expert consultant” approach). According to this
interpretative model, the company engages the services of a consultant because it is facing
some difficulties and/or is sensing symptoms of dysfunction, and entrusts him with the
responsibility of conducting a diagnosis (problem finding) and, subsequently, identifying and
suggesting the solution (problem solving). The expert consultant must have adequate skills
(both diagnostic and therapeutic), including those needed to tailor possible solutions to the
client's particular context (Bessant and Rush, 1995; Greiner and Metzger, 1983). Under the
“expert consultant” approach, the potential of knowledge-creation of consulting relationship is
limited (almost ignored as far as the client’s role is concerned), and the knowledge which is
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generated/transferred travels primarily in the consultantclient direction, taking on a mainly
codified character.
Under a second (“process-consulting”) approach the client retains full ownership of
the problem in every phase of the consulting process, while the consultant acts as a facilitator
of the diagnosis, solution, discovery, and application phases, which nevertheless remain the
client’s responsibility (Schein, 1987; Stjernberg and Werr, 2001). Starting from the initial
phases, the intervention aims to fuel and develop the client's self-diagnosis and problemsolving capabilities, by setting in motion bidirectional (consultantclient) transfer of
"process" (and hence tacit) knowledge. The “process-consulting” approach has a far greater
cognitive potential then the “expert-consulting” approach, and both parties to the relationship
play a critical role in it, even though the potential for knowledge-creation connected with the
use and the conversion of the consultant's explicit knowledge appears to be underestimated
(Linnarsson and Werr, 2002). Furthermore, even in the studies that adopt this approach there
are no significant contributions regarding the cognitive paths through which new
entrepreneurial knowledge creation is (or can be) induced through the consulting relationship
“in action”.
The same limitation can also be found in the recent literature which has adopted a
knowledge perspective in investigating management consulting (Buono, 2002; Clark and
Fincham, 2002; Engwall and Kipping, 2002; Engwall and Sahlin-Andersson, 2002). Among
the issues examined in this literature are:
-
the internal Knowledge Management (KM) procedures and systems of management
consulting firms (e.g., Anand et al., 2007; Bou and Sauquet, 2005; Bukh and
Mouritsen, 2005; Haas and Hansen, 2005; Henriksen, 2005; Stjernberg and Werr,
2003);
-
limitations to and risks connected with, the use of codified Information and
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Communication Technologies knowledge management systems, due to their inability
to manage the non-codified (implicit) part of the knowledge that is created and used
(Dunford, 2000; Kim and Trimi, 2007);
-
the problems of integrating KM systems in consulting firm mergers and acquisitions
(Ejenäs and Werr, 2005; Gammelgaard et al., 2005);
-
management consulting firms’ knowledge strategies: exploring new consulting
practices versus exploiting already known consulting practices (Baaij et al., 2005);
-
the mechanisms through which professional institutions affect knowledge-creation in
professional service firms (Robertson et al., 2003).
A few recent studies have shed a little light on the concrete dynamics of knowledge
creation within the management consulting process "in action". Some authors, for example,
have focused on the knowledge-creation processes involved in the adaptation of the
consultant’s codified knowledge to the client’s setting and the building among them of
“communities of practices” (Todorova, 2004), the importance of client-consultant face-to-face
interaction to professional service firms’ knowledge-development processes (Fosstenløkken et
al., 2003), the mainly tacit and socially constructed nature of knowledge created and used in
consulting intervention (Newell, 2005; Visscher, 2006), the factors which enhance, or impinge
upon the effectiveness of consultant-to-client knowledge transfer processes (Kirsch et al.,
2005; Lahti and Beyerlein, 2000), the role of "epistemic communities" (Cowan et al., 2000)
and "communities of practices" (Lave and Wenger, 1991) in interpreting and evaluating the
impact of the intervention of management consultants on the knowledge structure of the
organization they intervene in (Creplet et al., 2001). Others have highlighted the dynamic and
(tacit and explicit) composite nature of the knowledge that is used/generated in consultancy
activities as a consequence of the fact that in order to discover the solution to the problem,
consultants must have the ability to apply pre-existing explicit knowledge to the specific
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consultancy context on case-by-case basis (thus converting explicit knowledge into new tacit
knowledge) as well as (and above all) “the ability to relate to the specific situation without
having a…normological model”. Then “the consultant, through processes of reflection and
analysis, tends to become [also] a researcher” (Jensen, 2005), that is to say, someone who is
able to produce knowledge through insight as well as through externalization (i.e., conversion
into new explicit knowledge) of experience-based tacit knowledge. Even though these recent
contributions are original, they do not delve deeply into the cognitive paths through which the
potential of entrepreneurial knowledge creation by management consulting intervention can
be expressed.
MANAGEMENT CONSULTING: A CONCEPTUAL DELIMITATION
A vast amount of literature deals with the conceptual delimitation of management
consulting in a rather heterogeneous way. The definition of management consulting proposed
in this paper is an attempt to provide a synthesis of, and at the same time supersede the
heterogeneous aspects of the numerous definitions proposed in the literature (e.g., EIU, 1993;
Greiner and Metzger, 1983; Kubr, 2002; Salvemini, 1987; Steele, 1975), by underlying the
ontological aspects which define the inner nature of this particular and fascinating service
activity.
We define management consulting as a service activity performed by persons external
to, and independent of, the client company, which possess appropriate scientific/professional
skills and capabilities, and consisting of supporting the client company’s top management to
identify and solve strategic, organizational and/or specific functional areas related problems,
using a rectifying, progressive and/or creative approach, thereby contributing to the creation
of new entrepreneurial knowledge (see Figure 1).
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THE CONSULTANT'S INDEPENDENCE
THE CONSULTANT'S SCIENTIFICPROFESSIONAL SKILLS AND
CAPABILITIES
THE CONSULTATIVE NATURE
THE "PROBLEM ORIENTED" NATURE
DISTINCTIVE ONTOLOGICAL
(REAL, ESSENTIAL AND
RELATIVELY STABLE) FEATURES
OF MANAGEMENT CONSULTING
THE ENTREPRENEURIAL NATURE OF
THE PROBLEMS ADDRESSED
THE "PRIMARY CLIENT" BELONGS TO
THE TOP MANAGEMENT OF THE
CLIENT COMPANY
THE CONTRACTUAL AND FIDUCIARY
NATURE
THE MAINLY COGNITIVE NATURE OF
THE VALUE-CREATION POTENTIAL
Figure 1: Management consulting: synoptic conceptual framework.
1. The independence of the consultant. In order to be able to express its assessments
and opinions objectively and impartially, consultant must be independent (in financial,
decision-making and emotive terms), so that he can adopt cognitive and behavioural
approaches respectful of the fiduciary remit given to him by the client.
2. The scientific/professional skills required of the consultant. To provide management
consulting services, the consultant must possess (and be able to use) appropriate
scientific/professional skills and capabilities, acquired through specific training and/or
entrepreneurial experiences and/or previous consultancy work. The management consultant is
able to guarantee an independent approach precisely by virtue of his possession of appropriate
scientific and professional background. This feature is emphasized by the "definitional
approach", which interprets management consulting as a "profession", whose essence is
precisely in the particular professional skills and expertise of the consultant (Greiner and
Metzger, 1983). This aspect of the consulting activity is important in every phase of the
consulting process, even though it sometimes appears not to be adequately taken into account
by consultancy firms. In this connection, here are the comments of the chief executive officer
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of Studio Roscini S.p.a. (a garment design company whose clients include numerous leading
companies in the Italian fashion industry, such as Gucci, Fendi, Valentino and Tod's)
regarding the work of a consultancy firm it had commissioned to design and implement a new
enterprise resource planning system.
"A partner and two senior managers of the consultancy firm attended the first two meetings. The
meetings were very productive, and even before formally retaining their services, we had already defined the
project goals and the timing. But after engaging that firm we only met junior managers and trainees and all
these people never gave us the impression that they had mastered their task. The project was a failure, and we
were forced to go back to the old ERP system. I am certain that if the project had been followed up by the two
senior managers we had met the first time, things would have worked out differently."
3. The consultative nature. Management consultant provides opinions (not advice,
which is a deviation from the requirements of objectivity and independence, including
emotional independence, which should always characterize the consultant's work), which set
into motion a process of collaborative information and knowledge exchange between the
consultant – whose responsibility concerns the quality and objectivity of the opinions
provided – and the client, who is ultimately responsible for applying or rejecting the opinions
received. These are the comments of the chairman of a major Italian bank regarding the work
of a consulting firm engaged in the development of a new internal credit rating system.
"The consulting firm demonstrated that the new rating model worked better than the one we had
previously used (as it enabled us to predict the insolvency of our customers with a far narrower margin of error
that with our old model), and this model is now effectively underpinning our decisions to grant credit facilities.
However, none of us was involved in all the phases of designing the model, and as a result, none of us fully
understood the mathematical and statistical rationale underlying the way it operates and the complex weighting
criteria used for the several variables it uses: the model is simply like a "black box" as far as we are concerned.
How shall we be able to improve that model in future? And above all, how can we change it if it eventually turns
out not to be so reliable (under changed conditions and in a different economic situation, or with different
composition of customers, etc.)?"
The consultative nature is emphasized by the definitional approaches which interpret
consulting as a “method”, and find its essence in its advisoring function to the client when
taking decisions and/or performing certain tasks (e.g., Cohen, 1989).
4.
The
"problem-oriented"
nature.
Management
consulting
consists
of
identifying/defining problems (diagnosis), working out solutions (therapy) and subsequently
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applying those solutions (cure). The problem-oriented nature of management consulting
makes it all the more necessary to establish an appropriate level of co-operation between the
consultant and the client (Lippitt and Lippitt, 1986) in every single phase of the consulting
process. Here is what we were told by the managing director of the Italian division of a
pharmaceutical multinational.
“We are accustomed to dealing with (and seeking to solve) problems all the time (often very many
problems at once and the same time). We often have to take rapid decisions regarding the priority to be given to
the different problems. We can decide to set aside some of them, to resolve the most urgent ones, but we cannot
evade the problems or pretend not to see them. I can immediately recognize people who are accustomed to, and
skilled in, problem-solving, and when I have to choose a consultant (whatever the task might be) these are the
decisive qualities I look for."
5. The contractual and fiduciary nature of the management consulting relationship.
The remit is given by the client company and accepted by the consultant in the form of a
contract, in which both parties agree to confer full legal and psychological legitimacy to the
consultancy services. Among the key-elements of the consultancy relationship are a clear
definition of the rights, duties and roles of each party involved (legal contract) and their
commitment to co-operate in a climate of mutual trust (Galford et al., 2000; Green, 2006) and
respect (psychological covenant), which ought to be constructed already during the
negotiations in the initial phase of the consultancy relationship.
"The most difficult thing during the initial phases of contact with a new potential client is understanding
whether I can trust the client (whether he is sincere, whether he is really interested in the expertise that I can
offer, etc.) and above all, convincing him that he can trust me. Experience has taught me that being totally
transparent can create a sense of insecurity in the other party (I have "lost" many potential clients for this very
reason), but in the long term it certainly pays off: in the remits I have been given in the past 10 years I have
always received the maximum co-operation from my clients, and only in one case have I been accused of not
fully attaining the goals of the consultancy project (and in our profession attaining 100% of the objectives within
the given timescale is the exception, rather than the rule)."
These are the words of a founding partner of Integrale S.r.l., an Italian medium-sized
strategic consulting firm.
6. The entrepreneurial nature of the problems addressed. Management consultants
address entrepreneurial problems (strategic, organizational and/or related to one or more
specific functional areas) whose solution can significantly affect the structure of the client
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company (whether small or large, in manufacturing or in services, etc.), generate changes in
its state, set in motion strategic development, stability or recovery processes (Ciampi, 2004;
Fazzi 1982; 1984), and ultimately have innovation effects (Greiner and Metzger, 1983;
Vallini, 1991), supported by evolutionary changes in knowledge (rationalizing motivations for
change), attitudes (acceptance and internalization of motivations for change), individual and
group behaviour (concrete actions to bring about change); in one word: changes in the
corporate culture (Kubr, 2002). Over the last decades, the scope of the entrepreneurial
problems addressed by management consultants has gradually expanded to cover the whole
gamut of firm management activities. Some authors have held that identifying the
management consultant’s "specialized areas of expertise" lies at the heart of defining the
concept of management consulting: given a particular list of specialized areas of expertise, it
is assumed that whoever supplies services in those specific fields may be called a
management consultant. We do not share this view, since not only does it fail to bring out the
essential features of management consulting, but it also generates definitions that are
physiologically obsolete because of the changes to which the spheres of consulting
intervention are constantly subjected (Aiello, 1996; Clark and Fincham, 2002).
7. The persons primarily interested in solving the problem for which the consultancy
services are retained belong to the top management of the client company. Given the nature of
the management consultant's work, the “primary client” must be at least one person belonging
to the client company top management, for it is at this level that the “not delegable”
entrepreneurial top management functions related to the problems to be addressed by the
consultant are performed (Ciampi, 2004; Fazzi, 1982).
"I immediately decided to take up the KPMG offer, even though the starting salary they proposed was
20% lower than what I was paid by ITN Consulting [a company offering Information and Communication
Technologies services to manufacturing firms]. Even though I had become a senior manager, our consultancy
projects almost invariably dealt with the technical aspects of the client's technological infrastructure and my
interlocutor was always an EDP employee and/or an employee of an external company to which our client had
outsourced the maintenance of his technological facilities. I was not working for an IT management consulting
firm, but for a company offering IT infrastructure maintenance services."
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This statement was made by one of the candidates recently recruited, after a lengthy
selection process, by the IT management consulting sector of KPMG Italia.
8. The mainly cognitive nature of management consulting value-creation potential.
The creation of new knowledge and the development of new entrepreneurial capabilities
(diagnostic, therapeutic and/or interpretative), which both the client and the consultant can
exploit once the consultant’s work is completed, are potentially the most significant results of
management consulting intervention. However, empirical evidence shows that it is extremely
rare for this potential to be consciously perceived and fully exploited. For in very few cases do
the client and the consultant consciously set knowledge-creation goals for the consultancy
project (Linnarsson and Werr, 2002). Furthermore, their efforts are very often taken up
entirely by merely replacing the client's existing practices with best practices (mainly explicit
knowledge) which the consultant proposes to "transfer” to the client (e.g., Ernst and Keiser,
2002; Newell, 2005). By so doing, both parties to the consultancy relationship eschew
embarking on social reconstruction pathways (Lave and Wenger, 1991) through which new
practices and knowledge (not only explicit but mainly tacit) can be generated (by
contextualizing the "best practices" proposed by the consultant and/or by socializing the preexisting implicit knowledge possessed by the two parties). Yet not only implicit knowledge
very often constitutes the most important cognitive baggage of both parties, but it also
represents the main potential outcome of the consulting intervention. From this it follows that
even in cases where the consultancy intervention is deemed successful (because it has made it
possible to solve the problem the consultant had been commissioned to solve), the most
important part of the potential cognitive value of the relationship is often lost and/or not
adequately exploited. We will address this specific feature of the consultancy activity in
greater depth in the final part of this paper.
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Figure 2 provides a synoptic overview of the concepts, distinctive ontological (real,
essential and relatively stable) features, and logical relations which, according to the proposed
definition, best identify the essence of management consulting activity.
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Features of management consultant
Definitional approaches
CURRENT
SKILLS
CONSULTING AND
ENTREPRENEURIAL
EXPERIENCE
POTENTIAL
SKILLS
CONSULTANCY AS
PROFESSION
SCIENTIFIC-PROFESSIONAL SKILLS
Features of the service
CONSULTANCY AS METHOD
CONSULTATIVE NATURE
RESPONSIBILITIES
“PROBLEM ORIENTED” NATURE
INDEPENDENCE
DIAGNOSIS
THERAPY
CURE
DECISION-MAKING
FINANCIAL
RELEVANCE TO ENTREPRENEURIAL
PROBLEMS
EMOTIONAL
ANALYTICAL
CAPABILITIES
SYNTHETIC
CAPABILITIES
MAIEUTIC
CAPABILITIES
EMPATHETIC
CAPABILITIES
CREATIVE
CAPABILITIES
Features of the consulting relationship
TRIGGERS/FACILITATES STRATEGIC DEVELOPMENT
PROCESSES AND (TACIT AND EXPLICIT) KNOWLEDGECREATION PROCESSES
SKILLS AND
CAPABILITIES
TRIGGERS-FACILITATES
CHANGE ABOUT
APTITUDES
ATTITUDES
QUALITY
CONDUCT
HIGH-LEVEL OF INTERACTION AND
COLLABORATION
CONTRACTUAL NATURE
Features of the primary client
MEMBERSHIP OF TOP
MANAGEMENT
OBJECTIVITY
CONTENTS
PROBLEM OWNERSHIP
LEGAL
PSYCHOLOGICAL
STRATEGIC AREA
ORGANIZATIONAL AREA
FINANCIAL AREA
MARKETING AREA
SPECIALISED AREAS OF
MANAGEMENT
CONSULTING PRACTICES
(TECHNIQUES, TOOLS
AND METHODS)
PRODUCTION AREA
INFORMATION AREA
(MANAGEMENT INFORMATION
SYSTEM)
ADMINISTRATION AREA
HUMAN RESOURCES AREA
RESEARCH AND
DEVELOPMENT AREA
Figure 2: The ontology of the management consulting activity: concepts, features and logical relationships.
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FROM THE DIACHRONIC INTERPRETATION TO THE SYNCHRONIC
INTERPRETATION: CONSULTING MODELS
In the literature, management consulting is often interpreted as a process (Figure 3)
comprising
several
sequential
phases
(initial
contact→entrepreneurial
problem
diagnosis→therapeutic planning→solution implementation→output evaluation→conclusion
of the relationship), each one characterized by different activities to be performed, specific
risk and critical elements, and consequently, particular skills that the consultant must possess
in order to successfully complete each phase (e.g., Greiner and Metzger, 1983; Kubr, 2002).
INITIAL CONTACT AND CONTRACT STIPULATION
ENTREPRENEURIAL PROBLEM DIAGNOSIS
SOLUTION DISCOVERY: THERAPEUTIC PLANNING
SOLUTION IMPLEMENTATION
OUTPUT EVALUATION AND CONCLUSION
Figure 3: The diachronic interpretation of management consulting: consulting process.
By focusing on the specific features of each phase in the process this interpretative
approach (“diachronic interpretation” of management consulting) does not, however, reveal
the overall picture of the essential variables in the relational dynamics on which the results of
the consultancy intervention depend in terms of new entrepreneurial cognitive value creation.
For the consultancy process tends to take concretely place with variable degrees of
looping/reiteration, completeness, and intensity of co-operation, depending upon the service
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configuration sought, the problem to be solved, the ways of delivering the service and, above
all, the consulting model adopted (“synchronic interpretation of management consulting”).
Key to the synchronic interpretation of management consulting is the “nature of the
relationship” established and developed between the consultant and the client (Bell and
Nadler, 1985). In this regard, factors such as the structure (i.e., the system of qualitative and
quantitative features) of the entrepreneurial problem to be solved, the volume of specific
investments required from both parties, the intensity of the knowledge generation/transfer
dynamics, the mainly codified or tacit nature of the both parties’ starting knowledge and of
the knowledge generated/transferred through the relationship, become particularly relevant.
Particularly critical features of consultant-client interaction are the quality and quantity
of the client's starting knowledge, and the degree to which the consultant is inclined/able to
activate and manage the knowledge creation/transfer processes. Many different possible
combinations have been identified in literature regarding the forms that these features may
assume (Maister, 1993; Schein, 1987; 1988; 1999): here, we shall merely examine three
alternatives which, we believe, can be seen as theoretical configurations (models) while
bearing in mind that each one is a conceptual abstraction that, as such, tends to take a different
form in each specific consulting context (Figure 4). Each model identifies a different "mode
of reasoning" and "way to relate to the client" by the management consultant.
Under the “quasi-management consultancy model”, the client company needs specific
information and/or cognitive support to implement solutions to already diagnosed problems.
The client company has already identified and defined the problem to be solved as well as the
type of intervention required, and the party to which it should relate. After having established
the need for a specific input of information or expertise in a given firm area, the client reaches
the conclusion that it does not have the ability to implement the solution on its own, or it
concludes that it is more economically or politically convenient to outsource it. From the
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outset, the client-consultant interaction is highly structured with regard to the mutual role
expectations. This model assigns a critical role to the client as he must have the ability to:
-
diagnose the problem autonomously;
-
identify the solution (therapy) autonomously;
-
identify the specific information and/or expertise needed;
-
select the consultant which possesses the above mentioned information and expertise;
-
correctly explain the problem to the consultant.
"QUASI CONSULTING"
MODEL
"META-CONSULTING"
MODEL
“CLASSICAL” MODEL
THE CLIENT IDENTIFIES THE
PROBLEM AND ITS POSSIBLE
SOLUTION. IMPLEMENTING THE
SOLUTION REQUIRES SPECIFIC
INFORMATION OR EXPERTISE
THE CLIENT PERCEIVES THE
SYMPTOMS OF CERTAIN
DYSFUNCTIONS BUT IS UNABLE
TO DIAGNOSE IT AND TO
IDENTIFY A THERAPY
THE CLIENT PERCEIVES THE
SYMPTOMS OF CERTAIN
DYSFUNCTIONS, DOES NOT
HAVE SELF-DIAGNOSIS SKILLS,
BUT WISHES TO DEVELOP
THEM
THE CONSULTANT IMPLEMENTS
THE SOLUTION
THE CONSULTANT DIAGNOSES
THE PROBLEM, DISCOVERS THE
THERAPY AND IMPLEMENTS
THE SOLUTION
THE CONSULTANT "HELPS THE
CLIENT TO HELP HIMSELF"
(DEVELOPING THE CLIENT'S
SELF-DIAGNOSIS SKILLS )
Figure 4: The consultant-client relationship: consulting models.
The consultant, whose role is merely that of a "knowledge provider", is required to
possess specialized expertise within the specific area with which the consultancy intervention
has to deal. The generated/transferred knowledge mainly travels in the consultantclient
direction, and takes on an almost exclusively codified character. The consultant’s intervention
has a slight impact on the client company structure and therefore remains on the borderlines of
management consulting work.
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Under the “classical model” the company feels symptoms of a certain dysfunction, but
is unable neither to clearly spell out the scope of the problem nor to identify the most
appropriate measures to solve it. The responsibility for conducting the diagnosis (problem
finding) and subsequently identifying and suggesting the solution (problem solving) therefore
falls to the consultant. The consultant is given broad margins of action freedom by a client,
who entrusts himself totally to the consultant, vesting him with the remit not only to find a
remedy but above all to define the "borderlines of the disease". The diagnostic phase can
sometimes lead "far away" from the starting point, thus identifying problems that are very far
from the generic expectations that had originally led the client to engage the consultant. The
relationship is much less structured, and its effectiveness is heavily influenced by the client’s
will and the capability to become involved in the various phases of the consulting process.
While the client should be involved as intensely as possible in principle, the more complex the
problem, the more necessary it is for the consultant to receive the client cooperation from the
very first phases of the interaction, in which, by diagnosing the situation, the problem is
reconfigured in its proper dimensions. The knowledge generated/transferred is mainly
codified even though, unlike what happens under the "quasi-management consulting" model,
its transfer is bidirectional (consultantclient). For the classical model to function
effectively:
-
the client must provide the consultant with all the information needed to conduct a
reliable diagnosis, and must above all be ready to accept and manage the changes
resulting from an in-depth diagnostic intervention performed "from the outside";
-
the consultant’s analytical, synthetic, and intuitive/creative capabilities must be
adequate for the complexity of the entrepreneurial problem to be solved. The
consultant must also be able to correctly communicate the diagnosis to the client (not
infrequently, consultant deliberately uses "obscure" or "sophisticated" language,
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assuming he will win over the unconditional trust of the client). The consultant’s
analytical capabilities are indispensable for dividing up the entrepreneurial problem
and reconstructing the system of cause-effect relations between the principal variables.
The consultant's synthetic, intuitive and creative capabilities are decisive to identify
the primary causes of the problem and to discover the possible solutions;
-
the client must understand and properly interpret the diagnosis made by the consultant,
and must effectively be able to adopt the solution (“cure”) proposed (even theoretically
right the solution might be unviable because of conflict with the value system and/or
with the deep-seated strategic identity of the client company).
In conclusion, the classical model is appropriate provided that the client ("patient") is
willing to rely wholly on the consultant ("physician") with regard both to the diagnosis and
the therapy, and to implement the advised measures ("to take the medicine") and to give up
the idea of developing autonomous auto-diagnostic and problem solving capabilities.
The “meta-consultancy” model is the most ambitious one. The client retains full
ownership of the problem in every phase of the consultancy process because no one knows
better than him the company's strategic, managerial and cultural context, and can therefore
determine real scale of the problem and the true feasibility and effectiveness of any possible
solutions to it. The starting point is similar to the one in the classical model (the client
perceives certain shortcomings and dysfunctions but does not know their origin, or how to
deal with them, and finds it difficult to choose the most appropriate consultant), but the degree
of client involvement is far higher, particularly from the cognitive point of view. The
consultant plays a “leading role” in the diagnosis (which nevertheless remain within the
client’s competence) and acts as a “facilitator” for the therapeutic planning and
implementation phases, also suggesting recourse to further specialist resources (external
and/or internal) if these are deemed necessary to solve specific problems. The problem
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remains the client's, and the work of the consultant consists of "helping the client to help
himself". From the initial phases the intervention is oriented to fuel and develop the client's
self-diagnosis
and
problem-solving
capabilities,
by
implementing
bidirectional
(consultantclient) transfers of “process” (i.e., tacit) knowledge. In conclusion, the metaconsultancy model not only aims to maximize the possibilities of solving the immediate
problem but its main purpose is to enable the top management of the client company to
enhance its own level of autonomy when dealing with future entrepreneurial problems
(Schein, 1987). The necessary conditions for effective meta-consultancy are:
-
from the outset, the client must be aware of his responsibilities connected with
retaining full ownership of the problem;
-
the consultant must resist the temptation to exclude the client from the problem
(Schaffer, 1997) and, at least in the initial phases, avoid offering personal
diagnostic interpretations, to avoid hampering the development potential of
client's self-diagnosis capability;
-
the consultant must be endowed with not only analytical, synthetic and creative
but also maieutic and empathetic capabilities that can stimulate a high (and early)
involvement of the client, thereby triggering cooperative processes for autodiagnostic and problem solving learning. The consultant's capacity to stimulate a
collaborative relational environment is essential for overcoming the difficulties
connected with the presence of "evasive" and/or "antagonist" (sometimes even
"rejection") attitudes which are physiologically present, particularly in people who
work in functional areas and/or roles where the root cause of the problem lies, and
in companies whose culture is one with a strong "resistance to change". Hence the
need for the consultant to avoid aggressive diagnostic attitudes which might create
the sensation of "hunting for mistakes to punish" ("inspective attitude”) or which
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lead to expressing premature value judgments (thus preventing client from calmly
offering his own evaluations). In addition to facilitating the process (client knows
the problem better than consultant, although his over-involvement may prevent
him from "seeing the wood for the trees"; the agreement on the outcomes of a
commonly agreed diagnosis emerges in a wholly natural way, without the need for
the consultant to convince the client about its soundness), jointly conducting a
commonly agreed diagnostics exercise, also acquires an "intervention’s
ontological value" for it triggers a change in the cognitive system of the client
company which, by reacting to the stimuli, sets in motion processes for gradually
“bringing to the surface” and “re-appropriating” (and hence "regaining control
of") the problem, and for learning the diagnostic techniques proposed by the
consultant. In addition to facilitating the client's involvement in the subsequent
phases, these cognitive processes enable the client to acquire skills and
capabilities that can be used in future to solve problems autonomously, even if
they are not necessarily similar to those addressed in the consulting intervention;
-
client must be strongly motivated to develop autonomous problem-solving
capabilities and effectively be able to implement the related learning processes:
the client's cognitive flexibility (i.e., his degree of receptiveness to change and his
ability to challenge his own ideas, convictions and working methods) is essential
to ensure the effectiveness of the knowledge-generation process set in motion
using the meta-consultancy model.
“Over the past ten years we have commissioned more than twenty different consulting firms to carry out
more than forty strategic consulting projects. In the last five years, despite the fact that we have almost doubled
our turnover and the managerial complexity of our business has certainly grown, we have only implemented two
strategic consulting projects (one on the "redefinition of our concept of customer loyalty" and another on the
"redefinition of our businesses chains of value") using only one consultancy firm, Alfa S.p.a. The fact is that after
the first consulting project carried through by Alfa S.p.a. our managers began to consider it possible to develop
their own capacities to define, diagnose and solve problems, even when the problems belonged to completely
new strategic contexts from those experienced in the past. The risk of failure became for us a desired opportunity
for developing these skills, an occasion that all the managers in our group were anxious to address, and no
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longer something from which to defend themselves, avoiding the problem as far as possible or offloading it on to
external "specialists". The consultancy projects implemented by Alfa S.p.a. are much more demanding than those
implemented previously and cost almost twice as much. But the value that these projects enable us to create in
terms of new strategic and managerial skills and abilities is immeasurably higher."
These words were spoken by the Chairman of a multinational corporation working in
the garments industry, which owns three world-famous high-fashion labels and were reported
to us by two partners of Maretex S.r.l., an Italian strategic consultancy firm that adopts
consulting intervention techniques consistent with the model we have defined as metaconsultancy.
Figure 5 offers a synoptic picture of the essential features characterizing each of the
three consultancy models described above.
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ENTREPRENEURIAL PROBLEM
Essential
features
Breadth/
complexity
Diagnosis
Therapy
CLIENT
Cure
Initial
knowledge
of the
problem
Critical capabilities
CONSULTANT
CONSULTING RELATIONSHIP
Critical features
and propensities
Primary role
Critical
capabilities
Primary role
Degree of
structuring
Nature of
generated
and
transferred
knowledge
Propensity to
"shift the problem"
Acquirer of
codified
information
(delegating
solution
implementation)
Specialized
expertise regarding
the specific
problem
Supplier of
codified
knowledge
(implementing
the solution)
High
Essentially
codified
(content
related)
One-way
(consultant to
client)
Limited
Mainly
codified
(mainly
content
related)
Two-way
(consultant
client)
Very
limited
Mainly tacit
(mainly
process
related)
INDUCED/SOUGHT EFFECTS
Knowledge
transfer
flows
Degree of
client
involvement
Primary goal
Primary risk
Limited
Mainly
operational
(implementing
the problem
solution)
High level of
client
dependency on
consultant
High
Entrepreneurialtechnical
(solving the
problem)
Inconsistency
between
"prescription"
and strategic
identity of the
client
Very high
Entrepreneurial
-cognitive
(developing the
client’s selfdiagnosis and
problem
solving
capabilities)
Inconsistency
between
cognitive
potential and
client's
capacity/will to
learn
QUASI-CONSULTING
Diagnostic capability
Problem-solving
capability
Limited
Client
responsible
Client
responsible
Consultant
responsible
High
Capability to specify
necessary
information/knowledge
Capability to select
consultant
Analytical
capability
CLASSICAL
Information
transparency
META-CONSULTING
CONSULTING MODELS
Capability to
communicate the
problem
High
Consultant
mainly
responsible
Consultant
mainly
responsible
Client
mainly
responsible
Capability to understand
the diagnosis
Limited
Capability to implement
the therapy
Propensity to
change
Willingness to
comply with
consultant's
"prescription"
Implementer of
the prescribed
treatment
("patient")
Client
mainly
responsible
Client
mainly
responsible
Client
mainly
responsible
Very
limited
Cooperative learning
capability
Cognitive
flexibility
Creative
capability
Diagnostic and
therapeutic
role (entering
into the
problem)
Capability to
communicate the
diagnosis
Analytical
capability
Realization of the
problem "full
ownership"
Very high
Synthetic
capability
Synthetic
capability
Cooperative
learning
protagonist
Motivation to
learn
Creative
capability
Empathetic
capability
Cooperative
learning
facilitator
(remaining
outside the
problem)
Two-way
(consultant
client)
Desire to change
Maieutic capability
Figure 5: Consulting models: essential features of intervention object (entrepreneurial problem), parties to the relationship (client and consultant), consulting relationship, and
outcomes (induced/sought effects).
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COGNITIVE INTERPRETATION: THE KNOWLEDGE-CONVERSION METACONSULTING PATHWAYS
Company knowledge-Creation Processes: the Nonaka and Takeuchi’s Model
The dimensions of knowledge
Nonaka and Takeuchi (1995) define company knowledge creative capacity as the
capacity of an organization as a whole to generate new knowledge, to disseminate it internally
and translate it into products, services and systems.
The organizational knowledge-creation theory developed by the Authors is based on
the possibility to categorize cognitive resources in terms of the two following essential
dimensions:
-
epistemological, which makes it possible to distinguish between explicit and tacit
knowledge (Arrow, 1962; Gelwick, 1977; Polanyi, 1966; 1985). Explicit knowledge is
knowledge that can be expressed, codified and easily transferred between different
people through formal and systematic languages. Tacit (or implicit) knowledge, on the
other hand, comes from personal events, is difficult to formalize, and resides
exclusively in the minds of individuals (insight, personal experiential skills, etc.),
often at levels different from the level of "full awareness". Since explicit knowledge
(which can be effectively expressed in numbers and in words) is only the "tip of the
iceberg" (Figure 6), whose foundations are essentially "tacit events" (which are
difficult to express and share), the fulcrum of the entrepreneurial process of
knowledge creation lies in the capacity to mobilize, convert and disseminate the tacit
knowledge of individuals throughout the organization;
-
ontological, which makes it possible to categorize knowledge in relation to the entities
involved in its creation (individual knowledge, group knowledge, organizational
knowledge, inter-organizational knowledge). The firm knowledge-creation process
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can be described as an “interactive/looping spiral" moving away from the individual
level and gradually spreading through ever higher ontological levels, involving
increasingly broader interacting communities.
EXPLICIT
knowledge
TACIT
knowledge
Figure 6: Polyani's knowledge iceberg.
Company knowledge-creation processes
The interactions between individuals (social interactions), by setting into motion
processes of knowledge epistemological and ontological evolutionary metamorphosis,
trigger/activate a spiral of knowledge conversion processes (Nonaka and Takeuchi, 1995).
The socialization pathway consists of processes of sharing of tacit knowledge among
individuals, and generate new tacit knowledge through the social interaction arising
therefrom. Since tacit knowledge cannot be codified, this cognitive path requires the sharing
of experiences which, in turn activate "fields of interaction" (between those who possess the
experience and those who wish to acquire it), through, for example, recourse to on-the-job
training practices reproducing the apprentice-master craftsman relationship, in which the
former learns from the latter through observation, imitation and practice. By resorting to
“dialogue and group reflection” and methods of inductive and deductive reasoning, the
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externalization process makes it possible to convert tacit knowledge into new explicit
knowledge in the form of metaphor, analogy, concept, hypothesis and/or model. The
complexity of the process is due to the fact that, in addition to being non-codified, implicit
knowledge is characterized by a close linkage with the mental models of the individuals who
possess it. The combination process makes it possible to produce new explicit knowledge by
sorting, adding, combining and categorizing externalized and pre-existing explicit knowledge.
Information and Communications Technologies facilitate this process by networking, and
hence “systematizing” distinct corpuses of explicit knowledge. Internalization makes it
possible to convert explicit knowledge into new tacit knowledge: applying explicit knowledge
(codified in documents, manuals, etc.) to specific operational environments enables
individuals to contextualize that knowledge (“learning by doing”), “to take possession of it”,
and to transform it into new implicit knowledge.
To tacit
knowledge
From tacit
knowledge
From explicit
knowledge
To explicit
knowledge
(Socialization):
Sympathetic
knowledge
(Externalization):
Conceptual
knowledge
(Internalization):
Operational
knowledge
(Combination):
Systemic
knowledge
Figure 7: Knowledge conversion processes (Nonaka and Takeuchi, 1995).
The nature of the new created knowledge depends on the way it is converted (Figure
7): socialization produces sympathetic knowledge, that is to say, shared technical abilities and
mental models; externalization creates conceptual knowledge (for example, the concept of a
new product structure); combination produces systemic knowledge (for example, the
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conceptual architecture of a new technology); and internalization produces operational
knowledge, that is to say, new and mainly process knowledge (for example, project
management innovative know how).
Creating new knowledge can be viewed as a continuous and dynamic meta-process
consisting of parallel iterations of the four knowledge conversion processes (socialization,
externalization, combination and internalization), the spiral shape of which shows the
expansion of knowledge towards increasingly higher both epistemological (knowledge quality
development) and ontological levels (from the individual to the organizational level, and to
the inter-organizational level).
Knowledge-Conversion Meta-Consulting Pathways
The basic aim of meta-consulting intervention is induction of new diagnostic,
therapeutic and interpretative (vision of firm structure and competitive environment)
entrepreneurial knowledge, which the client and the consultant can also exploit once the
consultant has completed his intervention. We speak here of "induction", and not of “transfer
of" new knowledge because the client and the consultant learn by reprocessing new and preexisting knowledge and connecting it to their starting own cognitive structure rather than by
only acquiring that knowledge (codified to a greater or lesser degree). This reprocessing is
subjective, by definition, and cannot be "taught"; it can however be stimulated (induced) by
the specific capabilities, attitudes and conduct of the parties (discussion, explanation, recovery
of previous experiences, active participation, etc.).
Assuming a knowledge-perspective for interpreting management consulting
intervention, making use of the conceptual categories developed by Nonaka and Takeuchi and
seeking to externalize the implicit knowledge acquired through our personal consulting
experiences, in Figures 8 and 9 we propose a possible conceptual mapping of the essential
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pathways through which the potential of entrepreneurial knowledge creation by management
"meta-consulting" intervention can express itself.
Through socialization pathways, new tacit knowledge is induced by the face-to-face
interaction and by the subsequent informal sharing (and integration) of the tacit knowledge
owned by the two parties to the consulting relationship. Through active participation in the
consulting experience, the client and the consultant develop new implicit knowledge by
submitting their own initial baggage of tacit knowledge, through direct shared use and
comparison, to a critical “justification” process which leads, in the event of "nonconfirmation", to its “unfreezing” and renovation, thereby contributing to new implicit
knowledge learning. Mutual direct observation, comparing different viewpoints, sharing and
synchronizing experiences, emotions, sentiments, feelings and mental models, makes it
possible for both the client and the consultant, in particular:
a)
to renew their own implicit mental models (patterns, cognitive maps, paradigms,
points of view, perspectives, visions, beliefs, etc.) and visions about the company's
structure (or functional portions of it) and/or the competitive environment. For
example, by sharing and comparing their own differing mental patterns, the client and
the consultant can co-operatively develop new ways of intuitively interpreting (and
"seeing") the essential (qualitative and quantitative) features of the company structure,
and new ways of interpreting (and "seeing") the relationship between the company and
its
clients,
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between
the
company
29
and
its
competitors,
etc.;
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CLIENT'S INITIAL KNOWLEDGE
AREA
TACIT
KNOWLEDGE
NEW KNOWLEDGE INDUCED BY THE METACONSULTING RELATIONSHIP AREA
EXPLICIT
KNOWLEDGE
TACIT
KNOWLEDGE
EXPLICIT
KNOWLEDGE
SOCIALIZATION
SOCIALIZATION
IMPLICIT VISION OF FIRM
STRUCTURE
NEW IMPLICIT VISION OF FIRM
STRUCTURE
EXPLICIT CONCEPTUAL MODEL
OF FIRM STRUCTURE
IMPLICIT VISION OF
COMPETITIVE ENVIRONMENT
IMPLICIT DIAGNOSTIC
CAPABILITIES
IMPLICIT PROBLEM-SOLVING
CAPABILITIES
SOCIALIZATION
NEW IMPLICIT DIAGNOSTIC
ANALYSIS KNOW-HOW
EXPLICIT CONCEPTUAL MODEL
OF FIRM STRUCTURE
IMPLICIT VISION OF
COMPETITIVE ENVIRONMENT
EXPLICIT CONCEPTUAL MODEL
OF COMPETITIVE ENVIRONMENT
IMPLICIT DIAGNOSTIC
CAPABILITIES
EXPLICIT DIAGNOSTIC
TECHNIQUES
INTERNALIZATION
INTERNALIZATION
SOCIALIZATION
NEW IMPLICIT PROBLEMSOLVING KNOW-HOW
IMPLICIT PROBLEM-SOLVING
CAPABILITIES
EXPLICIT PROBLEM-SOLVING
TECHNIQUES
INTERNALIZATION
INTERNALIZATION
SOCIALIZATION
SOCIALIZATION
NEW IMPLICIT CHANGE
IMPLEMENTATION KNOW-HOW
EXPLICIT CHANGE
IMPLEMENTATION TECHNIQUES
EXPLICIT
KNOWLEDGE
IMPLICIT VISION OF FIRM
STRUCTURE
INTERNALIZATION
INTERNALIZATION
SOCIALIZATION
EXPLICIT PROBLEM-SOLVING
TECHNIQUES
IMPLICIT CHANGE
IMPLEMENTATION CAPABILITIES
SOCIALIZATION
NEW IMPLICIT VISION OF
COMPETITIVE ENVIRONMENT
SOCIALIZATION
EXPLICIT DIAGNOSTIC
TECHNIQUES
TACIT
KNOWLEDGE
INTERNALIZATION
INTERNALIZATION
SOCIALIZATION
EXPLICIT CONCEPTUAL MODEL
OF COMPETITIVE ENVIRONMENT
CONSULTANT'S INITIAL
KNOWLEDGE AREA
INTERNALIZATION
INTERNALIZATION
IMPLICIT CHANGE
IMPLEMENTATION CAPABILITIES
EXPLICIT CHANGE
IMPLEMENTATION TECHNIQUES
Figure 8: Cognitive interpretation of the meta-consulting process: synthetic mapping of the tacit knowledge creation processes (socialization and
internalization).
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b)
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to renew their own implicit diagnostic analysis, problem solving, and change
implementation capabilities. By socializing their own earlier diagnostic-type implicit
capabilities, the client and the consultant can, for example, learn new abilities and to
gain insights into the cause-effect relationship among the explanatory variables of
entrepreneurial problems referring to a certain functional area (for example, the
marketing area) and detect distinction, in the full set of involved variables, between
the "relatively primary" and the "relatively secondary" ones.
The entrepreneurial knowledge creation potential of socialization pathways can be
activated through consulting intervention has been very clearly perceived by a young partner
of a medium-sized consultancy firm, which is a European leader in the Business Process
Reengineering segment, who had the following to say:
"Classroom training was banished from our company over 10 years ago. Anyone wishing to work with
us must have learnt the basics of general management at business school. But that knowledge is not sufficient.
For we attribute considerable weight to the mental agility and flexibility of our collaborators, their humility,
their determination and capability to learn from experience. Working "shoulder to shoulder" with more expert
colleagues, and above all with clients on concrete consulting projects, makes it possible to learn, fine-tune,
improve and develop consulting skills, and above all it enables to develop the most important capability required
of management consultants: the capacity to challenge their own mental patterns every time or, to put it another
way, it teaches to learn from experience. Our clients often do not realize it, but the value created by every
consulting project averages for as at least three times more than we charge them in fees. Entrepreneur knows its
business better than anyone else, and his company differs from every other. Becoming totally immersed in this
knowledge and in this diversity enables us to build up unique cognitive value, which none of our competitors will
be able to imitate."
By applying their own explicit knowledge (diagnostic analysis, problem solving and
change implementation methods and techniques; conceptual models for interpreting the
company structure and the competitive environment) to the specific context in which the
consulting intervention takes place, both clients and consultants convert that knowledge into
new tacit knowledge (internalization pathways) specific to the company context. This is a
very arduous cognitive path which requires both parties to shun any temptation to merely
replace the client's "existing practices" with "best practices" (mainly explicit knowledge)
forming part of the consultant's cognitive background, and engage themselves in an intense
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activity of contextualization of that knowledge (by adapting it, changing it, redefining it, etc.)
in relation to the specific client company environment. For example, the consulting
relationship makes it possible to convert the consultant's explicit entrepreneurial problem
diagnosis techniques into new implicit know-how, specific to the client's company context: by
experimenting with the application of his own codified knowledge to the specific consulting
context, the consultant develops new non-codified skills and capabilities which are
appropriate for defining the specific entrepreneurial problem, for discovering its causes, and
for identifying the client's abilities that can be used to solve it; the direct experiential sharing
of this knowledge conversion process also makes it possible for the client to assimilate this
new tacit knowledge, while at the same time subjecting his own initial explicit diagnostic
capabilities to critical justification, unfreezing, and renewing.
Through externalization pathways, the client and the consultant co-operatively express
their own tacit knowledge (both the pre-existing and the new one generated in the course of
the consulting intervention) by translating perceptions, mental models, beliefs and
experiences into explicit forms. Through these pathways, new conceptual patterns and models
are created which, being explicit, are easily transmissible through codified languages (to
different levels of the organization’s structure), as well as reusable in the future should the
need arise. As new process (i.e., implicit) knowledge emerges that proves to work better than
pre-existing one (new tacit knowledge "which is shown to be true"), client-consultant social
interaction shifts to the plane of a shared reflection, which, through the integrated use of
inductive, deductive and adductive reasoning methods (metaphors and analogies; on the role
of metaphors in the consultancy process see, for example, Atkin and Perren, 2000), is oriented
to translate implicit knowledge into words, phrases and in the ultimate analysis, into explicit
(formalized and codified) conceptual models. For example, from the initial phases of the
consulting intervention, client and consultant share the activity of codifying the client's initial
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CLIENT'S INITIAL KNOWLEDGE
AREA
TACIT
KNOWLEDGE
NEW KNOWLEDGE INDUCED BY THE METACONSULTING RELATIONSHIP AREA
EXPLICIT
KNOWLEDGE
TACIT
KNOWLEDGE
EXPLICIT
KNOWLEDGE
EXTERNALIZATION
TACIT
KNOWLEDGE
EXPLICIT
KNOWLEDGE
EXTERNALIZATION
NEW IMPLICIT VISION OF FIRM
STRUCTURE
IMPLICIT VISION OF FIRM
STRUCTURE
CONSULTANT'S INITIAL
KNOWLEDGE AREA
IMPLICIT VISION OF FIRM
STRUCTURE
EXTERNALIZATION
EXPLICIT CONCEPTUAL MODEL
OF FIRM STRUCTURE
NEW EXPLICIT CONCEPTUAL
MODEL OF FIRM STRUCTURE
COMBINATION
COMBINATION
NEW IMPLICIT VISION OF
COMPETITIVE ENVIRONMENT
EXTERNALIZATION
EXTERNALIZATION
EXPLICIT CONCEPTUAL MODEL
OF FIRM STRUCTURE
IMPLICIT VISION OF
COMPETITIVE ENVIRONMENT
EXTERNALIZATION
IMPLICIT VISION OF
COMPETITIVE ENVIRONMENT
EXPLICIT CONCEPTUAL MODEL
OF COMPETITIVE ENVIRONMENT
NEW EXPLICIT CONCEPTUAL
MODEL OF COMPETITIVE
ENVIRONMENT
COMBINATION
NEW IMPLICIT DIAGNOSTIC
ANALYSIS KNOW-HOW
COMBINATION
EXTERNALIZATION
EXTERNALIZATION
IMPLICIT DIAGNOSTIC
CAPABILITIES
EXTERNALIZATION
IMPLICIT DIAGNOSTIC
CAPABILITIES
EXPLICIT DIAGNOSTIC
TECHNIQUES
NEW EXPLICIT DIAGNOSTIC
METHODS
COMBINATION
EXTERNALIZATION
NEW IMPLICIT PROBLEMSOLVING KNOW-HOW
IMPLICIT PROBLEM-SOLVING
CAPABILITIES
EXTERNALIZATION
COMBINATION
NEW EXPLICIT PROBLEMSOLVING METHODS
EXPLICIT DIAGNOSTIC
TECHNIQUES
IMPLICIT PROBLEM-SOLVING
CAPABILITIES
EXTERNALIZATION
EXPLICIT PROBLEM-SOLVING
TECHNIQUES
EXPLICIT CONCEPTUAL MODEL
OF COMPETITIVE ENVIRONMENT
COMBINATION
EXPLICIT PROBLEM-SOLVING
TECHNIQUES
COMBINATION
NEW IMPLICIT CHANGE
IMPLEMENTATION KNOW-HOW
EXTERNALIZATION
EXTERNALIZATION
IMPLICIT CHANGE
IMPLEMENTATION CAPABILITIES
EXTERNALIZATION
IMPLICIT CHANGE
IMPLEMENTATION CAPABILITIES
EXPLICIT CHANGE
IMPLEMENTATION TECHNIQUES
NEW EXPLICIT CHANGE
IMPLEMENTATION METHODS
COMBINATION
EXPLICIT CHANGE
IMPLEMENTATION TECHNIQUES
COMBINATION
Figure 9: Cognitive interpretation of the meta-consulting process: synthetic mapping of the explicit knowledge creation processes (externalization and
combination).
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implicit knowledge regarding his mental model for perceiving the qualitative and quantitative
features of the company structure (the client’s implicit "starting" vision of the company
structure), thus making it possible to subject that knowledge to critical justification and
unfreezing processes (which will be fully implemented through successive internalization and
socialization dynamics). Furthermore, during the whole consulting process, client and
consultant jointly endeavour to make explicit and codify the new tacit knowledge which
emerges in the diagnostic phase (implicit diagnostic analysis capabilities), the therapeutic
planning phase (implicit problem-solving capabilities), and the solution implementation phase
(implicit change implementation capabilities). This enables both parties to codify and learn
new explicit knowledge (models, techniques, instruments and methods) which can be
exploited in future, once the consulting process is concluded.
Finally, the combination pathways make it possible to integrate the new explicit
knowledge (generated through the consulting process) into the pre-existing explicit
conceptual systems. There is also a high level of knowledge-creation potential in the
combination pathway, when the consulting intervention deals with partial areas of the client's
company structure (for example, a given business segment, or a given functional area). For in
these cases in the combination of new explicit "medium-range" knowledge with more general
pre-existing concepts (for example, the explicit corporate vision), the latter is enriched with
new meanings. The creative use of ICT networks and hypertext information databases
facilitates the combination pathway and helps both the client and the consultant to refreeze the
new conceptual models, the new techniques and the new cognitive capabilities that are
developed.
"Our best practices in terms of designing and implementing management control systems have reached
levels of excellence, particularly the ones that can be used by companies in the manufacturing and banking
industries. I think that they are the best in Europe. This has helped us to earn an excellent reputation, but our
work remains extremely difficult. For every new commission we receive entails immersing our logical,
mathematical and statistical models into a specific corporate context and making them work in the best way
possible, in relation to each client company's specific [present and future] needs of. To do this, we need the
active co-operation of the management of the client company. It is precisely thanks to this collaboration that we
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realize that our systems are failing to take account of important business interpretation keys, or that they possess
potentialities which we had never previously realized. We offer our system to our clients as the best available on
the market (and we believe this to be true), but we have learnt that in the course of every consulting intervention
the main focus of our attention must be on seeking both the shortcomings and the latent potential of our systems
and of their several component modules [consequently generating new implicit knowledge through
internalization]. The result is that almost all our consulting interventions lead us to modify (sometimes also to
add) one or more modules [thus externalizing the new implicit knowledge acquired during the consulting
intervention], and some of the relationships which enable the various modules to function as a system [hence
recombining the new explicit knowledge generated through the consulting process]."
These are the words of a senior consultant working for a medium-sized consulting
firm, a leader in Italy in the management control systems segment. They provide an excellent
example of how new (implicit and explicit) knowledge can be created by activating
knowledge internalization, externalization and combination meta-consulting processes.
CONCLUSIONS, PAPER LIMITATIONS AND ENTREPRENEURIAL
IMPLICATIONS
This paper pursues the challenging goal of presenting a general conceptual framework
for interpreting meta-consulting knowledge-creation processes. The purpose is not to
demonstrate the absolute validity of this model, but more simply to highlight its internal
theoretical consistency and to discuss the supporting evidence of a number of empirical
observations. In particular, a few anecdotal cases have been used to illustrate and better
clarify the conceptual framework, rather than as empirical evidence of the validity of the
model (this is an approach that is typically adopted in the management literature. See, for
example, Normann, 2001). Testing the validity of the proposed framework through a
systematic and reliable quantitative analysis is the first next challenge for the author. The
second challenge is to develop management control tools which can represent the translation
of the conceptual model into practice, into systems that can support both management
consulting companies and their clients in the consulting relationship knowledge management.
The paper may have three limitations. First, it pursues the challenging goal of
presenting a general conceptual framework which is in itself non-compatible with a concise
discussion compressed into the strict borders of a few pages. Second (and more important) the
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individual knowledge creation pathways and the whole conceptual framework from which
they stem still need to be more thoroughly analyzed and carefully sifted for validation. Third,
the paper may be subjected to the limitations a few authors recently attributed (e.g., Gourlay
and Nurse, 2005) to Nonaka and Takeuchi's theory of organizational knowledge.
The paper has significant implications both for the consulting firms and for their
clients. Accepting the proposed framework, both the client companies and the consulting
firms can increase their awareness of the entrepreneurial knowledge generation potential
ingrained in their relational dynamics. They may therefore be able to more clearly and with
more awareness define the knowledge creation goals for their consulting projects, to more
effectively design (and manage) the related cooperative learning dynamics, and to evaluate
also the cognitive value (new diagnostic, therapeutic and change-implementation capabilities),
rather then only the economic value of the consulting intervention results. The client may then
intend and appreciate the management consultant's work not merely as "seeking a solution to
a specific problem" but as "facilitating the endogenous development of its cognitive
capacities" (and hence of its distinctive abilities). It is on these base that he could select the
consultant and, above all, plan its expectations and active co-operation in the consulting
process. Moreover, the consultant may be encouraged to interpret consulting relationship as
an opportunity for cooperative learning, which will not only increase the client's competences
base, but also enable himself to develop new and "unique" knowledge (which only the
specific consulting context can induce), and consequently new distinctive consulting
capabilities that can be fundamental to its competitive success.
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