Wise Man from the East Syndrome

Today at breakfast I tried to explain management consulting to my wife at the breakfast table – my poor wife gets to hear all of the mysteries of life, or just the business world, while eating. I love her ability to smile and listen to me ramble on. But I stumbled into a clear description of what I experienced numerous times – the “Wise Man from the East Syndrome“. This is a very powerful phenomenon, and one that should serve as a cornerstone of understanding for anyone that does or aspires to do management consulting.

Wise Man from the East Syndrome

The Wise Man from the East Syndrome is the phenomenon when there is a problem within an organization that seems unsolvable by the organization’s own people, or even intractable, and the organizational management brings in a third person from outside to fix the problem even though there are people within the organization, sometimes vociferous, that know what the problem is and have solutions. The way it plays out most of the time, if a good management consultant is involved, is the management consultant (the Wise Man) listens to everyone in a 360 degree listening manner (see a good explanation of this concept on A Better Leader website) and pieces together the problem and solution from many different sources within the organization.

Being around Christmas time, you’d think that I used “Wise Man from the East” in reference to the three wise men:

The Magi Visit the Messiah – After Jesus was born in Bethlehem in Judea, during the time of King Herod, Magi[a] from the east came to Jerusalem 2 and asked, “Where is the one who has been born king of the Jews? We saw his star when it rose and have come to worship him.” 3 When King Herod heard this he was disturbed, and all Jerusalem with him. 4 When he had called together all the people’s chief priests and teachers of the law, he asked them where the Messiah was to be born. 5 “In Bethlehem in Judea,” they replied, “for this is what the prophet has written: 6 “‘But you, Bethlehem, in the land of Judah, are by no means least among the rulers of Judah; for out of you will come a ruler who will shepherd my people Israel.’[b]” 7 Then Herod called the Magi secretly and found out from them the exact time the star had appeared. 8 He sent them to Bethlehem and said, “Go and search carefully for the child. As soon as you find him, report to me, so that I too may go and worship him.” 9 After they had heard the king, they went on their way, and the star they had seen when it rose went ahead of them until it stopped over the place where the child was. 10 When they saw the star, they were overjoyed. 11 On coming to the house, they saw the child with his mother Mary, and they bowed down and worshiped him. Then they opened their treasures and presented him with gifts of gold, frankincense and myrrh. 12 And having been warned in a dream not to go back to Herod, they returned to their country by another route.

Matthew Chapter 2: 1 – 1

But then again, you’d be wrong. I have used it for many years to refer to the mysterious wise men that seem to stumble out of the East, whether it be China with Sun Tzu (The Art of War), Buddha, or India’s Mahatma Ghandi, drop some nuggets of wisdom that we all know since many of them are common sense (I know, not so common any more), put the common sense nuggets together in a way that is so simple and self evident that we all think them madly brilliant, and then disappear into the mists just as quickly as them came.

And then again, maybe I should listen to that epiphany (pun intended) – look at the wise men from Matthew:

1. The Magi stopped in to make a sales call – “hey, where is this king that was just born? We just stopped by to pay our respects…” It seems that they were the management consultants.
2. Jerusalem, otherwise known as the “organization“, knew the problem – their world order was just about to be messed with.
3. King Herod, also known as “management“, asked the wise men to solve a problem for him.
4. The Magi, smart enough because they’ve seen this before, agreed to the task. They probably even got paid – why do I say that? They had three really expensive gifts (see Christ for all the Nations discussion on the Magi’s Gifts). Did they start off with them or did King Herod give those to them?
5. When they saw the solution, they knew it.
6. They gave credit where credit was due, “…they bowed down and worshipped him“.
7. And they presented their findings in the appropriate way, they disappeared into the night.

Now that might be a stretch for some of you, but I wanted to play a little with the concept. The Magi (a little research at Encyclopedia Britannica and Wikipedia was fun), also known as The Wise Man from the East (I know, it’s wise men, but the search engine optimization loves to see the key words) did show wisdom throughout the story, and it is a wonderful story that all of us Christians hear each year, so I felt that it was fair game. I’ll boil it down for you then – they listened.

Problem Definition

Many times, if not most of the time, the members of the organization who understand the problem well and are vociferous about it want to be heard and are more than willing to tell anyone who will listen what the problem is – their problem is that the organization’s management thinks they are too close and are “part of the problem“. That might be true, but none the less, the Wise Man from the East (oh by the way, before getting your pitch forks out and saying that I am a misogynist, I’m going to use that anyway, so there), will hear a ring of truth and consistency after speaking with many in the organization. The key for the Wise Man from the East at this stage is to keep an open mind, show respect for all you listen to, and endeavor to boil each person’s statements down into a digestible summary with bullet points and then have them weigh in on them. By having them “bless” your summary, they tend to have more buy in on your findings.

The synthesis is where the Wise Man can shine – being succinct ( also known as “less words are better“, obviously I have not mastered that yet) and elegantly stating the problem is an art form. Work on it.

Synthesizing the solution

Not that the problem is stated, now go ahead and start working on the solution. Your 360 listening discussions with the organization most likely have most of the solution material in them, but now it’s time to find out how much momentum you can get within the organization. By presenting the problem statement back to the same people, giving them credit in general. It’s best if you not single out people in the organization yet because then some people will feel left out, mistrusted or down right start to work against you since their ideas weren’t given the proper credence.

Again, this is more art form than science – we’re dealing with people, and we all know that people don’t fit into neat little boxes. I personally find it best to:

1. Keep the goals as small and meaningful as possible. No one likes to work for a year without feedback for the ability to celebrate a success.
2. Keep the timeframe to less than 90 days, in fact, keep it to less than 60 days so that there is at lest 30 days for the organization’s people to do some other work in the meantime.
3. It is important to make everything measurable and objective. If you can’t measure it, did it really happen?
4. Make sure that everyone has a part to do, even if it is a small part. First, it will help with buy in. Secondly, if someone gets hit by a bus, then there are people there to pick up the pieces.

Presenting the Problem and the Solution

And here is why the good management consultant or Wise Man from the East gets paid the “big bucks” – they present a problem such that it makes everyone in the organization think, “well, finally someone listened to us“, and they present a solution that makes the organization people the champions of the solution that they will deliver. I’m not saying that the Wise Man, also known as the management consultant, may not continue helping the organization implement the solution. Oh nay nay. I’m saying that the Wise Man cannot be the solution.

And that is where some management consultants show they ugly underbelly of the industry – they are either too greedy and want all the credit and money for themselves (fire them immediately and talk bad about them every chance you get) or they are too immature to know that the solution has to come from within the organization for it to be successful in the long run.

Oh, I have many, many more secrets, but you must engage with me to get the full weight of my experience…

Examples from the Wise Man from the East

Here are some real life examples from my past as a custom software developer and “failed” project specialists during the client server development revolution during the 1990’s:

1. We got a call from a major outsourcing company during 1996 asking for some help with an application development project for energy deregulation that had already spent its budget and wasn’t even close to being finished. After being there less than week, I had heard from the 250 person team that they needed less people so they wouldn’t be stepping on each other and they also needed some specialists that had the requisite tool knowledge – that week I personally laid off 210 of the staff. I then brought in a small team of 7 people that were able to work with the 40 people left on the team that was able to deliver the application within 5 months. Outcome – my company billed over $1M and the outsourcing company was able to salvage a $50M engagement with multiple clients.
2. A client in the natural gas trading and pipeline industry, a client of 4 years and multiple different projects, needed Y2K remediation. The client was phasing out a major consulting company’s Y2K due to failure to complete remediation while addressing outstanding changes needed in the system. We were integrated into the previous company’s project management team and brought in 3 of our own resources. We listened to their project management team as to the errors they made and the solution, we listened to the client’s operational team who knew what the problems were operationally and got them talking (which they had never done) with the Y2K project manager and created a solution that we implemented in the next4 months. Outcome – my company billed over $600K, hired one of the outgoing resources from the Y2k remediation company with its blessing, and helped the client successfully remediate its mission critical natural gas trading shipping application for Y2K.
3. A client in the electric utility marketing asked us to review their telecommunications provisioning and management applications. After review with their development staff and discussion with their project management, we presented our findings that succinctly stated their problem and laid out a clear plan for implementation – we gave their staff 100% of the credit for the solution. Outcome – we have lifetime friends from both the line staff developers and client management, we successfully helped them implement throughout the next 2 years, and we billed over $400K.

And here are some examples from my life as a merchant banker:

1. A $40M revenue construction company providing specialized welders to the oil & gas refiners was taken over by a public company that we controlled. As part of the transaction, I personally was appointed the Chief Financial Officer (CFO), and I inherited a staff of foreign national accountants who had run the accounting for the last 5 years. Within the next 90 days, we (me and the accountants, especially the controller) were able to successfully cut over $ 400K from the budget, increased working capital from $700K to $2.5M from a commercial bank, secured a $50M factoring line, brought in $3M investment, and completed the “go public” transaction. Outcome – this one did not have a happy outcome as there was an outside force that wanted control of the operations, and accused me of nefarious intent (I had the last laugh as the outside force was the cause of failure for the entire operations while pocketing many millions from the investors).
2. An individual with a patent portfolio with over 30 healthcare patents wanted to tap the public markets for funding for third phase drug trials. We were able to structure and accomplish a $20M acquisition of the patent portfolio with a public company, recruit professionals (lawyers, transfer agents, etc.) and management team able to deal with a difficult genus, and work towards funding. Outcome – the public company has been funded (not to the level needed for phase three drug trials) and has pivoted towards nutraceuticals.
3. A gold and silver mining company based in Colorado needed $16M financing to restart their ore processing site and process tailings worth arguably $20M. We were able to reorganize the company’s capital structure to “crush the shorts” (no small feat, we used a bifurcated Common Stock structure with attached warrants), present to the investing public the ore processing site’s value successfully as measured by stock buying pressure, and finally we were able to secure enough funding to partially restart the ore processing site and buy further mine claims. Outcome – the public company was funded.

Even when I didn’t include all of the details here, each of these engagements underscored the importance of the Wise Man from the East Syndrome – every one of these had the solution already in the organization. They just needed the Wise Man…

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About Robert C. Rhodes

Robert is a merchant banker living in Sugar Land, Texas with his wife Stacey who listens to all his adventures (sometimes without rolling her eyes). Robert graduated from University of Houston with a BBA in Decision Support Sciences (management consulting for information technology) in 1991 and immediately was thrown into custom software development. After telling off his managing partner in 1992, he was told that wasn’t proper and transferred into customer software development training with vendors such as Powersoft, Sybase, Microsoft, and SilverStream, and technologies such as PowerBuilder, SQL Server (Oracle, Sybase, and Microsoft), javascript, and Java. Throughout the 1990’s and early 2000’s, Robert trained over 11,000 students, many adults transitioning into new toolsets that felt jeopardized by the transition.

Robert founded Systems Evolution Incorporation in 1993 and eventually took it public in 2003, acquired 7 companies, raised over $3.5M, had a run rate over $20M revenue, and had over 100 employees with a development system over 250. In 2007, he resigned from Systems Evolution Incorporated to devote his fulltime to merchant banking endeavors. Over the last 15 years, Robert’s merchant banking organization DSV Consulting LLC (previously named “Rhodes Holdings LLC“) has accomplished a lot:

• Taken 17+ companies to the public markets – largest had a $250M market capitalization
• Completed 41+ restructuring projects
• Completed 4 Regulation A+ projects
• Worked within 4 Regulation CF projects
• Completed over $200M in funding projects

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