Your $250,000-per-month McKinsey team recommended the same strategy your internal team proposed six months ago? IT consulting services bring in over $1 trillion globally, yet most expensive projects fail spectacularly.
The paradox is that the incentive structure makes failure profitable. How to avoid it and beat the paradox? Let’s find out.
The $2 Billion Advice That No One Can Implement
A 1982 Harvard Business Review study revealed a harsh truth: companies spend over $2 billion annually on impractical data and poorly implemented recommendations. The consulting industry has perfected the art of creating brilliant PowerPoints that collect dust.
Recent Spectacular Failures:
- Hertz paid Accenture $32 million for a website redesign that never went live.
- Queensland Health’s payroll system costs $1.25 billion and still doesn’t work properly.
- Texas wasted $367 million on an unusable child support enforcement system.
- Knight Capital lost $440 million in 45 minutes due to faulty software implementation.
The pattern is consistent: consultants deliver comprehensive strategies, collect their fees, and disappear before implementation reality hits. They design solutions for perfect worlds that don’t exist in your organization.
Why Implementation Always Fails:
- Consultants don’t understand your company’s political dynamics
- Recommendations assume resources and capabilities you don’t have
- Internal teams weren’t involved in solution design
- No one owns the outcome after consultants leave
The Perverse Incentives That Guarantee Failure
The revenue model rewards extended engagements over rapid solutions. A McKinsey partner makes more money from a three-year transformation program than from a three-month diagnostic that fixes your issue.
The Dependency Trap in Action:
- Consultants identify problems that require their specific expertise.
- Solutions create new problems that need consulting expertise.
- Organizations lose the ability to make decisions without external validation.
- Internal capabilities atrophy while consultant dependency grows.
Conflicts of Interest: McKinsey simultaneously advised opioid manufacturer Purdue Pharma and the FDA that regulates opioids for over 10 years without disclosure. This dual loyalty cost taxpayers $65 million in compromised regulatory advice.
Similar conflicts exist everywhere: consultants advising both your company and your competitors, both government regulators and the industries they oversee.
Why Smart Executives Keep Hiring Them Anyway
If consulting fails so often, why do CTOs and executives keep writing checks? The reasons are more psychological than practical.
- Political Cover: CEOs use consultants to justify unpopular decisions they’ve already made. Want to cut costs? Hire consultants to “recommend” the layoffs you planned. Need to change strategy? External validation makes the pill easier to swallow.
- The “Nobody Gets Fired” Safety Net: Hiring McKinsey, BCG, or Bain provides career insurance. If the project fails, you can blame the consultants. If it succeeds, you hired the right advisors. It’s a win-win for executives, a lose-lose for companies.
- Internal Dysfunction: Organizations hire consultants because they can’t get their own teams to listen to each other. The same analysis from an external team suddenly carries weight that internal recommendations never had.
- The Expertise Illusion: Consultants take the watch off your wrist and tell you the time. They synthesize information your team already knows and present it back with authority and confidence your internal experts lack.
The Hidden Costs Beyond the Invoice
| Cost Type | Impact | Example |
| Brain Drain | Internal talent leaves or disengages | Teams stop proposing solutions |
| Decision Paralysis | Organizations wait for consultant approval | Projects stall without external validation |
| Cultural Damage | Employees lose confidence in leadership | “Why didn’t you ask us first?” syndrome |
| Knowledge Loss | Critical insights leave with consultants | No institutional memory of decisions |
The real damage happens after consultants pack up their laptops. Companies become addicted to external validation, unable to trust their own judgment or capabilities.
Long-term Organizational Damage:
- Teams stop developing strategic thinking skills.
- Decision-making processes become consultant-dependent.
- Internal innovation decreases as external solutions become the default.
- Organizational learning stops because knowledge walks out the door.
When Consulting Works (And How to Get There)
Not all consulting engagements fail. The successful ones share specific characteristics that you can engineer from the start.
Engagement Types:
- Crisis management (70% success rate): Clear urgency, focused timeline, specific outcomes.
- Process optimization (60% success rate): Measurable improvements, limited scope.
- Technical implementation with internal partnership: Knowledge transfer built in.
How to Structure Success:
- Define specific, measurable outcomes upfront
- Require consultants to work alongside internal teams, not replace them
- Build knowledge transfer into every milestone
- Use fixed-scope contracts, avoid open-ended “strategic partnerships”
- Measure capability building, not just deliverables
Red Flags to Avoid:
- Consultants who can’t explain their methodology in simple terms
- Engagements without clear end dates
- Recommendations that require ongoing consultant involvement
- Teams that work in isolation from your internal staff
Conclusion
The consulting paradox isn’t unfixable. Define specific outcomes, demand skin in the game, and build internal capabilities simultaneously. The best consultants solve problems and leave. The worst create dependencies and stay forever.
