What is a next-generation partner company?
Choosing a partner company full of mistakes destroys the company
I don’t even need to explain it now, but companies have several partner companies that support their management activities. For example, a consulting company that drafts and designs management strategies on behalf of companies, an advertising agency that works through advertising production for media such as TV commercials, newspapers, magazines, and the web for products and services of companies, core systems of companies, It is an IT vendor that builds IT infrastructure. In addition to partner companies, there are also partner companies that use their professional qualifications, such as tax accountants, lawyers, and patent attorneys, to support the management activities of companies from the side. What I would like to discuss here is the actual situation of partner companies and how to select them. The three most important are consulting companies, advertising agencies, and IT vendors. This is because these partner companies have a significant impact on the performance of the company depending on how they are involved. Top-notch companies with abundant funds have set up departments equivalent to these partner companies, scouted human resources, and secured them within the company. Still, for example, when you hit a commercial, you should be indebted to a major advertising agency. And most companies, except for “wealthy companies”, will ask the necessary partner companies according to budget, timing, issues, etc. However, partner companies do not have the absolute know-how of management strategies to support client companies. Still, why is it possible to exist as a strategic partner of a company? The reason for this is that partner companies aim to make profits only in the departments they are in charge of. As a brain, I can give some advice, but it is not the role of the partner company but the job of the manager to take a bird’s-eye view of the industry as a whole and formulate a management strategy. A well-known partner company attracts excellent human resources. Among them, major companies have a track record of making profits with the support of first-class companies, so newcomers form a “team” with their seniors to respond to the company’s demands. The education at that time is similar to the apprenticeship system of “stealing skills” like Japanese craftsmen, and it is quite difficult for one senior employee to train many juniors. What each company requires of these “teams” is different, so once we have a certain level of common know-how, all that remains is to achieve success in responding to the needs of the field. Although this process is repeated to increase the experience of each employee, it seems that they are not aiming to improve the skills of the company as a whole by sharing the know-how they have learned through horizontal connections. As a result, the quality of employees tends to vary. (Know-how becomes personal) I guess so.
What is the actual situation of a consulting company?
When I visit companies to support their management strategy, I often hear that they used another consulting company and failed. This story is not new. Ever since I worked at an advertising company, I have wondered why people hate consulting companies, so even now I try to ask for details whenever the subject comes up. The reasons are many and varied, but let me give you one example. It’s about a railway company. When I was talking in a department called the Corporate Planning Office, I was shown a management plan created by my previous consulting company. There were two copies of the plan, each proposed by a different company. Both were created by a major consulting firm that everyone knows. The plan was thick, probably about 300 pages. I flipped through the pages, but to be honest, I couldn’t help but sigh, thinking, “This is terrible.” From my time as a new employee to the present day, I have created many different proposals and plans, so I can tell the quality of a document just by reading a few pages. The main reason why I thought the management plan was terrible was that it was clearly written by multiple people, and the overall content was inconsistent and the contents were not connected between the beginning and the end. Probably because of the division of labor, each person in charge had their own “color” and their claims were subtly different. . Even if I took this seriously and tried to put it into practice, it seemed impossible to realize it. The person in charge of the corporate planning office also noticed the inconsistency and lamented, “This is not very useful.” When I asked the price of this management plan as a trial, one company cost 100 million yen and the other cost 30 million yen. Since it was a large company with money, it may be enough to dispose of the person in charge for “failed this time”, but if it is a small and medium-sized company, it will be a big loss. There is none. However, what is really scary is when you trust and practice a management plan of this level of quality. No matter how you think about it, if you put a lot of money into it, the loss will be immeasurable. Thinking about it sent chills down my spine. Since the damage was minimal, it can be said that the Corporate Planning Office’s decision to stop was correct in a sense. The other day, I was asked to design a management strategy for a company with annual sales of about 20 billion yen. With a scale of this scale, of course, there must have been consulting firms intervening in the past. When I asked him about it, he said, “Well, I asked a major consulting company for about 30 million yen, but it was no longer useful. The output that came out was ‘Your company’s strength is its human resources.’ As expected, the president was furious when he saw this.” There have been cases where companies made good use of consulting firms and their proposals were successful, resulting in improved business performance, but such failures occur frequently. It’s happening in reality. In the past, I interviewed several people in order to explore the actual situation of consulting companies. One of them is a professor at the MBA school I belonged to. He worked at a major consulting firm before teaching at the school. So he asked candidly what was really going on at the consulting firm. Large consulting companies tend to hire highly educated people. In addition, it seems that there is a systematic training system for training new employees, but it seems that there is no unified basic rule or know-how in formulating a management plan. After the training, senior employees will teach them through practice, but since everyone is smart in the first place, it seems that the education is mainly focused on “learning on site”. As a result, since it is an individual instruction, the management plan that is output depends on the ability of each individual. Talented personnel create a good management plan, and unqualified personnel create a poor plan. produce a book. The bottom line is that even at a major consulting company, the quality of consulting is inconsistent depending on the person in charge. There is one more thing that managers who hate consulting companies say. That is, “They can formulate strategies, but they can’t teach you tactics.” This has a very deep meaning. There is no need to explain the difference between strategy and tactics. No matter how good a strategy is, a strategic design that is not based on tactics, that is, how to practice, ends up being just an empty theory. In other words, it is “only idealistic and not realistic”. Consulting companies make money by strategically designing. And if you can charge more, you’ll be credited with doing a great job. To put it in extreme terms, all you need is the ability to create proposals and plans that look like they can be bought with a lot of money. It doesn’t matter where you are. This is because if you provide such raw support, you will not be able to get rid of it. Of course, there is almost no field experience. Because I don’t work for that company. In this way, people who don’t know the site very well and have different abilities put together empty theories and put them together into a plan. That is the true nature of the expensive strategic blueprint. Of course, I have many excellent management consultants among my acquaintances and colleagues, and they are producing results that are worth the cost. However, it is an important theme that must be reconsidered by the consulting industry as a whole to dispel the negative image that managers say. So how do you avoid wasting money and choose the best consulting firm? After all, managers and executives have no choice but to improve their knowledge and skills, develop their own management strategies properly, and acquire the ability to put them into practice. That’s the manager’s job. You will fail because you will throw the whole thing to other companies. Once the manager himself has improved his literacy in management strategy, he can ask a consulting company to provide partial support only where necessary. If there is something wrong with the support content, you can stop there and fix it or switch to a different company. If you have a keen eye for support, you will be able to realize your business strategy by keeping costs low without expanding the damage.
The pain of advertising agencies
For some time, there have been several major incidents that have shaken the credibility of the advertising agency industry, such as the suicide of an employee and the issue of rights to the Olympic Games. We are not defending advertising agencies, but we are also important business partners, so we know the behind-the-scenes circumstances, so we can understand the anguish of advertising agency managers. What are the pain points of advertising agencies? They are the decline in cost-effectiveness and the inability to keep up with the diversification of media for providing information. Let me elaborate a little. Normally, when a client company wants to place an advertisement, an advertising agency undertakes the production and publication of the advertisement in a centralized manner. Advertisements, as they say, advertise a company’s products and services to consumers. In the old days, products and services were either seen in person at a nearby store, sold by a salesperson, or word of mouth. In addition, companies with budgets have used mass advertising in newspapers, radio, and magazines to increase sales. And it was the spread of television that made large companies even bigger during the high-growth period from the 1950s. It’s an era where family and friends gather in front of the TV, and the next day, the topic of TV becomes lively at school or at work. The influence of advertising was enormous, as a successful TV commercial was enough to create a listed company. However, today, due to the increase in overtime work, double income, and the diversification of entertainment other than TV, families are separated even if they live under the same roof. Furthermore, with the improvement of the Internet environment and the spread of SNS (Social Networking Service), good products and services have spread through word-of-mouth information. In the same way, “hype” is quickly seen as a lie and spread. There is also a bad example of spreading false rumors assuming that they are true. If there is a failure or mistake, it will immediately go up in flames on social media, and the company will often be overwhelmed until it can’t recover easily. As a result, companies will begin to implement safety-first “self-regulation,” and the impact of advertising will be weakened. In addition, the income of the people is steadily decreasing, and it is a big cause that they have stopped spending money on things. Due to these various factors, the meaning of advertising itself is being reconsidered, and an increasing number of companies are working to optimize and reduce advertising costs. It’s been a long time since I’ve said this, but in fact, since the “Lehman shock”, the advertising budget of companies has increased. Although it is not possible to make a simple comparison due to factors such as the increase in advertising costs, advertising costs themselves have increased since the “bubble” era. Some companies are cutting their marketing and promotional budgets, while others are spending big. Internet advertising costs are particularly conspicuous. Internet advertising costs have continued to rise since the mid-2000s, as if they were eating up TV advertising costs. Mass advertising on television, newspapers, magazines, etc. (*Mass advertising refers to mass media such as TV commercials, newspaper advertisements, magazine advertisements, billboards, etc.) With the change in advertising, new advertising design models that did not exist in the past, such as directing advertising from mass advertising to the Internet, have appeared, and the design methods of corporate advertising have changed. However, the proprietors of advertising agencies are unable to take action. Here lies the weakness of traditional advertising agencies. The reason for this is that, first of all, the competition for a certain amount of the pie that is the target of mass advertising has begun, and the number of companies that can run mass advertising has become limited. One of the causes is the decrease in TV viewing time as mentioned above. TV viewing is high, especially among middle-aged and older people, but among younger generations under the age of 30, the use of smartphones is overwhelmingly higher than TV use. The amount of time spent in contact with the media has not changed much since then, but the direction has changed significantly. In addition, as the income of the younger generation does not increase, they are forced to work overtime and come home late. We don’t have time to watch TV during the so-called “golden time” from 7pm to 9pm. Automobiles are one of Japan’s key industries, but in rural areas, more and more people think they cannot or do not need to own a car in metropolitan areas. If the number of people who buy things decreases, the company’s sales will only decrease. It’s really simple, if the population doesn’t increase due to the declining birthrate and aging population, the number of buyers will be limited even if you place an advertisement. Another weakness is the lack of know-how to create online advertisements. In recent years, there has been a rapid increase in the number of emerging companies that specialize in creating Internet advertisements rather than advertising agencies that have traditionally created television, newspaper, and magazine advertisements. Internet mass advertising can be produced cheaper than TV commercials. As a result, medium-sized advertising agencies that have followed the old ways have been in a difficult situation. In addition, the cost-effectiveness of TV commercials can basically only be roughly measured by comparing audience ratings and sales, but with Internet advertising, where data analysis has evolved, it is possible to fine-tune the cost-effectiveness by tracking the browsing history of customers. Effects are becoming measurable. Perhaps for this reason, some companies have begun to question the idea of running television commercials that cost huge amounts of money. Currently, about 7,500 commercial products and services are aired on TV every year. Multiple advertising agencies are fiercely competing for a small number of 7,500 brand projects. In marketing terms, there is a phrase “red ocean,” in which the competitive environment becomes fierce and bloody battles take place. There are also problems with the way advertising agencies create advertisements. When an advertising agency receives an advertisement order from a client, it outsources most of the planning and advertisement production work, such as various market research and commercials, to an external company. What happens then? The know-how of the business of “producing advertisements” is not accumulated in the original advertising agency, and the “strength” of the production ability is passed to external contractors. Major advertising agencies only have sales-focused functions, and their in-house production capabilities are severely weakened. If a cutting-edge advertising agency that is also good at IT-related production enters there, the advertising agency will have no choice but to compete in sales services for client companies. In order to develop new sales destinations, advertising agencies are expanding their sales activities to small and medium-sized enterprises, which they have not paid much attention to until now. However, since small and medium-sized enterprises have not had much experience with major advertising agencies, they may seek support not only for advertising but also for management strategies. The reason I mention it here is because this kind of example happens to me from time to time, and most of them fail. As will be explained in Chapter 2, there are six stages in management strategy, including marketing, management, and operations. Marketing, which is one of them, is classified into 4P (product, price, promotion, place). Of these, promotions are further subdivided, and advertising is only a small part of it. Advertisement is just one activity element from the perspective of management strategy activities as a whole, and advertising alone cannot solve management issues. Even if it is a major advertising agency, it does not have the know-how to support the management strategy, so if you easily ask for support for the management strategy, you will be in trouble.
High failure rate of IT system implementation
In order to avoid such failures in IT solutions, it is desirable to appoint a consultant who understands the company’s needs and issues, understands the characteristics and programs of the IT vendor, and skillfully connects the two. Good consultants are not easy to find. There are increasing calls to reduce costs through the introduction of IT, but this is only possible if you can make full use of IT. What kind of choice you make here and how well you introduce IT will make the difference.
What is a next-generation partner company?
What did you think. Many doubts remain about whether the current business support of consulting companies, advertising agencies, etc. is sufficient for corporate support. In fact, all these partner companies can see a common management strategy policy. That is, (1) work segment (2) to improve hands-off. Certainly, in order to provide management support, all-round knowledge, experience, and know-how are required. There are many managers of partner companies who think that human resources are fluid and that employee education is not permanent, and that the training cost will be nothing. Therefore, it is “business segment” that enables education in a relatively short time. Also, if you pursue “good hands-on” while doing this segment, you will be able to pursue profits without spending time and money on education. If you choose such a partner company, it will only cost you money, and you will not be able to proceed with your work from a holistic perspective, so it will be difficult to achieve results. So which company should you choose?
(1) A partner company that has a comprehensive support system from strategy to tactics
(2) A partner company that focuses on human resource education. I would like to explain this point in detail, but this is the end of this column. Text: Hiroshi Ashida
●The column is scheduled for the 1st of every month. Column scheduled to be published in September: “Why IT Vendors Will Disappear Soon”