I’m Sorry I Broke Your Company | Karen Phelan

Summary of: I’m Sorry I Broke Your Company: When Management Consultants Are the Problem, Not the Solution
By: Karen Phelan


Embark on a voyage through ‘I’m Sorry I Broke Your Company,’ a prolific insight into the world of management consultants, as author Karen Phelan presents both the pitfalls and benefits of hiring these professionals. Explore the history of business consulting, the rise and consequences of performance metrics, and the complexities of leadership development. Ultimately, examine the importance of communication, empathy, and flexibility within the organization while recognizing that theories and models often don’t account for the human element in businesses.

The Limits of Management Consulting

Hiring a management consultant to solve business problems can make a difference, but finding the right one is crucial. Many consultants lack real-world experience and may miss the emotional needs of employees, which form the foundation of most business problems. While consultants can analyze and apply complex theories, they might not identify the dynamics happening between people within the company. Thus, it’s imperative to balance a consultant’s expertise with a deep understanding of your employees and their needs to produce effective solutions.

Evolution of Business Consulting

The history of business consulting began in the 80s when Michael Porter wrote his book on analyzing industries and competitors, which inspired Deloitte Haskins & Sells to adopt his framework. Consultants of the 90s emphasized downsizing and ROI for financial success. Then came the “Strategic Intent/Core Competence” paradigm by Gary Hamel and C.K. Prahalad, where managers had to predict the future to build competencies for their envisioned business. Today, consultants must avoid outdated strategies and think creatively to add value.

When Consulting Meets Real People

A summary of the story that outlines a common error in the consulting industry by overlooking communication between managers and line workers leading to their demise.

Phelan started in consulting, and eventually, she was sent to investigate a small refrigerator firm’s production issues, such as excessive inventory, long lead times, and inability to meet customer orders. Looking to take advantage, her team sold software that ended up being an ineffective solution. Understanding that a company is made of people, unique and unpredictable, she decides to speak to the shop-floor employees. She discovers the manufacturer pays employees by the number of pieces they produce, which, in turn, leads to an excess of inventory. She suggested changing the compensation structure and getting rid of the expediters, but the underlying problem was the lack of communication between the line workers and managers. One cannot redesign people. If you try to, it results in mistrust, conflicting goals, and impatience, which affects any re-engineering processes.

Organizations that do not communicate are bound to experience recurring cycles of games, controls, and cross-checking. Managers who try to keep multiple projects going simultaneously, often fail to pay attention to details, resulting in shoddy products. Some executives spend so much time perfecting new products that they ultimately never launch anything. Phelan’s story highlights a common error in the consulting industry, overlooking communication between managers and line workers leading to their demise. By understanding, acknowledging, and communicating people’s emotions and quirks, internal operations can run smoother, which positively impacts businesses.

The Pitfalls of Performance Metrics

In his book “Avoiding the Corporate Death Spiral”, Gregg Stocker warns against the dangers of relying solely on performance-driven metrics in the workplace. While incentives can motivate employees to meet goals, they can also lead to unethical behavior, as seen in the case of California’s Sears stores, where salespeople claimed to fix cars that were not broken in order to meet targets. Similarly, metrics can create conflicts between departments, prioritize individual financial gain over the organization’s needs, and encourage employees to cut corners to meet quotas. Stocker emphasizes the importance of good management in preventing such pitfalls and argues that consulting firms should not simply provide recommendations but also ensure their implementation. Ultimately, companies must decide how to measure success and be mindful of the unintended consequences of their chosen metrics.

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