Quote from Robin Hanson

The puzzle is why firms pay huge sums to big name consulting firms, when their advice comes from kids fresh out of college, who spend only a few months studying an industry they previous knew nothing about. How could such quick-made advice from ignorant recent grads be worth millions? Why don’t firms just ask their own internal recent college grads?

Some say that consulting firms use their access to collect data on best practices, data that other firms are eager to pay for. But while this probably contributes, I find it hard to see as the main effect.

My guess is that most intellectuals underestimate just how dysfunctional most firms are. Firms often have big obvious misallocations of resources, where lots of folks in the firm know about the problems and workable solutions. The main issue is that many highest status folks in the firm resist such changes, as they correctly see that their status will be lowered if they embrace such solutions.

The CEO often understands what needs to be done, but does not have the resources to fight this blocking coalition.

The Concept of "Valuable Final Products"

Companies hire consultants, looking for "solutions to their problems", mostly due to "misallocations of resources", as Mr. hanson says. We subscribe totally to the tru notion of VFP:

"A valuable final product (VFP) is valuable because it is potentially or factually exchangeable. The key word in this sense is EXCHANGEABLE. And exchangeability means outside, with something outside the person or activity. A valuable final product could as easily be named a VALUABLE EXCHANGEABLE PRODUCT".

This is at the central core of what we follow at Candex. Our consultants: