Software, and the death of traditional management consulting

Photo by Robert Kneschke

A friend recommended that I read an article, how McKinsey Destroyed the Middle Class. It basically summarizes how management consultants and elite business school MBAs had taken a bigger role in many companies, making middle management less important and placing ordinary people to execute simple tasks. The article also emphasizes the political aspect, and why liberals are skeptical about former McKinsey consultant and ex-Presidential candidate, Pete Buttigieg. 

But I think the story is more complex and we can already see transitions in other directions. Management consultants have often created puritanical processes and focus in many companies. But those companies have also become very vulnerable to any changes occurring inside or outside the company. More and more startups challenge them by changing the rules of business, but changes in software and the more important role of developers is also changing this top-down thinking.

We can see how consumerization has spread to companies. Employees use their own tools and software to do work more effectively than the top-down processes and legacy IT systems would do. Some innovative companies, like Supercell, have created models of more independent teams where this is possible. And in Silicon Valley, companies have already become frustrated with the traditional top down model in B2B sales where you can easily spend months or years and millions of dollars to get a corporate deal.

Open source and cloud companies offer software components and services for free or for a very low price and employees can start to use them almost independently. They can sometimes submit those small costs with their normal business expenses and no formal decisions are needed. Software developers, in particular, have felt it very difficult working with legacy IT systems and slow-moving processes when better and more effective solutions are coming to market all the time.

There is a link between elite management consulting principles and people who just start to use tools independently, or developers that make better solutions independently from open source components. The latter group are challenging the power and top down thinking of top management and inflexible models to create things. They feel, they want to make things better and use their own brains to make them better. Some could say this is part of a counterattack of the middle class.

Of course, things are not always so simple. Some visionary people in top management are happy to see this. They can even encourage lower level people to use their own brains and make things more effective and better. But there are also people in the management teams that don’t like this kind of development. They can see it challenges their position, or even worse, they cannot use projects in the traditional way to promote their own career paths inside the organization by taking credit.

I was able to participate in an interesting project of a military organization where they looked for new and more dynamic models to operate, especially in the gray area between a war and peace; Ukraine’s crisis was an example of this. The project included models where local members of the military can organize things bottom up, when something unexpected happens rapidly, and to use their daily tools like mobile phones and messaging services to organize things, yet still keep them in control. It was a very good example, how the use of everyday devices and software have empowered many more people to do things independently. The biggest challenge for the project was that the traditional big-dollar military suppliers and career officers didn’t feel they get much value from it themselves.

I see more examples of this in my daily businesses, for example,

  • Prifina is developing solutions where people can manage and use their personal data to challenge the dominance of big data giants. Prifina alone has more than 11,000 developers interested in the project and also make open source components from volunteer work to enable this. There are also other communities and activities in the same field.
  • Robocorp enables the use of open source software and cloud services to make RPA solutions. They have created a new job category called Software Robot Developers, basically any talented software developer can start to implement and offer software robots to handle all kinds of daily tasks. This is very different from top down models where consultants identify processes and then hire IT consultants to implement RPA solutions with expensive software licenses.
  • Many distributed models, like distributed ledger or distributed AI, are looking for models where independent people and smaller companies can work as an equal partner inside a network, not where a big company makes the rules that impact subcontractors, too.

We are seeing the dominance of the management and process consultants getting weaker. Of course, things don’t happen overnight, but we have seen the turning point. The political impact can be more complex to predict. And then there are also more complex cases like Uber in the Atlantic article, where there is literally no corporate hierarchy through which drivers can rise up to join management. One can argue it is really an example for top down control, but at the same time it offers more independent work for many people to drive and make money as they wish. In business we see many nuances of these models, politicians today prefer to see things as black or white.

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