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Comment by hintymad | Hacker News Reader

I see a disconnection here. Every once in a while we see a article criticizing management consultancy, yet the business is still booming and very powerful and sophisticated corporations still hire them. So, I'd assume that the consulting companies do offer some value, in fact billions of dollars of value. What are those values, then?

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I've always suspected that at least some of it is information laundering.

I used to work in engine development and calibration. There aren't many people who know how to do engine cal and it's incredibly important to get your engine emissions certified to sell in a market like the USA. The problem is that most people who know how to do it work for a car manufacturer (OEM). So when I had that on my LinkedIn I would get pretty regular messages from some consultancy or another offering hundreds of dollars per hour to chat with me about my expertise. Of course I couldn't go talk to a competitor but I'm sure a lot of engineers were happy to make a few hundred bucks chatting with some generic consultant who was writing a general industry report with anonymous data and background info.

Well the customer was usually a competitor or a foreign automaker exploring entering the US market. Everyone who could help them understand the timelines, cost, and process worked for their competitors. So the critical info got passed through consultancies into sanitized anonymized reports; laundering.

Note: I'm not sure whether talking to a consultancy would have violated my employment contract at the time but I never took the calls so I had no reason to look it up. I know that coworkers did and just called it a gray area. I pass no moral judgement one way or another.

Not sure about high espionage, but information laundering is the right phrase for how it usually works: consultants cut across organizational boundaries, gathering useful information from the people who know what's actually going on (the rank-and-file employees) and packaging it for CxOs in a way that allows them to present an opportunity as their own idea, or a risk as not their fault. Nice, safe, clean information.

Major scandal in Australia was PwC secretly passing government secrets (tax changes consulting work) to private corporations [1]. And another one was KPMG passing secret client information to win contracts [2]

[1] - https://en.wikipedia.org/wiki/PwC_tax_scandal [2] - https://www.theguardian.com/australia-news/2026/jun/10/kpmg-...

I've also seen public information (from SEC filings) being sold by a consulting firm as competitive intel. Which I guess it kind of is competitive intel, but you can download it for free.

You have to think of it like the nutritional supplements industry. They make mountains of money because people have certain misgivings or insecurities or unrealistic goals (or all of these things) with regard to their health. Would life go on just fine without the entire supplements industry? Sure. But that wouldn’t do anything to assuage the health concerns that people perceive themselves to have.

The same is true of the consulting industry. Because companies _also_ have certain misgivings or insecurities or unrealistic goals with regard to their health.

> that wouldn’t do anything to assuage the health concerns that people perceive themselves to have

But the reason people feel dehydrated is because Brawndo ads tells them they had a thirst that needed mutilating.

My working theory is that in many cases, it's one of those absurdities that are actually necessary because the world isn't always rational.

If you're the CEO, maybe you know exactly how your org should be restructured. But maybe it means stepping on a lot of toes and hurting people you have close relationships with.

If you get the blessing of management consultants you can at least say it's not personal.

Human beings aren't fundamentally rational. We have to work at it, because it's not in our nature.

A thing to keep in mind is that expecting the systems humans built to act rationally at all times is perhaps expecting too much.

Human beings are quite rational. But they are not rational in the classical economics sense. Human beings recognize social aspects. They also have their own social status they want to improve. They also know that they can exploit their social status and gain advantages, favors, mates and power over other human beings. They know that openly backstabbing one of your key players may discourage other ones from obeying your power, so they let others do the stabbing take the blame.

Yes. I've seen people attempt to argue that the existence of racism/sexism is proof of the inadequacy of the discriminated group, because otherwise it isn't rational and humans are rational. Which is either a concerning level of trust in economic theory or a disturbing use of economic theory to justify existing bigotry.

people are emotional first and rational second

What I'm referring to is that humans don't behave according to strict logic. They are able to hold in their minds totally contradictory ideas on things without issue.

I know plenty of really smart people who are frustrated by this.

And some of those smart people can't see their own blind spots, for example making a completely rational case for why a woman should be with them romantically as the most obvious course of action, and being mad when they don't agree.

This is how it was explained to me by an actual management consultant

Or likely workers on the ground know exactly what’s wrong—management is poor, uncommunicative, or perhaps filled with unqualified nepo hires. This isn’t able to be stated out loud by folks whose jobs would be at risk. So MCs can come in, gather the info, and fix the symptoms at least.

Scapegoat as a service. You hire them to put a stamp of approval on any silly idea you have, implement it, etc. Then, if it turns out badly, well...it wasn't your fault.

this is the correct answer. nobody internal ends up as the "bad guy".

Not only scapegoats but also backup as a service. I.e you are an executive with an unpopular plan, you bring them in to carry your message.

You can be like see these very smart people that we are paying a ton of money, agree with me, the fact that i hired them is completely coincidental.

Also works if you want to derail someone else's plan

Management consultants exist as a liability shift. Boards or exec management pay them money, the consultants interview them in private, the consultants give them their ideas back. This provides two things: cover, and political lubricant. Worth every penny when the alternative is completely dysfunctional management teams, or when it is your reputation or job on the line.

1. When I was 8, my mom told me that people got paid what their work was worth to society. When I was 12 she told me not necessarily. She said this: "You were only 8. I was trying to make it simple for you."

2. Management consultants get paid by shareholders to outsource blame for decisions made by management.

My brother still believes this and he's 46 :(

It's self-propagating nonsense. In the immediate post-dotcom crash, I worked for a company that was run by a bunch of young HBS grads, who all had management consulting backgrounds, (and a few minor dotcom successes). They regarded themselves as geniuses. They couldn't make a decision on anything.

Their preferred working style was to not make decisions, and to hire consulting firms to make the decisions for them. So they hired these even younger consultants, who would work for a few weeks, and make their recommendations, and then those recommendations would not be put into action. No. Instead, more consultants were hired to review and then discard the work of the previous consultants. Rinse and repeat for a few cycles.

I cannot resist one story. The initial HBS/management consulting CEO was replaced by a new CEO, someone who had run one of the early search engine companies, and had a similar background. He turned out to be no better. What I found very entertaining about CEO2 was his business past. He was known for two decisions. 1) Declined to buy the very early Google for high six figures, when he had the chance. 2) Decided to buy Blue Mountain -- think Hallmark cards but online -- for $780M. Greeting cards. 3/4 of a billion dollars. 1000x the cost of Google at the time.

Yes, hindsight and all, but still. If I had made both decisions by flipping a coin, my expected value would far exceed what this business genius accomplished.

They are in the business of justifying blame from the executives to the frontline. Executives keep or increase their bonuses, layoffs ensue. If you are the decision maker of a company, and you can pay a team a few hundred thousand a year using company money, netting a 10 million increase in your own salary, its a deal too good to pass up.

The people criticizing use of management consulting are not usually the same people who make the decision to use management consulting.

There is no disconnect and your comment does not attempt to explain why this is some sort of contradiction.

Read it twice then

Snake oil salesmen of all kinds make money all the time.

What does that have to do with providing value?

It's easy -- because companies are people. Management is also people, and sometimes management admit that they may not know what others know. Especially if that management came from the trenches, not and MBA school, so they know very good how to row, but not so well in management (or at least they think they are). So, having money, they seek paid advice from someone who knows it more.

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