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AT&T's future is bleak, and with several other states in the US also expected to push for further deregulation of the telecom market, "long distance will be a memory" for this yesteryears' monolith, reported Washington Post, on January 16, this year. Taking a further dig at the company, the daily commented that although the communication major may have more than 100 years of experience catering to the needs of telephone consumers, it has sought help of Accenture, a consultancy firm, to advise it on reducing its operational costs. And the advice would come at a princely sum of $2.6 bn.
This is not for the first time that the US telecom giant is flirting with consultants. In the 1990s, the company used to be a management consultant's dream client, doling out about billion dollars during that period on an army of consultants. Between 1989 and 1984 alone, the company spent over $500 mn as consultancy fees. More than a thousand firms, right from big names like McKinsey to smaller fry like Delta, vied fiercely to grab this prized catch. Courtesy their advice, the company took several ill-fated decisions like the overpriced acquisition of NCR, a computer maker, which led to bitter job cuts and unrest among the workforce. Critics flayed the company for committing acts like renaming managers as coaches, tearing down office doors, and encouraging employees to wear
T-shirts bearing the message "Putting the moose on the table", in the name of damage control measures. Based on the consultant's advice, the company spent $20 bn on buying new businesses and incurred $19 bn as restructuring costs, though it continued to lose market share. Disenchanted by the disastrous results of the company, the first thing the new CEO John Walter did after taking charge in November 1995, was to show the door to several of those consultants and asked his people to start thinking for themselves. Thereafter the company's results started showing some improvement.
AT&T's stumbling performance has always been a big excuse for cynics to take a dig at consultants. However, they now have a host of such opportunities, thanks to the Enron saga (The company's post-mortem report suggests how several of its top executives, including CEO Jeff Skilling, who came from the consultancy industry failed to manage the affairs of the energy-trading firm), to hit out at this self-proclaimed breed of idea machines, not to say money machines too. In fact, history is replete with such examples where failures outscore winners (James O' Shea and Charles Medigan, the celebrated authors of the book Dangerous Company should know better). This book shows how big companies got into never-ending troubles after seeking consultants' advice. Big failures like Sears, AT&T, and People Express suggest that the idea machines have churned out more trash than any novel but workable concepts.The big question then is, why do companies go in for management consultancy and has the moment of reckoning come for the profession?
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