Low risk plays provide no differentiation

A guest  post from the Unreasonablemen.net

This might be obvious but I see it time and time again. Old world companies are so fixated on risk that they are going nowhere. Old world companies behaviour can be characterised by panic, followed by engaging consultants and outsourcing to drive down cost and build ‘unique capability’. End result: not a lot of action, no differentiation, but a whole host of warm fuzzies are derived. That is to say it’s more about the process and less about the outcome.

Let me expand on this.. I had coffee with a friend who attended a senior managers day at a large Telco. The interesting thing about this conference was some very insightful thinking provided by Michael Porter who spoke at this event. He asked the executive if they had engaged McKinsey’s to help with their strategy. When the response was ‘yes’, he challenged this decision saying

how do you think you are going to be different from your competitors when you are all engaging the same consultants and getting the same advice?

Michael hit the nail on the head there. It’s an interesting phenomenon, maybe 15 or 20 years ago it wouldn’t have mattered because everyone played cosily in their own markets, but globalisation has changed all that. Unfortunately management practices haven’t kept up. His point also raises a cultural issue. To me he also said “why is your culture supportive of outsourcing key decision functions, ticking a box and not on creating real differentiation”

Consulting isn’t unique in this. The current flavour of the month with Telcos is reinventing themselves. But here’s the kicker, they are all doing this with the same company. Check this out

Tech Mahindra, a company which is incidentally 43% owned by BT, is currently doing systems/transformational/rebuilding of the following Telecommunications companies, Fuji, BT itself, Telecom NZ, Botswana and if you look at their own website a bunch more.

How are these guys going to differentiate themselves when there is a strong possibility they will be getting the same stuff – consulting, design, software…

It appears to me that New World companies are different, they’re disrupting, attracting talent and getting on with it. They back themselves to achieve and, generally speaking, make things happen. Why can’t old world companies have this kind of attitude?

2 Comments
  • I have always had the feeling that there is more behind a McKinsey advise than just an advise.

    You probably pay to have the name of a big strategy consulting firm at the bottom of your project charters instead of paying to have real innovation in your domain.

    I don’t say the work of McKinsey is worthless (I have a few friends there that are really impressive). They can certainly give a fresh look at your industry, bring real best practices and new ideas.

    But having such a name in your project is some kind of a stability for investores, shareholders, …

    I am not sure that for big companies being really different is always a plus unless the culture at the company, globally speaking, is so.

    It is also maybe the sign that the telco industry is far from being overcrowded and that good old recipes that doesn’t require new investments are still working.

    My 2 cents.

  • Hi Yves,

    These consultants do bring a warm fuzzy feeling that blogs and other new forms of commentary don’t bring. But do they bring originality, cross border competitive differentiation and a culture that backs itself?

    I’ve got no qualms about the talent of consultants. I do challenge their relevance and value.

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