Working to a different set of rules

Most consultants are capable mathematicians and work to the formulaa rewarding approach, says James Betts, enabling the whole to be greater than the sum of the parts. one plus one equals two. So that when they are presented with a problem – say, where stock levels are too high, they identify the root cause, which may be poor purchasing disciplines or wrong information from the stores or the workplace, correct the cause and eliminate the problem.

Nothing new has been added or created, however, as the stock is still ordered, purchased, delivered, stored and used as before but to a tightened set of rules which meet parameters which probably existed before but were not being observed.

Engineers, or at least the more inspired ones, work to a different formula of one plus one equals a very large number. They actually create a new concept or tangible product as the result of their work, with two or more simpler products or concepts as the basis. The new concept may bear little or no relationship to the originals.

Table 1 shows some simplified examples of this proposal. The first example, a hovercraft, has an equally famous counterpart where Marilyn Monroe stood over the pavement fan, illustrating how a fan and a long skirt can be used to give a spectacular effect.

These inspired engineers have taken two ordinary “state of the art” materials and created an entirely new product with the new whole being normally much greater than the sum of the original parts. They have not just made an existing system work better (although this can sometimes be a great achievement) but have created something that did not exist before.

The consultant can solve his problems by developing a solution that is based on and limited to the problem as presented so that in the first case he may have improved the speed or fuel consumption or passenger capacity of existing vessels. Sir Christopher Cockerell, the inventor of the hovercraft, took a completely new approach using items not normally associated with water transport.

Each example can be treated in these two ways. One, as illustrated, takes the lateral thinking approach but each can also be solved in a narrower context which gives a degree of improvement but not the order of magnitude breakthrough that is achievable.

We can also examine trends in business, machine and human behaviour and see how these react to different stimuli over time.

An example of lateral thinking in medical diagnosis and surgery is the development of Magnetic Resonance Imaging or MRI. This was introduced to give the surgeon a much improved picture of our internal workings while the operation is taking place. In February 1997 Tomorrow’s World showed how the process could be much improved if the scanner was split in half and the operation carried out in the space so created while the patient was being scanned. The surgeon could look at a screen to obtain valuable information from the imager as he was operating. Shortly after this development the concept of a form of virtual reality called Augmented Reality was introduced using goggles in the line of sight of the surgeon so that he does not have to avert his eyes from the operation itself.

More recently the idea of using a Head Up Display (HUD) has evolved, coupled with the binocular microscopes normally used for this type of surgery, so that now the information is displayed in the same plane of focus as the surgeon’s instruments. Even more recently the HUD has been made obsolete by using lasers to project data directly onto the surgeon’s eyeball.

These developments have taken place over months rather than years and I cannot see any equivalent improvements taking place in consultancy.

If we combine an engineering and a consultancy approach we may get not a compromise but a fresh insight into developing new techniques to tackle the problems of the 20th century with answers that are more appropriate to the 21st.

Consultancy can be grouped into three categories in descending degrees of difficulty:

Diagnosis: where neither the root cause of the problem nor the full effects are known initially with any precision.

Correction: the problem is known and can be readily quantified but the solution has yet to be identified.

Implementation: both the problem and the solution are known.

We can illustrate the boundary layers within which the problems and solutions are addressed in Table 2. We should not assume that any of the two categories are limited to any one of the lists.

For the client who thinks he needs to reduce stock as a purely internal re-arrangement, the options may be:

Change the design of the product to reduce component costs but maintain the parameters visible to the customer.

Change the design and then propose to the customer that component costs can be reduced and performance improved.

Change the design of the “product” in collaboration with the client to suit the needs of his marketplace and reduce costs.

One example of where a business looked only at the first option was that of the mechanical cash register. The producers of these products made strenuous but ultimately futile efforts to improve the performance of the mechanical devices against competition from electronic equipment that fed real-time information back to base about stock control, purchasing and customer buying habits.

I believe we should adopt and modify Edward de Bono’s ideas on lateral thinking to restructure the way in which projects are approached. By this I mean a positive approach to a prospective client as well as reacting to requests for assistance.

The keystone to a new approach in both cases is information. It is not difficult or expensive to obtain information nor is it a problem to correlate and cross reference data in many different configurations taking into account both internal and external forces.

What we must not do is to collect every scrap of data about every organisation that we might wish to do business with. Every consulting practice, whether the Big Six or a sole operator, must have a business plan. With this as the starting point we can begin to decide in which sector to operate.

We need to go back to the terms of reference suggested earlier to determine where we can generate a new solution from existing parts which is radically different to those starting blocks. This may not always be possible or desirable and the first decision tree point is to set out how the business can be apportioned between the existing way we do business and the new approach.

For example, one of our major business sectors might be with the airlines who carry people and goods and who have seen a sawtooth of growth, stasis and decay despite all the optimistic projections. Perhaps we could consider what information is needed to convince airline operators that we have some suggestions that can significantly improve their chances of survival.

This may be simply a function of size or parameters that lie within the control and operation of the business. On the other hand the real problem may be brought about by external forces, such as the surrounding transport infrastructure or local/national government policies, which require solutions that lie outside the scope of the day-to-day operation of the company.

If we look again at the boundary layer table we can identify which parameters in which layers are critical to an airline. The relevant information can then be collected, collated and made ready for presentation as a costed action or business plan complete with risk analysis. This is a complex process: usually the problems associated with changing the fortunes or directions of a business are not simplistic and need root cause and effect analysis to identify and correct.

Before this is done there is a further key stage, exemplified in weather forecasting. Forecasters have attempted for some years to lengthen the forward times in which accurate predictions can be made. Their answer has been to prepare forecasts for a known past period to modify and correct errors. Weather forecasters assumed at one time that bigger, faster and more powerful computers were all that was needed to give accurate, long-term predictions. Using tree rings as markers of weather conditions, forecasts were prepared for those periods and, to the dismay of the experts, no real improvements in accuracy could be obtained however much was spent on hardware. We now know that the first experimenter in this kind of weather forecasting, Edward Lorenz, had discovered Chaos Theory and the effect of non-linear processes.

To ensure that we understand and have included the important variables, we need to take the details in each layer of the boundary and project what might happen over the next 12 months or so and how this is likely to affect our airline.

We now have to go back, say, five years and enter the events that we know have happened and use these to forecast the ups and downs of our sample client. We then match these to what actually happened to the business and iterate until we can provide accurate forecasts each year up to today.

Out of this slogging groundwork will come particular trends and indicators that at first have no apparent meaning or cause. Further investigation will show that events and organisations are affecting the overall pattern.

These are where an unexplained diversion has taken place in the normal pattern of business. Some businesses will thrive after this “branch” while others crash.

A further effect that needs to be taken into account is a phenomenon called “Strange Attractors” which shape events time after time but are hidden in the jumble of daily activities. Analysis of the past performance of the American cotton markets has shown up such core influences which at first sight have nothing to do with the price of cotton. In business, as in other areas where the events are non-linear, there are fixed and immovable obstacles to forecasting over long periods of time or over large areas of activity. Within these limitations, however, we can predict with acceptable accuracy what will happen given certain conditions and we will also be able to identify the areas where we cannot predict outcomes.

In summary:

Select a market/business sector(s);

Identify major internal and external influences on that sector;

Forecast how these may change over 12 months;

Project the effects on the sector;

Repeat for a past period where changes and effects are known;

Iterate until an acceptable accuracy is obtained both for the past and future;

Prepare a “What – if” scenario for a selected client;

Present to a tame client and use as a learning tool for serious entry into this market.

James Betts is an independent consultant.