Son, Bane, what are you studying now?

When I first became a consultant more than twenty years ago, one of my biggest challenges was explaining to my parents and, indeed, most of my friends at the time what I did for a living. To make matters more complex, even then, I needed to figure out what consulting was and what I would do in life.

Making a career choice is always tricky, but when you're a baker, doctor, pharmacist, blacksmith, carpenter, or the like, it's easy to explain, even in a song. However, there was no place for a consultant in that song. In the hierarchy of professions, ranging from easy to complex, I became a consultant in Serbia, working for a global consulting firm. And at that time, consultants could be counted on the fingers of one hand in our entire region - let's say, two hands at most. Now, after years spent partly in consulting and partly in industry, I no longer have a problem explaining what I do, but the market needs to be more sure what consultants do or whether they are needed. This text summarizes what consultants do and why they are essential in business.

I often use an old joke about consultants as an icebreaker with clients, which goes something like this:

In a pasture, an older man is watching over his sheep. A man passing by asks him, "If I guess how many sheep you have in your flock, will you give me one?"

The old man didn't think much and said, "Sure, go ahead."

The passerby looks at the flock, starts writing something on paper, draws the pasture, measures dimensions, does some math, and says, "You have 567 sheep in your flock."

"Bravo!" says the old man. "Take one, but if I guess what you do for a living, you'll give me the sheep back."

"Okay, of course," says the passerby.

The old man immediately says, "You're a consultant."

"Uh, bravo!" says the passerby. "How did you know?" he asks.

"Here's how I knew: first, you came here - no one called you; second, you told me something I already knew myself; and third, please put down that sheepdog; I need it."

You might wonder why a consultant would tell a joke that degrades consulting. The answer is simple: people's perception of consultants is often just like in that joke, and it's only after such self-deprecating humour and gaining the client's trust that you can explain what we do.

From an outsider's perspective, it can sometimes be challenging to understand why companies need external consultants to identify and solve problems within their organization. There are many reasons why companies genuinely need consultants to help address some of the most complex challenges facing the business world. The factors that often influence clients to engage consultants from consulting firms or independent companies can be summarized into several key points:

Independence

Unlike permanent employees who may be subject to internal organizational "politics," consultants bring an independent perspective to their work. A good consultant will always remain unbiased and objective since they have no personal ties to the organization. Their "outside the box" thinking allows them to focus solely on the goals and plans agreed upon with their clients without the fear of being entangled in internal organizational and cultural issues.

Creative Thinking

Without being tied to specific ways of working or the historical culture and methods of the company, consultants can also direct their objectivity toward essential creative solutions. Without considering whether their future work might depend on gaining favour with company executives, they can deliver revolutionary insights and strategic thinking contrary to what the client might typically contemplate.

Expertise

Business consultants typically work in narrow fields, which means they can provide the detailed and in-depth expertise required for any sector or organization. In addition to training their employees, companies, by engaging consultants who have worked with multiple clients in their specialized field and industry, allow their employees to gain insights into the latest trends in this field. This is crucial because it enables companies to track trends and extract the maximum potential from new methods and models brought by consultants.

Best Industry Practices

Based on consultants' expertise and diversity of experience, companies gain insight into best practices in the market. By learning from the best in the industry, organizations can find ways to improve their business. The holistic thinking of strategic consultants can lead to increasing the organization's market share, expanding product offerings, and assisting in reorganization for efficiency and cost savings. In addition to raising employee competencies, engaging consultants can provide a broader perspective on potential strategies, even proposing acquiring competitors or completely changing the business model.

Credibility

Sometimes, organizations need someone they can trust to implement important company change projects. In an industry that doesn't require licensed status, reputation often serves as a quality guarantee. Consultants with well-established experience have demonstrated expertise across various areas and work with thousands of clients worldwide each year to solve multiple business problems and promote growth. Their credibility translates into the project's credibility, making it easier for management to implement strategic changes.

Capacity

Often, a company needs to accomplish something for which it simply doesn't have the relevant talent or expertise - but it requires only a short-term contract for a specific project. Digitalization is a good example of this. Given the speed of digitalization and the competitive landscape in all sectors, a company may need more time to implement new digital infrastructure. In this case, hiring a digital technology consultant is necessary to help meet the urgent need for speed and capacity building.

Maintaining Daily Operations at the Necessary Level

Executing a transformation project with existing internal capabilities can jeopardize the organization's daily operations. Running multiple parallel transformation projects often leads to the inability to carry out day-to-day operations simply due to a lack of resources. By engaging external consultants to help manage company transformation projects, they ensure that their daily functions have the excellent support of their staff. In contrast, the team led by consultants can implement planned transformation projects with the help of internal staff.

Difficult Decisions

Since consultants are objective, they can also be tasked with making tough decisions. For example, if the process of identifying excess staff and implementing layoffs is done internally, it can affect the team and harm its dynamics. On the other hand, consultants have an objective perspective on where cuts need to be made and can make them with enough emotional distance.

Global Scope

Consultants have experience in the global market and have the capacity to help businesses expand locally, regionally, or globally. Most large consulting firms have a vast network of clients and consultants in different geographical and business domains from which they can get support. This can significantly boost companies expanding into various industries, borders, or markets.

Cost-Effectiveness

Aside from the immediate fee paid to the consultant, organizations using external expertise for individual projects do not incur overhead costs, such as providing benefits or even the need to purchase computers and office space. Furthermore, once the project is completed, consultants leave, meaning the organization no longer has costs associated with those individuals. For example, companies must pay a yearly salary when hiring a permanent employee. If the organization provides a permanent contract to someone who turns out not to fit the organization, the process starts anew, leading to significant costs and time loss.

Examples of Best Practices

The first consulting firms were established in the late nineteenth century, mainly in the most developed countries in the world. Consulting as a component of economic development in these countries has shown promising results throughout history. Good industrial and business development examples in these countries are often associated with engaging consulting firms to define strategies and implement significant business undertakings. Examples of Germany's development after World War II, Japan's development, and more recently, South Korea, or, for example, China or Middle Eastern countries, are primarily tied to engaging consultants precisely for the reasons mentioned in the text.

We hope that this text will contribute to understanding the importance of consulting and that our companies will recognize the value that consulting brings. In the meantime, we at Egzakta Advisory have built a team that is constantly growing, learning, and able to meet the needs of all companies in this area.