Maximising management consulting: Insights from Colombia’s export program

Research examines why management consulting programs often fall short of predictions, using Colombia’s export initiative as a case study

Business leaders worldwide face a familiar challenge: accurately predicting whether expensive new programs will deliver promised results. This challenge has become increasingly acute as organisations pour unprecedented resources into transformation initiatives, with global management consulting revenues reaching US$1 trillion annually. The pressure to demonstrate return on investment intensifies when boards and stakeholders demand clear evidence that substantial expenditures will generate measurable outcomes.

The stakes are particularly high when governments and organisations invest millions in initiatives designed to boost economic performance – particularly with more complex programs involving export competitiveness or operational efficiency. These initiatives typically require sustained commitment across multiple organisational levels, significant resource allocation over extended periods, and coordination among various external providers and internal stakeholders.

New research has found that the gap between initial promise and final delivery of such programs often emerges not from poor intentions or inadequate expertise, but from fundamental misalignments between program design and implementation realities. The research, based on a Colombian government program, offers valuable lessons about the gap between expert predictions and program outcomes. The Colombia Productivity and Export Improvement Program (PEIP) appeared to have all the ingredients for success: substantial government backing, expert consulting services worth approximately US$13,800 per firm, and strong participant engagement. Yet the results revealed important insights for future program design.

The case studies that provided valuable learning opportunities

The research, Bayesian Impact Evaluation with Informative Priors: An Application to a Colombian Management and Export Improvement Program, was conducted by Associate Professor Rafe Meager in the School of Economics at UNSW Business School, together with Leonardo Iacovone and David McKenzie from the World Bank. Published in Econometrica, the research explained how the Colombian government launched their PEIP, with ambitious goals to help 200 firms improve their productivity and export capacity through intensive management consulting. The program targeted companies across 13 sectors, from textiles to pharmaceuticals, offering specialised technical assistance covering commercial strategy, operational productivity, quality standards, and energy efficiency.

Consider the experience of one cosmetics factory participating in the program. The consultants worked with the firm to identify sunblock as their “star product” with the highest future profitability potential. They analysed costs and client lists, ultimately advising the firm to reduce excessive discounts that were creating losses. While this advice improved domestic operations, it highlighted the complexity of achieving export-specific objectives. This case exemplified a broader pattern where consulting improved general business practices while revealing the challenges of export market entry.

Similarly, a fashion firm found opportunities for knowledge exchange with consultants about industry-specific requirements. The firm noted they spent part of their time educating the consultants on their industry, highlighting the collaborative nature of the consulting process and opportunities for mutual learning.

What made this program particularly noteworthy was not just its scale but the extraordinary consensus among stakeholders about its potential for success. Government policymakers, academic experts, and participating firms all predicted positive outcomes. The actual take-up rate of 83% exceeded most expectations, with firms paying between US$1035 and US$2070 to participate.

Research methodology reveals important insights

The researchers collected detailed predictions from seven Colombian policymakers, 11 academic experts, and ten participating firms before the program began. They used a novel method where respondents distributed stones across probability ranges to capture their full expectations about program outcomes. This methodology represented a significant advancement in impact evaluation, allowing researchers to compare actual results against the collective wisdom of those closest to the program.

The researchers tracked firms from 2010 to 2020, using comprehensive administrative data on exports from the National Directorate of Taxes and Customs, employment records from the Planilla Integrada de Liquidación de Aportes, and detailed survey data on management practices. This longitudinal approach provided insights into how management consulting programs actually perform versus how stakeholders expect them to perform.

When expert consensus meets complex realities

The research revealed important divergences between expectations and outcomes across multiple measures, with no meaningful improvements in 2019 and some declines in 2020.

It was predicted the program would increase the probability of firms exporting by 6 percentage points, while policymakers expected a 13% increase. Instead, researchers found outcomes that varied from these predictions, with particular challenges emerging in 2020 likely influenced by global market disruptions.

The pattern repeated across other export measures. For product variety, experts predicted increases of 0.5 to 1.5 new products per firm, but actual results showed the complexity of expanding product ranges in international markets. Export values and productivity showed similar variations from predictions, with particularly challenging conditions emerging in the second year.

“The results show the program was not as successful as anticipated, but also temper the conclusion of it perversely worsening export outcomes,” the researchers noted, highlighting how their Bayesian approach provided more nuanced insights than traditional analysis methods.

“One of our motivations for this work was the tendency of both stakeholders and academics to engage in ‘HARK-ing’, which stands for ‘hypothesising after results known’,” said UNSW Business School’s A/Prof. Meager. “It is all too easy to convince yourself that you always knew or already believed the results you’re being shown in the data. Recording priors before collecting data helps everyone understand what's new and surprising when the results do come, versus what's expected and confirmed. The Bayesian approach also allows us to incorporate those priors into the final analysis, and potentially extract more information from the experiment as a whole.”

The consulting experience: Right methods, evolving focus

The program’s journey revealed important insights about the evolution of development initiatives. While the government initially focused on export outcomes, implementation gradually incorporated broader management practices and overall productivity improvements. This adaptation had measurable impacts on the ground.

Consulting services did improve certain management practices, particularly in lean manufacturing and customer relationship management. Firms receiving operational productivity consulting showed an 11.9% improvement in operations practices, while commercial practices improved by 7.9%. However, the research found that achieving export-specific outcomes required additional considerations beyond general management improvements.

The researchers identified several critical implementation insights. Consultants often recognised that many firms needed to strengthen their domestic market position before pursuing international expansion, leading to recommendations that prioritised building fundamental capabilities. “Our qualitative discussions with the commercial strategy consultants and several program firms found that the consultants believed that the majority of firms could not consistently produce at the capacity and quality needed to go to external markets, and so, in some cases, actually recommended that they focused more on the domestic market than foreign markets,” the researchers noted.

Additionally, the consulting was delivered through different specialised firms, each focusing on specific areas, with 190 hours of in-person technical assistance provided. This structure created opportunities for specialisation while also presenting coordination challenges that offer lessons for future program design.

Learning from implementation experiences

The implementation journey revealed important insights for future program design. “Since consulting firms had been hired to work solely on one area, their main focus was on measuring indicators and helping firms in that one area, without regard to whether this change would be the most likely to deliver improvements in overall productivity or in the ability of the firm to export,” the researchers observed.

The consulting firms brought valuable general expertise while also creating opportunities for sector-specific knowledge exchange with participating firms. This two-way learning process proved particularly important for developing context-appropriate strategies for different industries.

The timing and sequencing of interventions created additional learning opportunities. “The ordering of which area of consulting they received first was haphazard, with no strategic vision,” suggesting the importance of carefully planned intervention sequences in future programs.

Practical implications for the business world

The Colombian experience offers several crucial insights for organisations considering similar interventions. First, stakeholder consensus about program potential, while encouraging, should be balanced with realistic assessments of implementation challenges. Even when experts, implementers, and participants align in their optimism, careful attention to design and execution remains essential.

Second, the quality and focus of external consulting matter more than the quantity. The study revealed that building effective partnerships between consultants and firms requires attention to sector-specific knowledge and context. This highlights the importance of selecting consultants who can both bring general expertise and adapt to specialised contexts.

Third, coordination and sequencing of interventions prove critical. The Colombian program’s experience with multiple consulting firms working on separate areas provides valuable lessons about the importance of integrated strategies, particularly for complex objectives like export development.

“We think this work highlights the importance of governments doing randomised controlled trials in general, because not everything they try will work as expected,” said A/Prof. Meager. “It is better to learn this and not keep throwing money at something that doesn’t work as planned.”

For business leaders, the Colombian case underscores the importance of maintaining flexibility and learning throughout program implementation. While improving general management practices has clear value, achieving specific strategic objectives often requires adaptive approaches that respond to emerging insights. The most successful interventions balance initial objectives with the flexibility to adjust based on real-world learning. This research provides valuable guidance for designing future consulting investments that can adapt to complex business realities while maintaining focus on long-term capability building.