Under-use of consultants

An acquaintance of mine, undergoing a divorce, returned from a meeting with his Korean counsel looking frustrated. Apparently, he had been advised by a third party of a critical fact, which his lawyer had not mentioned. When my friend asked why not, the lawyer replied: “Oh! You did not ask me about that specific point.”

Some years back, I interviewed Wilfred Horie, the first foreign CEO of a local bank here. Horie had served in the U.S. Army’s Special Forces, and brought up their approach to management: He parachuted into Seoul with a small team of elite executives, but for backup, hired a battery of external consultants the same way Green Berets utilize artillery and air support. The consultants’ recommendations were duly implemented. Horie mentioned this to the head of another local bank. The man was startled. “We hired the same consultants and got the same advice,” he told Horie. “But we never executed!”

One of my best pals runs a PR firm. His clients are local and foreign. To foreign clients, he consults strategically, direct to CEO-level. (One of his clients, incidentally, is one of the biggest foreign investors ever to park money in Korea.) But his Korean clients, who include companies and government agencies, rarely seek his counsel beyond the working level.

I once accompanied him to present to a local Seoul government office on upgrading the district’s tourism infrastructure. His presentation was packed with practical ideas, benchmarked from Europe; several could have been implemented with minimal planning or expense. I was gob-smacked by the nit-picking approach district bureaucrats took to his pitch: Their concept was, “Let’s marshal any argument to shoot down these ideas rather than seek ways to execute.”

Last year, I accompanied a panel of experts traveling to a city to advise local officials there about an upcoming international event. These experts included a central government official, a foreign diplomat, a high-profile foreign resident and a foreign academic. The first to present was the central government official. After his presentation, it was the diplomat’s turn. By the time he started, the front two rows of senior local officials had conspicuously exited: They had disappeared to have coffee with the central government official rather than listen to subsequent presentations which had been specifically prepared for them.

Several years ago, the Asia-Pacific CEO of one of the world’s top international PR agencies – one which had re-branded Hong Kong, and which was advising the president of another Asian nation on communications ― was invited to Seoul to brief a senior official on destination branding. The chief executive prepared a presentation and flew in to the city for a day to deliver it to officials who nodded off and snored conspicuously throughout.

My wife spent two years in London studying international cuisine and wine. Back in Korea, she consulted for food and beverage companies, advising them on everything from wine lists and menu planning to food trends and marketing. As these issues were central to their business, I was dismayed at her small fees: Sometimes she was not even paid, but was, instead, given a free meal or a bottle of wine.

My point?

Expert, external advice here is very often not trusted, respected or valued.

Korea’s economy has customarily been a nexus between manufacturing and government. With Korea being a “low trust” society, the key glue was relationships ― hence the local bureaucrats who ignored a series of presentations as, to them, content was less important than networking with a senior official.

Government bodies have little respect for consultants ― as the snoring Seoul officials proved ― and big business tends to trust only their in-house departments. As outside service providers are utilized at the tactical, not the strategic level, consultants – like my friend’s lawyer ― don’t pro-actively consult, they simply react. Or, like my friend in PR, they function as low-value arms and legs, not high-value brains.

Given the accepted fact of “core competencies” ― the theory that an organization operates optimally only when it focuses on its core skill-sets ― this attitude is likely causing Korean bodies significant problems: A district government is not going to have great expertise in international marketing, any more than a chipmaker is home to the world’s finest accounting brains.

These skills can be imported from outside, but are not going to be effectively applied if the consultants who deliver these competencies are un-trusted, undervalued or, indeed, undermined.

More broadly, the fact that certain service sectors have been under-used, disrespected or lacked leeway to operate freely in Korea has caused tremendous issues across society, from rule of law to accounting failure.

If accountants’ skills were respected and fully leveraged by corporate management, various economic crises over the years could have been avoided or ameliorated. If attorneys were widely used and if law had force, society would have a fair, predictable and self-correcting mechanism based on rules and regulations, unrelated to politics or relationships. And if banking had been something more than a cash conduit for big manufacturers, the finance sector would be more competitive and funding for SMEs would be more equitable.

Meanwhile, Korea’s competitors do not necessarily distrust external advice.

A colleague told me of a financial/managerial consultancy which works region-wide. Their Chinese clients adopted many of the consultancy’s suggestions, which were based on international best practice. Their Korea clients had not. Their reason? “Well, this idea looks good,” the consultants were told. “But it couldn’t work here. It’s not the ‘Korean Way.’”

Clearly, government and manufacturing jointly rule Korea’s roost; service remains a distant third. But with China climbing the value ladder, is Korea, Inc. mentally positioned to move beyond a smokestack economy? <Korea Times/Andrew Salmon>

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