Increasingly, there seem to be two schools of management consulting. One tackles "what-to-do" issues before "how-to-do-it" ones; the second focuses almost exclusively on the how-to questions.

First Manhattan Consulting Group belongs to the first school; based on his letter, Mr. Wendel apparently adheres to the second.

We have found that some activities performed by banks meet customer needs and create shareholder value, but that more than 50% of these activities destroy value. Thus, "what to do" is typically not clear.

The article that Mr. Wendel criticizes stresses, among other things, the primary importance of understanding, via data base analysis, the determinants of high or low profitability in order to earmark the right products to the right customers via the right distribution.

To our mind, this task is a prerequisite to that of designing a system of incentive compensation and is necessary to arm top managers with the knowledge of how to direct the troops.

We do not minimize the importance of proper sales incentives. Yet without the ability to identify what to sell and to whom, banks can waste a lot of time selling the wrong things to the wrong people, thereby destroying rather than enhancing shareholder value.

Paying people bonuses to sell before they understand how to channel their efforts is a recipe for disaster. It is one reason for the observed fact that, at many banks, nearly three-quarters of all accounts sold by branches earn a rate of return below the shareholder minimum.

Mr. Wendel falls into the same trap as do many change-management- oriented consultants - that of ignoring the celebrated business maxim: "First, do the right things. Then, do things right."

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