So, it is official: more and more consultants are encouraged to use chatGPT to enhance their efficiency and productivity (ergo profitability) for their organisations (BCG et al) and supposedly for their clients as well.
This reminded me that by and large it is still not understood how consulting and advisory should be used as a support for organisations, so I aim to clarify these in this op ed here.
As a first step, when do companies need an external service provider?
A few different scenarios apply:
They are in need of strategic business direction setting (either too many options or unclear options due to lack of knowledge), ergo they need knowledge, network they don't have (advisory)
They are in need of very specific, business critical knowledge (advisory)
They are in need of tactical and/or operational direction setting (advisory)
They are in need of tactical and/or operational structural improvements, business transformations, strategy implementation (consulting)
They are in need of operational process/system improvements, improvements in very specialised areas (consulting/contracting)
They are in need of knowledge building at tactical/operative levels (consulting/contracting)
They are in need to bridge a temporary organisational gap (ad interim)
Let's' see this in a matrix:
Let's quickly clarify what's what in the world of consulting:
Based on solid work experience and know-how (typically over 15+ years combined industry and consulting sides), ideally from more than one industry and with adjacent functional knowledge
Broad breadth and depth of expertise (broad, thorough general knowledge and min 5+ areas within where the person is an in-depth expert, both holistic/systems view and vertical view) OR a very specific, in-depth niche expertise that is not broadly available and is business critical
Provides strategic value (choosing either/or can make or break the business and the choice carries significant business value and builds strategic understanding for the leadership)
Can also additionally use significant value of the existing professional network of the advisor
Value-based, never time-based (measured in value/ROI for the organisation, not in time)
Based on solid work experience in at least 2-3 specialist fields
Already sees the holistic impact, but focuses still on the vertical impact
Provides tactical/operative value (getting support in the field builds robust value at tactical/operative levels already short-term in the verticals, focuses on transfer of knowledge and embedding the new ways of working)
Doesn't require the use of the expert's network, as it focuses on functional knowledge
Can be both value-based or time-based, but the value delivered should never expressed in an exchange of time for money, but straight ROI (return on investment defined before project starts)
Based on solid work experience in at least 2-3 specialist fields
Doesn't require holistic/systemic understanding of impact, but requires specific understanding of the vertical impact it focuses on
Provides tactical and operative value (getting support in the field builds robust value at tactical/operative levels already short-term in the verticals)
Does not focus on knowledge transfer, but providing the knowledge over a period of time to plug the existing gaps in the organisation
Time-based, but still focuses on the final ROI (return on investment) that the functional knowledge provides for the business over the specified time
Ad Interim management/assignment (transactional)
Based on solid work experience over a broader field and min 2-3 specialist fields
Has both systemic/holistic view as well as focused view of the specific verticals
Primarily provides tactical and operative value, BUT it can also provide strategic value, depending on the level required and the nature of the gap to be plugged for the organisation
Focuses on closing an organisational gap over a shorter period of time (typically 3-6-9 months, depending on industry and the level of the role)
If the assignment goes over 9 months, then the assignment is not a purebred ad interim assignment, but a combination of Ad Interim and Consulting
Time-based and normally focuses on keeping up a given standard and organisational setup over the agreed period (while they find the permanent successor for the role)
If it is a combination of Ad Interim and Consulting, then it is still time-based, but focuses on both keeping the organisation afloat while improving processes and ways of working
The two types of ad interim assignments are to be paid at different levels based on the value provided to the business
Now, back to our original point of argument about the use of chatGPT in consulting:
If we look at the definition of the different categories of external support a business can get, it becomes quite clear that at advisory and higher levels of consulting, the person must possess the knowledge that they can deploy rapidly, efficiently and productively to provide the value and spending time on chatGPT would actually be detrimental for the advisor or for the consultant as the value-based pricing implies that both the external service provider and the client (industry business) are looking at spending as little time as possible with the highest value possible to get from the interaction.
The problem we see and face as of today is that most companies don't take the time to understand how much more value they could get, if they turned to value-based pricing and they still only calculate time-based when they look to hire external support at all levels or the constantly try to calculate the time-based money exchange behind.
Now we know where this usually comes from, the lack of understanding of value-based pricing and the lack of understanding of the business on the client's side (ergo, it is hard for them to estimate the effort they would put in on their side and it adds to the uncertainty).
With a good adviser, a client should never worry about the effort implications as the advisor (or adviser) will be able to give guidance on how to establish those efforts as part of the engagement.
All of those clients I've provided strategic advice to, can confirm that the effort and time they spent on their side was almost negligible, but the value they got made a huge difference for them.
As soon as we look at transactional work, operative level contracting or more junior fields of consulting focusing on the operational levels of incremental business improvement, then using chatGPT can make a difference for both the external service provider and the client.
There is an element of learning in the process on both sides. That's why the value involved in the transaction is much lower and time-based.
That's where chatGPT and or AI (artificial intelligence) in general can help the contractor/junior consultant get into the job faster and start providing valuable operative support earlier, potentially decreasing the overall time that the whole assignment would take as well (win-win for both).
BUT, and that's the key here:
The level of information and insights chatGPT can provide can help the consultant get new information about a field, but can never tell them if that's actually sanitised and valid information, especially not in the context of the client they serve (as we have seen with the content developing, it has its highs and already shown lows as well). So to get to the level of providing higher value, the individual will inevitably go through failures and will learn from those, or needs help from their consulting organisation to provide that insight for them.
Who should pay for these then?
Would the consultant's or the client's organisation pay for this?
The answer is simple: Not the client.
Specifically as many consultants go into consulting as they always see and quasi learn something new (if they are ethical, not in the field they provide services for, but other adjacent areas that enrich their know-how) by seeing new clients every time (many things are the same in specific industries, but no two companies are really the same).
As a client, you know you hired the right external service provider, if the below are true for your interactions:
You both managed to build up a relationship, which is based on trust and you can share issues/details that truly matter to get the most out of your interactions
Your service provider promises fair results, but they also don't back down when it comes to tough discussions and highlighting business risks as they know that it can degrade the value they provide for your benefit (they won't say yes, just to get the business and your money)
Your service provider is open and honest if they aren't the best to tackle your problem and refer you to the right provider in their network to ensure they give you the value you deserve as a client
You are able to evaluate what value and level of work you are getting and able to ascertain what you should pay for it as well (there will be no grey areas as such or uncertainty)
You are able to address any concern during the interactions without hesitation and your service provider is open and willing to address these on their side as well
Your service provider does not try to sell you more work than needed and will ensure that the relevant knowledge transfers happen (depending on level of interaction), as they know that a business cannot always need their help (otherwise the business is not viable and your service provider is a permanent contractor, not an external service provider - see definitions above!)
You know you can reach out to your partner, whenever a new issue comes up that you don't know how to tackle and you trust that they will provide you with their best assessment and direction
So, should an external service provider encourage the use of chatGPT in their business or not?
👍 At advisor and higher consulting levels, definitely not.
☝️At contracting and junior consultant levels, yes with supervision and direction from more senior advisers.
Let's be honest, as external service providers, we always look forward to and are eager to learn more and thus we use every tool we can put our hands on to make that happen (curiosity, lifelong learning really is part of our DNA).
But consulting is a business of relationship and trust, which one can only violate once to lose all credibility.
So let's remain ethical and use these tools only, when these are appropriate and be honest about it towards ourselves and clients alike.
I personally prefer human interactions and active listening over online tools in general (despite being an official introvert and trying every tool that comes my way), as it always gives you more than what you dream of getting, when it comes to learning details about a business and that's crucial to providing real value as an external service provider.