The 6 insights from reading Nassim Taleb that consultants must internalize to create an ethical practice and build long-term relationships with their clients
There is one book that has influenced my thinking process more than anything else I have ever read: Fooled by randomness by Nassim Taleb.
If you downloaded my free short e-book The 39 books all consultants should read, you know that the book (obviously) made that list.
The core idea of Fooled by randomness is a challenge to the conventional wisdom of attributing success solely to skill. Taleb’s work is very persuasive in revealing the often underestimated influence of randomness in business and our lives.
The insights in the book made me also re-evaluate how we, as consultants, should approach the ethics of advice-giving in our profession.
Our ultimate objective as consultants is to establish solid, long-term, value-based relationships with our clients. In order to achieve our goal, we cannot just solve our clients’ problems - we must be able to do so by acting always ethically. Our reputation is the most important asset: if we screw up once, it may take us a long time (if ever) to recover their trust.
The question I will try to address today through the framings and insights provided by Taleb’s work, is simple:
How do we navigate our consulting world where skill, luck, and unpredictability intertwine, guided by ethical behaviors?
I invite you to read through the 6 considerations below, and to think how you can apply these ideas in your daily practice.
Transparency about uncertainty
As management consultants and business advisors, we should prioritize honesty about the limitations of our advice and the models we use.
We must openly discuss the potential impact of unforeseen events or random factors that could influence the outcomes previously discussed with our clients. We need to shift them, and hand-hold them in the process, from a ‘certainty-based’ approach to one that acknowledges and plans for uncertainty.
Managing expectations
A key ethical responsibility we face is managing clients’ expectations realistically. We often present overly optimistic scenarios and downplay risks for the sake of winning confidence or business. If you have been in this business for a while and you tell me that you never did that, well… I won’t believe you 😁
Easier said than done… What we should be doing instead is striving to provide a balanced view that includes the possibility of unforeseen variables playing to alter the course of events. We can be upfront and transparent about this, yet plan for our work with a reasonable degree of accuracy.
Avoiding overconfidence
Taleb’s critique of the illusion of control in the face of randomness tells us that consultants should be wary of projecting overconfidence in their predictions and strategies.
This is crucial.
When we are too confident in our analysis and takeaways, we lead clients towards risky decisions. We are underestimating the role of chance and external factors beyond our clients' control.
There is a mental defect psychologists call illusion of control that lead to a default to action rather than inaction, even when the benefits of inaction might be greater than those of action. So the “intervention bias” (doing something seems better than doing nothing, which is fine except that there are cases in which it gets us in trouble). The illusion of control was meant to show how “irrational” (according to some norm of behavior) we humans can be by giving ourselves the illusion to manage the uncontrollable around us: for instance gamblers cannot resist the pressure to do something in order to improve the outcome, such as throw the die with violence when they need a high number, or throw it softly in order to get a low one […] Many matters we deem scientific are just the fruit of that very illusion of control masquerading as science with, of course, actions to “improve” mankind.
Responsibility in risk assessment
Ethically, consultants should encourage comprehensive risk assessments that consider not just the most likely scenarios but also rare, high-impact events.
After Fooled by randomness, Taleb would proceed to write another fantastic book - The Black Swan - on this fundamental idea.
He tells us to look beyond standard models and consider a wider range of possibilities, thus preparing clients for a broader spectrum of potential future events.
Ultimately, the goal is to create businesses that are not simply reacting to changes but are proactive and forward-thinking, and are capable of navigating the unknown waters of future business landscapes with confidence and agility.
Integrity in success & failure analysis
Consultants should always acknowledge the role of chance – both good and bad luck - when analyzing successes and failures, either of their own advisory projects or their clients’ ventures.
I wrote about this subject in this post on Consulting Intel. I believe such an approach would foster a more honest and ethical analysis and would avoid attributing success solely to skill, or failure solely to poor decision-making.
The process is more important than the outcome: you can get the right results by doing the wrong things, and viceversa.
Long-term client interests
From an ethical perspective, all of us in consulting should prioritize the long-term interests and sustainability of our clients’ businesses over short-term gains.
This might mean advising against certain actions that might look favorable in the short term but could be detrimental in the long run, due to unforeseen or random events.
Mukom, from The Excellence Chronicles, talks about the opportunity of establishing the equivalent of an Hippocratic Oath for management consultants. Would it make sense? I think it’s a good the idea.
We must interpret consulting as a practice that values honesty, humility, and a deep respect for the unpredictable nature of the business world. This approach not only serves clients better but also contributes to a more responsible and sustainable business consulting practice.
I recommend reading Fooled by randomness - and in general Taleb’s entire work in his ‘Incerto’ collection - if you have an interest in the business world and how randomness plays a fundamental role in it.
The book never ceases to offer opportunities for reflection around its applicability to various facets of my life and profession.
Great article. I think a lot of firms bake in this mindset with the way they build a methodology or a template off the back of an engagement. It looks so clean and neat!
Who would think there was a lot of pain, missteps and learning that went into the initial delivery... and likely hasn't made it's way into the framework!
I was wondering whether it's the mix of this... and the expert mindset that consultants believe they need to wield, that creates the anti-patterns to your 6 considerations above!?
P.s., In the UK, there's the Chartered Management Consultant (ChMC) certification now... do you see that as the opportunity (missed or otherwise) to have a 'hippocratic oath' in place?