I saw this article on the FRONT PAGE of the Times of India this morning (12th March 2012) and I felt like throwing up.
I had written this post on the 3rd of Jan 2011 and I believe it typifies the story captured above!
I have always had a distrust and disdain for Consultants – Men in Suits who are sometimes thieves in disguise.
The events of 2010 have proven beyond doubt that the breed of ‘Consultants’ who charge obnoxious sums of moneys for reports and certificates are nothing but hoax folks.
– Ernst and Young is being sued in the USA for wrongfully green lighting the Lehman Brothers books even as the financial firm tumbled into bankruptcy.
E&Y claims that they went by the rules of accounting practices, blah, blue blee – but THATS NOT THE POINT! They easily understood that Lehman was falsifing their books to show solvency, and hence as watch guards of millions of investors, they should have Screamt Out Loud!!
– Satyam collapsed in India and Price Water Coopers (PWC) was hauled up by Indian Finance authorities. A couple of their Directors were imprisoned. Again, how could a firm like PWC not know what was going on inside Satyam?
– Remember that Arthur Anderson actually went bankrupt since they were auditors of Enron and had failed to warn the world about that firm’s financial wrong doing!
The men in Suits are THIEVES
Last week I met a brilliant entrepreneur in the Intreractive Media Training business. He revealed how one of the Big Consultants in India approached him and sold him a very tall and lucrative tale on how his business would be the best business to get funded by VC’s etc etc. On probing, he figured that the Consultants were only after him to sign a 8 lacs ‘report creation’ proposal and nothing else.
I believe that the Cost Structures of these big firms has gone out of whack. They are forced to hunt rich business ‘bakras’ on a very aggressive basis; almost just to survive, and in that process COMPROMISE on ethics, best practices and agree to leave their simple common sense judgement in their bathrooms.
I read such stupid reports of some stupid consultants who predict that the Indian Gaming market is some x millions of dollars and will become y billion in the next few years etc etc.
There is no basis nor science on how they generate these reports.
So, next time you see a Consultant approach you – take out your gun and not your cheque book.
Oh, and I forgot – I personally GOT CHEATED by no other than a Woman in a suit – Check out this story also – How Societe General tried to scam me.
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Daman Anand
Very well written post! I agree with Alok.
Ravi T
Agree with Abhishek. They are selling their services, which they believe will add value. It is for client to figure out if it adds value or if he/she needs help.
Alok, you seem to show some strong bias with people of similar background. non-MBA, non-Consultant, non-Banker.
For the few examples of Accounting firms you have (which is a part of consulting firm), there are probably tons of case studies where consultants made a difference. You have to see the whole picture without generalizing.
ps: I am not a Consultant.
Abhishek Rai said:
Alok Rodinhood Kejriwal
No Ravi,
I am not biased.
I lost 1 lac Rupees in Satyam not because the Stock Market behaved erratically, but because the Auditors – PWC were frauds!
That’s actually the reason 2 of the PWC senior directors are still in PRISON!
As a shareholder, I TRUST the signed auditor reports – in this case of Satyam.
Tomorrow, what happens when your doctor or lawyer commits fraud on you? Can your doctor avoid giving you medicine or give you the wrong medicine to just earn more money?
And its not me – look at Enron, Lehman examples!
Specifically for entrepreneurs and start up’s, i have a bigger grouse. I see lots of these consultants meet aspiring starry eyed tech entrepreneurs and FOOL them into believing that they can get funded. The proof is that they rarely agree to ‘success’ based models – its always a case of ‘pay for the report’ and then we will get you in front of a VC.
My first ESOP document for contests2win (in 1999) was written by a big 5 Company. In that time and age I paid 7 lacs! And I still remember when I began reading it in detail, it was riddled with gaffes, errors and stank of a ‘copy paste’ job! I was still wet behind the ears to have freaked out – but now I am wiser and therefore scream!
I am an entrepreneur boss – with no bias against anyone except those who CHEAT and DESTROY VALUE ( in the case of an entrepreneurs time – cheating him of his time (to pretend to take him to vc’s etc etc) is also destroying value!
Ravi T said:
Ravi T
I see your viewpoint Alok, and now understand how your experience has influenced that viewpoint. It is fair to be super cautious after your experience with the big 5.
That being said, here are few other points to consider
1) There are management consulting firms like McKinsey, BCG, etc. which have done some strong qualitative and quantitative work for clients, and proven the worth of a $500/hr consultant.
2) In case of Accounting firms, if you dig deeper you will realize, that the model inherently has a conflict of interest. You get paid by the same client, for whom we expect you to blow a whistle. This is the root cause of Enron, Lehman, Satyam accounting scandals.
Translated in other words, if you knew your client was doing something wrong, would you be a whistle blower, or rather be happy taking his cash, and hoping problems went away. In your case, take the example, when you knew people were improperly engaging in piracy and downloading games. Did you report them, or creatively use that as an opportunity to make money through ads.
Adhering to higher standard of ethics comes with a price. Not defending what went wrong with all the scandals, but sharing why they happened.
My 2 cents.
Alok ‘Rodinhood’ Kejriwal said:
Aalok Pandey
I Endorse, Alok’s view.
Its simply, in the first phase, letting the wrong happen, with your full knowledge & contention, hence the intent is corrupt.
What else, if you could not bring clarity in the way, things & entities work.
Best.
Aalok
Alok ‘Rodinhood’ Kejriwal said:
Alok Rodinhood Kejriwal
I think the lastest Citibank Scam is also an oblique fall out of folks in suits pretending to help innocent investors in managing their moneys….. if this Puri fellow didn’t carry a Citibank card, he wouldn’t have been that successful….
Anand
Alok
I think we must distinguish individual misdemeanor and willful negligence by a corporate. You will always have bad apples who compromise on their value systems and end up bringing disrepute to themselves and the organisations.
If only you had there was a moral hazard check (just like medical checks) before people were hired that we can be more cautious with such blokes!!
Be it the Soc gen incident which you had written or any other it is always an individual who out of his/her greed goes beyond the brief of their job and end up doing something as outrageous as this!!
Not all suited men are theives and not all wearing khadis are saints. Lets look beyond the cover!!
Anand
(Writing in my personal capacity)
Alok Rodinhood Kejriwal
Sure…. thats why i hire individual consultants and not the men in suits or women in skirts :-))
Anand said:
Abey John
This is an extension of that ‘is money important’ discussion…very insightful….
Alok ‘Rodinhood’ Kejriwal said:
karthik.c
Nice post and Awesome pic Alok Ji 🙂
Abey John
Love this line: “So, next time you see a Consultant approach you – take out your gun and not your cheque book.”
And let me extend that to other types of consultants too like the ones in internet marketing. 😉 :))