Posted , in Business model
Does the public sector need consultants?
Former Australian Prime Minister, Malcolm Turnbull, has become the latest high-profile figure to denounce the public sector’s use of consultants. Talking to InnovationAus’s Commercial Disco podcast as part of efforts to promote his autobiography, he speaks of the “cult of the consultant” that has developed to such an extent that “the skills for doing so many things that are really core business are no longer in the public service.”
The timing of his pronouncement could hardly be more damaging—even if it remains for Australians to tell me how much he’s actually listened to—but it’s neither surprising nor new. The global financial crisis of the late noughties was followed by uproar in the UK over the then Labour government’s excessive use of consultants, most of whom were summarily booted out when the Conservatives came into power in 2010. And only the other day, Max Hastings attempted to reignite the debate with a piece in The Times that called on ministers to ditch consultants and recruit “real talent.” In times of crisis, the idea that there are lots of well-paid consultants infesting the public sector is bound to get people a bit hot under the collar.
But can it be defended? Yes, I think so. Except in one, possibly critical, respect.
The case for the defence goes right for the jugular of Malcolm Turnbull’s main line of attack. Claims that the skills for doing “core business” are no longer in the public service miss a very important point: The private sector finds itself in precisely the same position. To understand why, we need to start by looking at the activities that leaders now consider to be core to their business. Research we started in 2019, and have carried over into 2020, is consistently finding that no matter where you are in the world, the activity most likely to be considered “core” is now technology. That represents a massive change from the days when technology was largely seen as a commodity that was important but peripheral; in much the same way that a range of support services, like the people who cleaned your office, might also have been seen.
But something else has changed: In the past, the trend was for figuring out which activities weren’t core to your business, and then carving them out and handing them to a provider of outsourced (and usually offshore) services, while keeping core activities in-house. But there’s been a complete volte face in that respect, too: Now it’s the very thing most likely to be considered core that’s also the most likely to involve the help of external parties. Why? Because business leaders—like the leaders of consulting firms, incidentally—now recognise that they can’t operate in a vacuum. They need to respond to rapidly-changing market conditions, and particularly to rapidly-advancing technology, by surrounding themselves with an ecosystem of providers, advisers, thinkers, and doers. It’s the only possible way to keep up. Instead of an organisation trying to pit itself against a hugely-fragmented and vibrant tech scene in the war for talent and ideas, it allows the two to collaborate. And consulting firms, who are almost uniquely well-placed to bring technology and strategy services together, have a huge role to play here.
There’s another line of defence to offer, although it’s weaker, which is that right now, many consulting firms are doing work in the public sector without being paid. The same thing happened in the aftermath of the global financial crisis, when pro-bono work became a big feature of the market. OK, so some will be doing so as a result of a cold calculation that showing their client a bit of love in times of trouble is likely to pay dividends in the long run; but – whisper it quietly – they may also be working for free because they want to do something good. They want to help. Not every consultant I’ve ever met strikes me as the type of person who is itching to leap into public service at the first sign of a crisis but they do exist, and more so with every new intake.
But that point rather links through to the fly in the ointment, which is that consultants won’t work without pay indefinitely, and when they do start getting paid again, they’ll get paid a lot. The idea of consultants as part of a critical ecosystem in large parts of the private sector is made so much more palatable because the difference between what they and their clients earn has been narrowing in recent years. Like the lock of a canal, the gates between two parts swing open effortlessly when the water levels on either side are the same. But that’s not the case in the public sector. The average Deloitte partner (just to pick on one firm) earned more than £800,000 last year. While most firms charge public sector clients less than others, there’s only so long that an £80,000-a-year senior civil servant is going to be happy holding hands and skipping through a bountiful ecosystem of collaboration with someone who’s earning ten times what they do.
So I think the public sector needs consultants, perhaps more than it ever has. But unless consulting firms find a way to make it easier for them to do so—and let’s be honest, occasional pro-bono work isn’t a long term solution—then they’re going to continue to come under fire from ex-prime-ministers, commentators, and increasingly nervous tax-payers.