The role of ‘sector knowledge’ in client-consultant relationships: comparative case studies Robin Fincham,* Timothy Clark, Karen Handley and Andrew Sturdy Workshop on Innovative Capabilities and the Role of Consultants in the Information Economy, Mannheim, November 2007 * Department of Management, Stirling University, Stirling FK9 4LA, UK

Introduction The image of the consultant as the ‘outside expert’ is expressed in terms of consultants as sector specialists in possession of sector knowledge The appeal to the client is (partly) constructed out of knowledge accumulated via repeated assignments in the industry where the client organization resides Also ‘the sector’ is a complex knowledge formation in its own right – a distinct institutional space These themes explored through 4 case studies

Consultant knowledge and sector knowledge (1)Sector knowledge enables consultant to frame client problems and claim special skills  Developed in consulting firms as collective knowledge type  Consultant knowledge base learned from interaction with clients  Sector knowledge may be seen as a structuring of that knowledge  The sector is a specific objective/subjective construct in the minds of managers and consultants (2) But the ‘simple model’ of consultant as outside expert bringing knowledge in needs more nuance  Sector recipes only a guide in decision making not deterministic  Uncertainty of knowledge and differences between sector organizations  Client insiders also have outside knowledge – they are citizens of the sector too – so there is interaction  Thus sector knowledge is an object-under-construction rather than being brought to the client by a privileged outsider

The Case Studies The building society – a regional society in the North of England. An IT package that was replacing their whole computing platform was being purchased from a software house The local authority – a large London council in which an improved procurement model for buying in agency staff was being developed by a Big 4/IT consulting firm. Part of e-government agenda The multinational – client was the strategic planning unit and the consultant a top strategy firm. The early ‘creative’ stages of planning cycle for investment/divestment The prison – a small niche consulting firm with public sector experience (health) but no prisons experience. Engaged in a bid for future investment that was part of government-driven performance review. A ‘failing’ prison and the review bid was crucial.

Role of Sector Knowledge The building society A unique and coherent ‘peer group’ type sector Rival firms that were actually collaborative Client managers had extensive informal and personal relationships with sector players Sector knowledge constantly being exchanged Two consultants – one effectively a sector specialist (a ‘client manager’ common in IT projects) The local authority Client and consultant both had extensive public sector contacts and experience Links to sector players more formalised than in the building society Uncertainty of sector knowledge in the search for a model of procurement The multinational Consultants experienced mainly with client rather than sector as a whole (but ‘mncs are the market’) Role of sector knowledge more ambivalent and mediated Power dependency most apparent in this case – client power displaces sector knowledge No sector contacts/experiences discussed – sector know-how incorporated in solutions (socialized) Consultant required to be the ‘outsider’ rather than have specific sector knowledge The prison Limiting case of (apparently) absent sector knowledge on consultancy side Caused the expected problems – initial period of the project difficulty and almost ‘failed’ But eventual success – client learned the project management approach and skills How do we explain this? –‘The sector’ was actually partly prisons and partly wider public sector –Real audience for the review bid was central government

Conclusion Evidence of ‘functional’ and positive aspects where sector knowledge was instrumental in decision making. Served an integrative function, supplied a common language (cf. systemic theory?) Conversely where sector knowledge was absent (the prison) it caused integration problems, even if overcome There were limits to sector knowledge – consultants in some instances stressed they had to focus in the final analysis on client problems and internal recipes. In 3 cases an ‘internal focus’ seemed to prevail Sector knowledge had a strong legitimizing/political role. The social capital that gave people status in decision making processes (the stake in the game). People who had sector know-how in abundance were central, those who lacked it were peripheral players