- Posted by jbehrendt on November 30, 2009
It is a long time that I wrote my last entry - and I have to apologize not to have been more "regular", considering that my intention was to write at least once a week what is going on in "the life of a management consultant". I promise not to give such a break again....
Well, to be frank, not much was going on, except of working extremely hard to finish the overdue work I described in my last post. Now the presentations about "Restructuring for Strategic Growth" are done, the final presentation for the restructuring project I described last time is completed, and even the hardest work, preparing and running two seminars for top executives in a German retail group, are done. These two seminars were the hardest part of it. Despite not running them alone but together with seasoned managers from the company itself, there is always a high expectation from top executives that you are providing them with deep insights and background information about the work they are doing on a daily basis but they never heard about, and, at the same time, being relevant and ready for immediate application for their daily business. It is a couple of years ago that I was teaching heavily - but at that time it was at university, framed by a well-defined curriculum and the never-ending thirst of students (or the academic system) for theoretical knowledge, with the application of theoretical knowledge being mainly limited to examinations and well-defined case studies, and with a less time-pressured and, in this respect, less demanding auditorium.
The two seminars were about "value-based controlling" and "financial management for an international retailing group", both of them based on the tools used in capital markets for enterprise valuation, and for measuring the performance of existing businesses in financial terms. It was a lot of fun for me for revising and preparing the slides for half-memorized issues like the irrelevance theorem of Modigliani-Miller, the capital asset pricing model, the time-state preference model, etc., but it seemed to be less of fun for some of the participants, struggling with basic mathematics avoided for long periods. However, if you go to a seminar to extend your knowledge about finance or controlling, the seminar has to contain something you are not already doing in your daily business anyway, and expecting that the only thing you will get if you spend part of your weekend are simple cooking recipes would be a disappointment for the participants - so go on with some theoretical background. The most interesting discussions, therefore, were about discovering that the seemingly sophisticated models and tools in finance and accounting are, in fact, based on rather heroic assumptions, and that it is not a good idea to apply these tools if you are not aware of their shortcomings, and if the assumptions or base parameters that are used are highly uncertain. Therefore, the results were maybe less about how to do things, and which additional sophisticated additional tools are available, but more about how to apply existing models, and under which conditions rather not to apply them. In my opinion, the key learning was that it is not "good management" to delegate managerial decisions to anonymous tools, which seems to be a main trend in some management areas - do not decide by your own but rely fully on a rational tool which gives you an indication what to do, and which you can blame in case the results of the decisions are not as desired. Never forget that these tools are only reflecting the quantitative part of a decision, and that it is neither possible to fully and properly reflect risk and uncertainty about the future, nor to show all implications of a decision (including the rather "qualitative" ones) in a proper way.
According to the questionnaires immediately distributed at the end of the seminars, participants were happy about it (where the weakest part still was the - in parts - limited immediate relevance for their daily business). I was even more happy when I completed them - it was very hard work, taking in total more than 20 days for a net amount of teaching of only two days. My personal learning: do not accept consulting (or teaching) assignments for areas where you are not dealing with frequently in existing projects, and where you already have a lot of slides, case studies and materials available.
As usual, the best part for an independent consultant is that hard work is (or should be) compensated for by a long weekend or another time of break where you can recover. This time, it was the Turkish "Kurban bayram" (festival of sacrifices), this time lasting from Thursday until today, Monday, and offering the opportunity to travel to the beautiful Agean coast with its olive oil pruduction, its nice mountain villages, and good-quality red wine which we tested in every occasion. Iyi bayramlar to all of you!