Apr 1, 2009

Disintermediate Strategy - Buy MBAs Direct

It’s getting harder and harder to find an industry that’s immune to the economic tsunami wreaking havoc on global marketplaces today. Sure, in the U.S. we read that education and health services, mining and logging, the federal government, and oil extraction continue to see expanding workforces.

But industries that are the primary engines of employment, national output and long-term economic growth are certainly hurting. The most recent numbers reported in the press are clear on this. February employment levels compared to a year earlier continue their free fall: down 11% in construction, 9% in manufacturing, 5% in transportation, 4% in wholesaling, and close to 4% in retailing.

It might be surprising, in the midst of all the belt tightening, that one very healthy sector of the U.S. economy is focused on providing companies with outside management advice. Even as overall service sector employment fell by over 5% in February, the management advisory sector saw its ranks swell. In fact, three new management and technology consulting positions were created as every one hundred goods producing employees were laid off.

I’m perplexed why companies facing painful budgetary challenges don’t simply hire more of this talent directly.

What might happen if companies looked anew at bringing this new leadership expertise in-house, rather than leasing it from outside advisers? Firstly, hiring new thinking and expertise often costs considerably less. The norm for management consulting firms is to mark-up their employee salaries by four times or more when billing clients, and while trumpeted as temporary workforce, at most big companies there’s always a next assignment.

Secondly, insiders often create considerably less distance between idea creation and marketplace action. And most importantly, as companies engage in fierce market share battles, hiring the brightest, newest thinkers is typically a more defensible way to grow proprietary competency within the company.

Either way, it’s worth remembering that investing in fresh thinking and new ideas has historically fueled our economy’s adaptability and growth. While there are many situations where leasing this new talent certainly makes good business sense, there are also plenty of solid reasons to buy it.

And there’s great news: graduation is only three months away!

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