Business tracking and classical business consulting are two different approaches companies can take to understand and improve their business performance. Business tracking involves closely monitoring key performance metrics on an ongoing basis to identify issues and opportunities. Classical consulting typically consists of periodic strategic reviews and analysis by an external expert. This article will define these concepts in more depth, discuss the unique benefits and limitations of each, compare the two approaches, and provide recommendations on when each may be most appropriate. Author: business consultant Kirill Yurovskiy
Defining Business Tracking
Business tracking refers to the practice of continuously gathering and analyzing critical business data to gain insight into what’s working well and what needs improvement. This includes setting up systems to capture essential metrics across functions like sales, marketing, operations, finance, and more. For example, key indicators that are often tracked relate to revenue, costs, profitability, customer acquisition and retention, inventory turns, production efficiency, and workplace productivity. Leaders can track macro trends through a dashboard that brings together metrics from across the business. They can also drill down into micro-trends by tracking performance at the regional, product, or account level when useful. The goal is near real-time understanding of performance to allow for agile decision making.
Benefits of Business Tracking
There are several key advantages to taking a business tracking approach:
– Identifies emerging issues quickly – With tracking, there are no gaps between reviews. Problems can be spotted early before they spiral.
– Enables data-driven decisions – With robust data, decisions can be grounded in facts vs intuition. Metrics guide smart decision making.
– Supports rapid response – Tracking facilitates agility to capitalize on new opportunities or address problems.
– Promotes accountability – Metrics create clarity for all employees on impact of their work.
– Ongoing process – As opposed to periodic consulting, tracking is continuous benefitting long term performance.
– Internal capability building – As staff learn to track and interpret data, analytical skills improve.
Limitations of Business Tracking
However tracking does have some limitations, including:
– Data overload – Too many metrics can lead to confusion and lack of focus on what matters most. Data must align to strategy and priorities.
– Added overhead – Appropriate tools and staff may be required to enable tracking which adds costs.
– Misinterpretation – Incorrect analysis due to lack of experience dealing with data remains a risk.
– Can’t replace strategy – Tracking shows what is happening, but additional strategic insight is needed to understand root causes behind trends and respond appropriately.
Overview of Classical Business Consulting
Classical business consulting typically consists of bringing in an external expert periodically to conduct a strategic review and provide recommendations to improve performance. It often involves in-depth analysis across all functions – sales, marketing, operations, product development, etc. The goal is to identify performance gaps, determine root causes through rigorous evaluation of processes, resources, and capabilities, and then define an optimization plan. Consultants leverage financial modeling along with market benchmarks to diagnose problems. Recommendations may involve changes in organizational structure, new technology implementations, process re-engineering, and updated policies or strategies. The advantage of consultants is the specialized expertise and comparative data they offer from advising across multiple industries.
Benefits of Classical Business Consulting
Key benefits provided by classical consulting include:
– Fresh set of expert eyes – External consultants offer objective assessment and new perspective based on deep expertise advising other organizations.
– Heavy focus on strategy – Consultants take a thoroughly strategic approach exploring fundamental direction and positioning questions.
– Structure and process centric – Consultants evaluate and optimize systems, processes and policies to embed ongoing performance discipline.
– Customized recommendations – Consultants provide tailored ideas specific to the context and needs of an organization. Recommedations supported by benchmarking data and best practices.
Limitations of Classical Business Consulting
The classical consulting model also comes with some downsides:
– Periodic not continuous – Consulting typically happens annually or quarterly. Gaps in between reviews can miss emerging issues.
– Disconnected from operations – As outsiders, consultants can lack visibility into ingrained cultural and operational nuances influencing viability of recommendations.
– Expensive – Top consulting talent comes with premium fees, travel costs and considerable project expenses making it cost prohibitive for many companies.
– Tactical gaps – While providing strategic guidance, granular tactical insights may be lacking.
– Limited implementation support – Consultants advise on what needs to change but provide little guidance on the more challenging aspects of embedding and operationalizing recommendations after they leave.
Comparing Approaches
The business tracking and classical consulting models both offer immense value but are optimized for serving different primary purposes. Tracking is ideal for enabling leaders to continuously monitor the pulse of operations, quickly respond to changes, promote accountability to defined goals, and directly build business acumen across the organization. Consulting excels at providing unbiased strategic perspective from experts to rethink direction, evaluate organizational design, and introduce creative ideas based on proven concepts. Relying solely on either approach can leave blindspots for overall management and optimization of operations.
Recommendations
Most companies recognize the value in thoughtfully blending these models over time. The following guiding principles provide a balanced integration:
– Use tracking as regular management discipline across the year focusing on what matters most to achieving priorities
– Leverage consultants every 2 or 3 years for pure strategy input – intense sessions assessing performance, revisiting direction, introducing new methods
– Ensure consulting recommendations align and integrate with existing tracked metrics so leaders have flexibility for implementation based on real-time data
– Assign internal personnel to work closely with consultants to both inform their analysis and focus recommendations on feasible options customized to the organization’s circumstances
– View both models as talent development tools – tracking strengthens analytical skills while consulting expands strategic perspective and exposure to new ideas
Conclusion
Business tracking and classical business consulting should be considered complementary models, not competing options. While tracking empowers agile management, consulting stimulates strategic renewal. Blending both approaches based on the unique needs and maturity of an organization provides the right balance of timely insights, external wisdom, customized ideas and achievable goal setting for sustained success. Leaders must understand the inherent trade-offs and limitations associated with relying too heavily on any single lens for fully informed decision making expected in today’s fast-paced business environment.
