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–the practice of some consultants of using free diagnostic surveys as a marketing tool (since the consultant cannot really work for nothing, another client will then pay for this “free” survey); and

–the practice of some clients of collecting a large amount of information and ideas from several consultants, who are all invited to make the same survey, without paying anything.

Free diagnostic surveys used to be quite common in some countries in the past, but have recently been much less so.

7.2Preliminary problem diagnosis

The preliminary diagnosis should start from the moment the consultant is in touch with the client. Everything is relevant: who made the initial contact and how; how the consultant is received at the first meeting; what sort of questions the client asks; if there are any undertones in those questions; what the client says about the business and his competitors; if the client is relaxed or tense; and so on. The consultant has to sort out this information and then complete the picture by getting some hard data and looking at the problem from new angles – for example, by talking to people other than those involved in the first meetings.

Scope of the diagnosis

The purpose of the preliminary problem diagnosis is not to propose measures for solving the problem, but to define and plan a consulting assignment or project which will have this effect. The scope of the preliminary diagnosis is limited to a quick gathering and analysis of essential information which, according to the consultant’s experience and judgement, is needed to understand the problem correctly, to see it in the wider context of the client organization’s activities, achievements, goals, and other existing or potential business and management problems, and realistically to assess opportunities for helping the client.

The scale of this preliminary diagnosis depends very much on the nature of the problem. Very specific and technical issues do not normally require a comprehensive survey of the whole client organization. On the other hand, the consultant must avoid the trap of accepting a client’s narrow definition of a problem as technical without looking into the constraints and factors that may impede the solution of that problem, or may show that the problem is much more or much less serious than the client thinks. Therefore even if the problem lies in one functional area only, or concerns the application of some specific techniques, the consultant should always be interested in the more general characteristics of the client organization.

If the consultant is brought in to deal with a general and major problem, such as deteriorating financial results, or inability to maintain the same pace of innovation as competitors, a general and comprehensive diagnosis or management survey of the client organization is essential.

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The time allocated to preliminary problem diagnosis is relatively short. As a rule, one to four days would be required. In the case of more complex assignments concerning several aspects of the client’s business, five to ten days may be needed. If a more extensive survey is required (e.g. in preparing company turnarounds, major reorganizations, buy-outs or mergers, or for any other reason), this can no longer be considered a preliminary diagnosis, but an indepth diagnostic survey (see Chapter 12).

Some methodological guidelines

The basic rules, procedures and analytical techniques used in the preliminary problem diagnosis are the same as those of the later diagnosis, as reviewed in detail in Chapter 8. Many consulting firms have developed their own approaches and guidelines for a quick assessment of clients’ businesses.

The diagnosis includes the gathering and analysis of information on the client’s activities, performance and perspectives. It also includes discussions with selected managers and other key people, and in certain cases also with people outside the client organization. Basically, the consultant is not interested in fine details, but is looking for trends, relationships and proportions. An experienced consultant needs to be observant and can often sense potential problems or opportunities that are not immediately apparent: the way people talk to and about each other, the respect for hierarchical relations, the cleanliness of workshops and offices, the handling of confidential information, the courtesy of the receptionist, and so on.

It is essential to take a dynamic and comprehensive view of the organization, its environment, resources, goals, activities, achievements and perspectives. Dynamism in this context means examining key achievements and events in the life of the organization and probable future trends as reflected in existing plans and assessed by the consultant personally. The client’s strengths and weaknesses ought to be viewed in a time perspective – a present strength may be merely short-term, while a weakness, hidden at present, may become a threat to the client’s organization in the long term. The consultant should look particularly at future opportunities – indeed, the detailed diagnosis and further work to be proposed to the client should be oriented towards these opportunities above all. This approach is summarized in figure 7.1.

As already mentioned, even if the problem is, or is likely to be, in a single functional area, the consultant should take a comprehensive view of the organization. How comprehensive is a matter of experience and judgement, and no universal recipe can be given. Most management consultants emphasize the need for some sort of wider appraisal of the organization before confirming the existence even of a fairly limited problem, and the feasibility of handling it within certain terms of reference.

It is recommended that the consultant should proceed from the general to the particular: from overall objectives and global performance indicators to the reasons for substandard performance or missed opportunities (or to interesting

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Figure 7.1 The consultant’s approach to a management survey

Past

Present state of client affairs

Future

Strengths and weaknesses

Possible improvements, opportunities

Action needed and help proposed

future opportunities), and then to an examination in some detail of selected areas of the organization’s activities. An approach that starts the other way round, by examining each management function or process (production, purchasing, marketing, etc.) in turn and hoping for a balanced synthesis at the end, will entail much unnecessary work and might well prove misdirected. The movement from the general to the particular helps the consultant to limit the preliminary diagnostic survey to matters of critical concern, or conversely may indicate that, to stand the best chance of achieving the results expected, the inquiry must take into account every aspect of the enterprise’s operation.

Such an approach implies that the consultant’s analysis will focus on basic relationships and proportions in the client organization, such as the following:

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●relationships and proportions between major processes, functions and activity areas (e.g. allocation of human and financial resources to marketing, research and development, production, administration);

●relationships between main inputs and outputs (e.g. sales related to materials consumed, the wage bill and the total workforce);

●relationships between the principal indicators of performance, effectiveness and efficiency (e.g. productivity, profitability, resource utilization, growth);

●relationships between global performance indicators and main factors affecting their magnitude in a positive or negative way (e.g. influence of the volume of work in progress on working capital and profitability);

●the contribution of the main divisions and product (service) lines to the results (profitability, image, etc.) achieved by the organization as a whole.

The comprehensive, overall approach should be combined with a functional approach as necessary. For example, the precarious financial situation of a company may be caused by problems in any functional area: by badly organized production, by costly or ineffective marketing, by excessive spending on unproductive research, by the shortage or high cost of capital, or something else. As already mentioned, if an assignment is likely to be exclusively or mainly in one technical area, this area will need to be examined in greater depth than other areas, and the examination of the organization as a whole will be limited to what is necessary.

In summary, this approach will tell the consultant if the work envisaged can make a meaningful contribution to the principal objectives of the client organization and what critical relationships and linkages are likely to affect the course of the assignment.

Using comparison

While recognizing that every client organization is unique and has to be treated as such, the consultant needs reference points that can guide him or her in a preliminary quick assessment of strengths, weaknesses, development prospects and desirable improvements. The consultant will find these by making comparisons with:

–past achievements (if the organization’s performance has deteriorated and the problem is essentially corrective);

–the client’s own objectives, plans and standards (if real performance does not measure up to them);

–other comparable organizations (to assess what has been achieved elsewhere and whether the same thing would be possible in the client organization);

–sectoral standards (available in the consulting firm or from another source).

A comparison of well-selected data with sectoral standards or with data from specific similar organizations is a powerful diagnostic tool. It helps not only in quick orientation, but also in making the client aware of the situation, which may be quite different from what he or she believes.

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The comparisons should encompass not only figures, but also qualitative information (e.g. the organizational structure, the corporate culture, the computer applications, or the market-research techniques used). In other words, the consultant should determine what levels of sophistication and performance and what sorts of problems he or she would normally expect to find in an organization of the type of the client enterprise.

Such a consideration is meaningful if the consultant has some method of classifying and comparing organizations (e.g. by sector, product type, size, ownership, market served and the like). For each class there would be a list of various attributes that are characteristic of it. Many well-established consulting firms provide their consultants with such data and guide them by means of manuals and checklists for management surveys and company appraisals. It is in the interest of the new firms to acquire or develop such documentation.3

Notwithstanding certain general rules, senior consultants undertaking diagnostic surveys tend to have their personal priorities and specific approaches. Many of them start by looking at important financial data, since these reflect the level and results of the activities of the enterprise in a way that lends itself to synthesis. Others emphasize production: they believe that a simple factory tour is most revealing and tells an experienced observer a great deal about the quality of management. Still others prefer to examine markets, products and services before turning to a financial appraisal and further investigations. These are just different starting-points reflecting personal experience and preferences: eventually the consultant has to study all areas and questions needed for a global diagnosis in order to see the problem in context and perspective.

The client’s involvement

The dialogue with the client should be pursued during problem diagnosis. The consultant should find out how the client feels about various aspects of the business: what its goals, objectives and technical and human capabilities are, what its potential is for making changes, and what style of consulting should be applied. The client, on the other hand, gets to know the consultant better and has an opportunity to appreciate his or her way of obtaining information, establishing contacts with people, grasping the overall situation, making judgements and distilling essential facts from the vast amount of data that can be found in any organization.

Sources of information

A successful diagnostic survey is based on the rapid collection of selective information that reveals the type and extent of help that the consultant can give to the client. Diagnostic data tend to be global in nature. The main sources of information for a preliminary diagnostic survey are published material and records (box 7.2), observation and interviewing by the consultant, and contacts outside the client organization.

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