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What Makes a Good Business Advisor or Consultant

February 1st, 2019

I once read that a consultant is a person who consults, and an advisor is a person who advises. I can’t think of a more stupid way of defining a concept but for my purpose I will consider them to do the same thing which in a business context is to help the management team of the business achieve the full potential of the business by bringing an outside perspective and different skill set to bear.

Consulting is an independent service. That is, a consultant is detached from the client’s business.   Her role is to identify and investigate problems or opportunities specifically in the areas of developing a competitive strategy, organization structure, process design and systemization, to recommend appropriate action and to assist with implementation.

The independence of the consultant is what brings value to the role simply because she’s not burdened with the established beliefs and the traditional ways of doing things in her client’s businesses.

But independence is also associated with no direct authority to either decide or implement change. The consultant therefore operates from a tenuous position involving persuasive influence in complex relationship with the clients and their team members.

A consultant must not only be highly skilled in the use of analytical and problem solving skills but she must  have  very  strong communication skills. By far the most important skill is to clearly and accurately identify and describe the problem being the most likely cause of under-performance.  There is no point finding a solution to an issue that is not the constraining problem.

She must also have strong analytical skills (in the sense of being able to reduce complex phenomena into their constituent parts) and she must possess the skill of synthesis – being able to put the parts back together again as a coherent whole. But too much analysis does not make for better decisions because it results in over-confidence which ends up undermining the accuracy of the problem solution (as reported by Malcolm Gladwell, Blink p.139-40 based on a study published by Stuart Oskamp in 1965).

Above all, a consultant is an agent of change. It almost goes without saying that a business only needs a consultant if there is a need for change.  In today’s turbulent environment every business on the planet needs to change. It’s arguable therefore that every business needs a consultant’s perspective – regrettably, the vast majority of people in business are either too stupid, too ignorant, too lazy, or too complacent to accept this and the mediocre performance of their organization reflects it.

A consultant’s job is not to offer miracle solutions to difficult problems. Consulting is difficult, systematic, and disciplined. It’s based on the analysis of hard facts from which judgements are formed about feasible solutions.

There are three basic consulting styles and each has a role to play in specific circumstances. These are: analyst, expert, or facilitator.

The analyst diagnostician’s function is to dispassionately examine an organization or a part thereof using a clearly defined methodology. The principal purpose is to identify problems and opportunities. She will prepare a report for management based on her findings and having done that, her job is complete.

An expert has a narrower brief than the analyst. She will generally have a high level of skill in a particular domain e.g. finance, manufacturing, packaging, logistics, strategic thinking, marketing, team building etc.  She will give specific “this is what you need to do” recommendations to management and she may also become quite heavily involved in the implementation of her recommendations in her specific domain. Accountants are very much in this space when they are acting as “accountants, auditors, and tax specialists.”

A facilitating consultant is both analyst and expert but her “expertise” relates to her ability to see the big picture through the eyes of the constituents of the client’s business. The facilitator’s role is to help a client see and understand the big picture perspective and then to assist in the complex process of implementing a solution to identified performance improvement barriers. I would also locate coaches in this space.

The consulting style that I advocate accountants adopt is a blended synthesis of facilitator and analyst underpinned with a strong dose of domain expertise in financial management and business development.

Accountants, in my opinion, are best placed to perform the function of facilitating consultant. However, for many of them their training does not naturally equip them for this role. Most of our training and most of our practical experience has been concerned with the measurement of results not the production of results.

In contrast, a consultant must continuously look out at the future, she deals with ambiguity constantly, her focus must always be on the activities that give rise to results rather than the results themselves.   She must also deal with the human dimension in business and she needs to be part of a team. She needs to come to terms with the fact that in business there’s no immediate right and wrong, there’s only a continuous and dynamic process of change, observe and measure, analyze, synthesize, change …

In my opinion an “accountant” can assume the role of consultant simply by (1) changing his or her mindset and (2) investing time and effort mastering the analytical and problem-solving tools needed to advise their clients.

Success in business generally comes not from a big bang strategy but from getting all the little things right through systematic process design and constancy of purpose. Our clients generally stumble from one problem to the next and, regrettably, they accept it because that’s the way they think all businesses operate. A talented business advisor will help her clients identify challenges and opportunities to unblock the barriers to performance improvement.

This is a list of the attributes I believe that person should possess:

  • Is honest and shows integrity which is a core personal value
  • Has a tolerance for, and admits, mistakes
  • Exhibits a balanced blend of humility and self-confidence
  • Has a thirst for knowledge – reads profusely and is a life-long learner, takes CPD very seriously and invests time and effort
  • Enjoys sharing knowledge and experience through coaching and teaching
  • Has a high tolerance of ambiguity
  • Is patient but resolute (but willing to change if the facts mandate it)
  • Has contagious enthusiasm and energy
  • Is a creative thinker
  • Is decisive
  • Is not a perfectionist
  • Has courage … confronts issues, explores concerns, comfortably deals with conflict
  • Communicates positively and with purpose (i.e., influence)
  • Celebrates all wins enthusiastically (especially small ones)
  • Has excellent problem identification and solving skills – this includes training and understanding of relevant consulting tools
  • Understands how several cognitive biases interfere with rational decision making, these include confirmation bias, availability bias, loss aversion, the sunk cost fallacy, and the endowment bias, overoptimism bias, timing bias, and anchoring.
  • Has a sense of humor
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