(Mt) – University of Colorado Management Discussion

FIND A SOLUTION AT Academic Writers Bay

The Management Consultant The Management Consultant Mastering the art of consultancy Richard Newton PEARSON EDUCATION LIMITED Edinburgh Gate Harlow CM20 2JE Tel: +44 (0)1279 623623 Fax: +44 (0)1279 431059 Website: www.pearsoned.co.uk First published in Great Britain in 2010 © Richard Newton 2010 The right of Richard Newton to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. ISBN: 978-0-273-73087-3 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Newton, Richard, 1964The management consultant : mastering the art of consultancy / Richard Newton. p. cm. Includes bibliographical references and index. ISBN 978-0-273-73087-3 (pbk.) 1. Business consultants. I. Title. HD69.C6N495 2010 001–dc22 2009050850 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publishers. 10 9 8 7 6 5 4 3 2 1 14 13 12 11 10 Typeset in 9/13pt Stone Serif by 30 Printed and bound in Great Britain by Ashford Colour Press Ltd, Gosport The Publisher’s policy is to use paper manufactured from sustainable forests. Contents Acknowledgements / vii Preface / ix Introduction / xi part 1 Understanding consultants and consultancy 1 Consultants and consultancy / 3 2 Why does anyone buy consultancy? / 23 3 Your consulting service / 41 4 The three core processes of client-centric consulting / 58 part 2 Consulting engagements 5 Finding and winning work / 77 6 Delivering consulting engagements and satisfying clients / 108 7 The alternative approach – process consulting and facilitation / 132 8 Closing engagements and sustaining results / 147 part 3 9 High-performance consulting Developing long-term client relationships / 169 10 The ethical dimension / 181 11 The language of consulting / 199 12 Knowing when to say no / 220 13 Key consulting tips / 234 14 The client’s perspective – buying consultancy / 251 Conclusion / 269 vi Contents part 4 Additional resources for consultants A The tools, processes and materials of a consultancy business / 275 B References / 279 C Sle proposal letter / 281 Index / 285 Acknowledgements I would like to thank five consulting colleagues who I started working with years ago in Coopers #038; Lybrand. Although our careers have moved on in different ways, we still work together from time to time. More often we meet up, share stories and enjoy laughing about the occasionally pretentious side of the profession. They are: Graham Jump, Peter Meredith, Perry Childs, Richard Ellis and Andy Macey. Dedication This book is dedicated to my son Konrad for inspiring me to write the book, when he admitted that he really did not have the faintest idea what I did. Preface This book is a personal guide to the art of management consulting. It sets out to help new and experienced consultants to do one thing: to become better consultants. In simple terms, better means providing help that is of the most long-term value to your clients. The approach is also simple: to identify what it is that the best consultants do that their less effective colleagues do not – and how you can do it, too. Underlying this is my belief in client-centric consulting. The contents are derived from three sources. The first source is my experience as a consultant (working for Coopers #038; Lybrand, A.T Kearney, Ernst #038; Young and my own company Enixus). Secondly, my experiences in industry as a client – negotiating, buying and managing consultants. Finally and most importantly, I have a network of trusted consulting colleagues whose ideas have flavoured the book. Like a magpie I have picked up ideas and concepts throughout my career. I have shifted through them, throwing away most, keeping hold of the ones I like and think are precious. Many ideas in this book are my own, but of course I have learnt from others. I can’t remember the sources of all of these, so I am sure more credit is deserved than I have given. There were several reasons for writing this book, but two of them stand out. Firstly, there are comparatively few books on consulting, unlike many other management disciplines. Look at the business book selection in a good bookshop or online, and you will find many on strategy, leadership, marketing, delivering change and project management, to name a few areas. But consulting books are relatively scarce, scarcer than an industry of its size justifies. There are a few good books on consulting, but they do not approach the audience in the way I want to. x Preface The second reason comes down to my frequent frustration when I work with or engage other consultants. The simple truth is that the profession often does not live up to its own hype. This is not to deny that there are many brilliant consultants out there, and I have been lucky enough to work with and learn from a few of them. But there are many consultants who know they should be better to justify their fees. Worse, there are some very mediocre consultants who mistake being paid a lot with being good. As supposed experts in business, it is amazing how often consultants provide inadequate value to their clients. Management consulting is a large and very varied industry. The range of skills and services that fall under this title are huge. The difference in the type of work of the most expensive strategy houses compared to a project management consultant is so great that they may not even recognise each other as being in the same profession. There are some books that set out to address components of this industry. They tend to describe various tools and techniques of consulting. The best tools and techniques are only applicable in some situations and even if you know them it does not make you necessarily an effective consultant. I wanted to write a book for all management consultants. The book contains tools and techniques, but it is also intended to make you think like a consultant: how do effective consultants think about their work and their clients? Consulting experiences are varied, and each is unique. By thinking like a consultant, irrespective of the situation you are in, you will be able to deal with any situation in the most effective way. Introduction Ask someone in business to define the title ‘management consultant’, and you will get a wide variety of responses, not all of them complimentary! The title covers an extensive range of roles providing a variety of services. There are no universally recognised standards for being a management consultant and as a result there are very varying levels of quality. In addition, many people want to be management consultants but do not know what it entails. There are many consulting success stories, and numerous people have become comfortably well off as consultants. Given this success, it might be thought that the world was full of praise for management consultants. Yet, if you ask many customers in the private and public sector about their feelings and experiences of consultants, you will often be met with sceptical and even highly negative comments. There are numerous causes for these responses, but they can be summarised into three major categories. Firstly, too many consultants simply do not provide sufficient value to their customers and rely on churning out the same old work time and time again. Secondly, even good consultants with valuable knowledge often fail to understand true client needs. Thirdly, it is unfortunate to say, but there seems to be a number of very poor management consultants. This problem is compounded by the already mentioned lack of widely recognised standards for consultancy which can be used to judge or benchmark consultants against. A key reason for the negative perception of consulting is the fact that too many consultants are focused on what they have to offer and how they make money, rather than what clients need. Too many consultants provide context-free and generic advice, whereas what clients need is advice that is tailored to their specific culture and context. Overall, too many consultants spend too much time trying to be clever, rather than asking themselves what actually makes a good consultant? xii Introduction This book will describe those factors that make good consultants and how consultants can go about providing client-centric consulting. It describes consulting from the viewpoint of the client, and so will help consultants understand what will make them successful. The book will help in deciding on how to provide the most the book focuses appropriate services and advice to clients. Rather on the skills of success- than considering the tools and processes of consulting, as most other consulting books do, it ful consultants focuses on the skills of successful consultants – what they do that makes them successful, success in this context being defined as client results, not only in terms of financial returns for the consultant. Finally, the book contains many tips from the author’s and his colleagues’ years of experience in consulting. “ ” There is a huge number of management consultants and business advisors of one form or another. Management consultancies have been one of the great business success stories of the past 40 years, with some now employing tens of thousands of people in worldwide businesses, delivering significant profits to shareholders and partners. At the other end of the scale there are thousands of small consultancies and independent consultants. As employment patterns change, more and more people are choosing to work as consultants. There are many attractions to a career in consulting. For some, consulting may seem the only choice following redundancy from a senior position. There are many exles of initially despondent redundant managers finding not only a better income, but more enjoyable work in consultancy. For others, it is a lifetime career choice that starts from university, even though few students have any real concept of what being a consultant entails. Many people enter the consulting profession for a more flexible lifestyle, although this is harder to achieve in practice than it might seem. Whatever the reasons for considering it, consultancy is a great opportunity. Companies appear to have an increasing and insatiable demand for advisors and interim managers. Providing services can be very profitable and give consultants a high standard of living. But consulting also has risks. It’s an increasingly competitive environment as more people are drawn to the profession. Select the wrong services or sales approach, and consulting will be a stressful profession. There is also the constant uncertainty about what happens when the current engagement is complete. Many people assume that simply because they have some specialist expertise, they can be a good consultant. Certainly, expertise is an Introduction essential foundation. This book assumes you have an area of specialist knowledge and can competently apply the techniques and tools of your specialisation. But specialist knowledge is not enough. It is not intended as a tautology when I say that the core competency of a successful consultant is the skill of being a consultant. It is not a profession for everyone – there is a specific art to being a consultant. Although the consulting industry is successful, that success is in jeopardy. Fee rates for many organisations, including some of the largest firms, are lower in real terms than they were previously. Clients are becoming more adept at controlling consultants and extracting the best value from them. More and more people are entering the consulting industry, meaning that to excel the standards are rising all the time. Consultants need to raise their game. This book sets out to provide you with guidance to what makes a great consultant, irrespective of where you fit amongst the incredible variety of management consultants. It avoids the constraints of focusing on specific elements of consulting or approaches to consultancy, and instead takes a client-centric view of what is needed to provide expert consulting. Although this book contains approaches, the fundamental questions it seeks to answer are what makes a great consultant and building on that, how do you achieve this? Contents and structure There are 14 chapters and two short additional reference lists in the book. The book is broken into three main parts. In the first part (Chapters 1–4), I explore what it means to be a management consultant and how to go about setting yourself up as one. In the second part (Chapters 5–8), I discuss how to go about winning work and delivering value to clients. In the third part (Chapters 9–14), I discuss a range of broader issues which set the context for consulting and will give you some additional tips and techniques to being a successful consultant. The book has been designed to be read from cover to cover, but you can dip into it as you require. If you want to reference parts individually, the detailed contents of each chapter are described in the following table: xiii xiv Introduction Chapter title Chapter summary 1 Consultants and consultancy Introduces the key terminology and concepts used in the book and provides an overview of what being a consultant means. 2 Why does anyone buy consultancy? Explores how successful consulting starts by understanding the reasons clients have for buying consultancy. This is essential knowledge for anyone wanting to provide client-centric consulting. 3 Your consulting service Looks at the range of services you can offer as a consultant and how to position your skills and experience as a saleable client service. 4 The three core processes of client-centric consulting Discusses the core engagement process and then puts it in context with the client’s change process, and the client’s operational process. Understanding this relationship is at the heart of client-centric consulting. 5 Finding and winning work As a commercial business, consultants must find opportunities and sell their services to clients. This chapter discusses the processes and approach to winning work. 6 Delivering consulting engagements and satisfying clients Investigates the central work of a consultant – delivering consulting engagements which add value to the clients. 7 The alternative approach – Describes an alternative approach to expert process consulting and facilitation consulting – process consulting – which can be used to deliver entire consulting engagements or as a tool on an engagement. 8 Closing engagements and sustaining results All consulting should result in some change in a client, otherwise it delivers no value. Often the change takes place and must continue after the consultant has finished their work. This chapter considers how to achieve change, and how to sustain it after a consulting engagement is complete. 9 Developing long-term client relationships Describes the advantages of having long-term client relationships and how to develop them. 10 The ethical dimension Considers the ethics of consulting, and the potential ethical dilemmas that regularly face consultants and ways to deal with them. Introduction Chapter title Chapter summary 11 The language of consulting The central tool of the consultant is language. This chapter describes some approaches to communications and explores the topic of consulting jargon. 12 Knowing when to say no Not all consulting opportunities are worth pursuing. This chapter describes the characteristics of engagements which consultants should avoid if possible. 13 Key consulting tips A summary of useful key tips from experience. 14 The client’s perspective – buying consultancy A short review from a client’s perspective of issues to consider when purchasing consultancy. Conclusion A brief summary of the role of the management consultant and topics covered in this book. A The tools and processes of a consultancy business A summary of the key processes and tools any consulting business requires. B References A short list of references that have influenced the author’s thinking, and may be useful to readers. C Sle proposal letter A sle proposal letter for readers to adapt. xv part one Understanding consultants and consultancy chapter 1 Consultants and consultancy T his chapter answers the questions: what is a management consultant and what is management consultancy? You may be an experienced consultant who wants to pick up a few new tricks. On the other hand, maybe you are new to consulting and want to gain a better understanding of what it is all about. This chapter is aimed primarily at the novice consultant, whether you are considering joining a major consultancy, are starting out as an independent consultant, or have been recruited as an internal consultant. It provides an overview of some of the fundamental concepts in consulting. Most of the book is about how to be a consultant. As an opening to the subject this chapter answers what being a consultant means. To gain the most from this book it is important to understand what a management consultant is, to be familiar with some common consulting terminology, and to appreciate the difference between being a consultant and other roles. If you want to be a management consultant, it is helpful to recognise why you want to be a consultant and to think through whether or not it is a profession that can meet your desires. To achieve this it is useful to have at least a basic grasp of the economics of a consulting business. This chapter sets out to do all of this. There is nothing complex here, but it is important as it provides the foundations for the rest of the book. This chapter covers a disparate range of topics that combined give a basic, but essential, picture of consulting. 4 Understanding consultants and consultancy One small, but noteworthy point: rather than write the phrases ‘management consultant’ and ‘management consultancy’ repeatedly, I shorten these to ‘consultant’ and ‘consultancy’. There are other types of consultants and consultancy, and many of them could find something useful in this book, but the focus is on the management variety. What is a management consultant? There is a large and growing band of people who call themselves management consultants. Some people are management consultants but do not use this title, preferring labels such as business advisor, strategy consultant, operational consultant or even leadership consultant. These and related job titles encompass a divergent and eclectic group of individuals. The work such people do varies enormously. The fee rates range from low to very high, and the length a consulting project may vary from hours to years. Clients who use consultants can be the owners of firms, managers of one level of seniority or another, or the main board directors of major corporations. Clients can also be staff in the public sector and not-forprofit organisations. Some consultants are employees of the firms the consulting takes place in, others are external but it is not easy to regular faces within an organisation, while many come up with a concise are individuals who appear in a client organisation for a short time and never reappear again. definition Their areas of specialist expertise go from obscure pieces of business to generalist management advice. Given this huge variety, what is it that is similar that enables them to be bundled together as management consultants? It is not easy to come up with a concise definition that covers this assortment of roles. “ ” The problem with describing the role of a management consultant is compounded by the fact that some existing definitions have been written by people who are not consultants, and who do not understand fully what consultants do. But listening to professional consultants can equally be misleading. Those who are consultants have a vested interest in making the role sound majestic and magical, and to bias any description towards the type of work they specifically do. I have read definitions of management consultancy in sales brochures, books, dictionaries and various online encyclopaedias. A few definitions are the hopeless summarisations of people without any real understanding, some are correct but focus on irrelevant aspects of the role, many are good, but do not quite manage to encapsulate the role and its variations. 1 I Consultants and consultancy Given the wide variety of consultants, rather than starting with a definition, I will list characteristics to provide an appreciation of the role of a consultant. As little in this world is absolutely black and white there are caveats with each one of these characteristics. Consultants do the following seven things: 1 They provide advice and recommendations to managers, and may provide assistance with the implementation of the recommendations. Caveat: Consulting companies may provide a whole range of services, from pure consulting to training and outsourcing. Not all of this is consulting. Consulting is about providing useful advice, and helping managers to implement the advice. 2 They base their advice and recommendation on a set of skills and expertise, or intellectual property they have available to them. Caveat: This is what should happen. However, ask any experienced manager and they can probably tell you of the time they spoke to or even engaged someone who purported to be a consultant but who had very limited skills, experience or intellectual property. 3 They consult. This may sound obvious given the name, but it is often forgotten. What I mean by this is that consultants engage in dialogue with an organisation and its staff, and apply their expertise to develop recommendations, taking account of the specific needs and context of that organisation. Caveat: Some firms called consultancies do not consult. Such firms may be very successful in selling research, benchmarking data or other types of information. Consultants do not sell products or give the same advice to everyone. There is nothing wrong with selling a product, but irrespective of how it is branded, it is not management consulting. 4 They are involved with a given client on a temporary basis. Caveat: The length of a consulting project may be anything from hours to months. Occasionally, it may be years, although it is difficult to argue that someone who has worked continuously in one organisation for years is still working as a consultant. (Internal consultants work for one organisation, but they will be working on different projects across a range of departments or divisions.) It is not unusual for a consultant to work regularly for the same client, but each piece of work is of a limited duration. 5 They are independent. A consultant should be providing advice or recommendations irrespective of the internal politics and vested interests of an organisation or the managers who are their client. 5 6 Understanding consultants and consultancy Caveat: Consultants are human, have their own business interest to consider, and naturally have their own biases. But a consultant’s biases should be independent of a client’s biases. 6 They are not paid for from an organisation’s normal staff budgets. Caveat: A manager who wants to employ a consultant needs a budget for it. This is often true even for internal consultants who charge back their time, and if they do not, they remain an overhead to the rest of the business. 7 They add value to a manager and the client organisation by helping them to change. Value can take many forms, such as improved decision making, faster change implementation, reduced business risk and so on. Caveat: At least they should do! Reality is not always so clear cut. If we take these seven characteristics of a consultant and take the most pertinent points it is possible to develop a definition of a consultant that is true in most situations: Definition A consultant is an independent advisor who adds value by helping managers to identify and achieve beneficial change appropriate to their situation. Essential consulting jargon To get the most from this book it is important that we start with a common understanding of the basic terminology surrounding management consultancy. Some words, or pieces of consulting jargon, will be used repeatedly through the book, and if you are new to the industry then it’s important you become familiar with these concepts. I am not generally a big advocate of jargon (see Chapter 11), but there are words and phrases that are continuously used by consultants. Most of these may be obvious and intuitively understandable, some are not specific to the consulting industry, but they are essential to know. Consultants tend to talk about clients, rather than customers. The concept of a client is explored in the next chapter. In general terms, the word is used both to refer to a specific manager who gives the consultant direction on a consulting project, and the organisation in which that manager works. Hence a consultant may think of the client as Mr Peter Smith of the XYZ Company, or may consider it to be the XYZ Company. To 1 I Consultants and consultancy differentiate, when I refer to a client I am talking about a person (or group of people), when I am talking about the organisation the client works for I use the term client organisation. Once employed by a client, the specific consulting project being undertaken is usually referred to as an engagement or sometimes a live engagement. A client is one of a larger group of stakeholders a consultant must deal with. Stakeholders form a set of individuals who consultants must take into consideration when delivering an engagement. To win some work consultants engage in business development. Business development relates to time that is not (usually) chargeable to a client, and includes activities that are associated with marketing a business and pursing specific sales. The aim of business develconsultants must opment is to identify opportunities, and then normally write a convert these opportunities into live engagements description of the and hence have some chargeable time. An opportunity is the situation in which a client has a need service they will for some consulting support. To convert an opporprovide tunity into an engagement and hence be able to charge fees, consultants must normally write a description of the service they will provide to the client. This description is called a proposal. Chargeable time is the time when a consultant is billing fees to the client. Once an engagement is complete, consultants often seek to sell on, that is to sell a subsequent consulting engagement to the client so the consultant can remain chargeable. “ ” In order to sell regularly, and for proposals to be successful, consultants may have service lines. A service line is a specific area of expertise that a consultant or a consultancy company invests in (see Chapter 3). For instance, one consultancy may have a service line in improving the management of IT departments, and another may have a service line to increase innovation in business. Service lines may be the informal labelling of expertise of individual consultants, but they can also be the formal documentation of processes and approaches to consulting by larger consulting companies. Service lines and any other knowledge or approaches are often called intellectual property or intellectual capital by consultants. Intellectual property has a specific legal meaning, but many consultants use this phrase in a looser fashion than the legal definition requires (see Chapter 3). One of the most important measures of a consulting business is utilisation or chargeable utilisation. Utilisation is a measure of the proportion 7 8 Understanding consultants and consultancy of time a consultant is working on fee-paying work on a client site. Hence, a consultant who is billing three days a week is 60 per cent utilised. It is normally not possible for a consultant to be 100 per cent utilised because some time must be spent on business development, the creation and maintenance of service lines, and holiday. How does consulting differ from other roles? Developing a full understanding of the role of the consultant is helped by understanding the difference between a consultant and an employee, a manager or a business leader. The boundaries between being a consultant and, for exle a manager, are grey, but there are important and definite differences. Let’s start by considering the role of a consultant versus an employee in the organisation using consultants. The obvious point is that a consultant is not an employee of the organisation they are helping, but an employee of a consulting business. Why does this matter? Most consultants want to do a good job that satisfies a client, but their performance assessments, pay increases, promotions, ongoing praise and criticism are not done by the client organisation. All these are influenced by their performance with clients, but consultants have different motivations from client staff. Consultants are never fully part of a client organisation’s team. For exle, a client may regard a consultant as having done a brilliant job by providing fantastic advice. A consulting company may judge the same consultant to have only done an average job because he did not manage to make any additional consulting sales. A consultant can be part of a client organisation’s project team, and in doing this share some goals with other client staff, but consultants are always to some extent independent from the client organisation. Their incentives and performance drivers are different. This is true even for an internal consultant. Obviously, an internal consultant is employed by the same company as their clients, but is not employed by the same department or part of the same management hierarchy. This is not necessarily a bad thing – a consultant who is as much part of your team as any other employee will struggle to give truly independent advice. What about the difference between being a consultant and a line manager? Like managers, consultants often are hard working and want to produce a quality result, but this is relative to the scope of a consulting engagement. They do not and arguably cannot deliver an end result in a 1 I Consultants and consultancy client organisation, and do not live with the outcomes of their recommendations. If a consultant is providing advice, then, if the advice is accepted, a line manager has to implement this advice somehow. Even if consultants help with implementation planning or a change implementation project, they do not end up working with the results following the implementation. Consultants are temporary visitors to an organisation – it is line managers who must live with the results of any consulting engagement. There is another point about consultants compared to managers. Many consultants are ex-senior managers with a good understanding of the challenge of managing a department. On the other hand, whilst all consultants advise, some have never managed anything of any significant complexity. Even relatively senior career consultants, who became consultants from university, may never have managed a team of more than 20 people. For someone in an operational role with several thousand staff and a budget of hundreds of millions, a consultant’s understanding of the reality of dealing with this number of people and scale of budget will appear limited. The consultant’s response to this should not even attempt to be an expert line manager, but to provide focused specialist expertise beyond that of a normal manager. Finally, what about a consultant compared to a business leader? Many consultants fancy themselves to be great leaders, and some have the potential. There are well regarded business gurus who have come from a consulting background, but a guru is not a leader – a guru is an influencer and a shaper of opinions. Sometimes you you can be a very see a successful chief executive with a background good consultant in consulting, and they are probably a great without having the leader. But on the whole I am sceptical about professional consultants as leaders. The consultancy ability to lead or profession encourages the development of a range inspire of skills which sometimes can be mistaken for leadership, such as strong communication and influencing skills. Normally though, consulting does not require significant leadership skills. You can be a very good consultant without having the ability to lead or inspire. “ ” The fact that consultants are different from employees, managers and business leaders should not be taken as a criticism of consultants. Consultants are not employees, managers or leaders – because that is not what the role entails or requires. Consulting is a very different role from 9 10 Understanding consultants and consultancy being an employee, manager or leader. Consultants must appreciate these roles, be able to work with them and be able to influence them. Some consultants may have a background in organisations which required them to manage or to lead, but this is not universally true. Consultants should not forget that the role of the consultant is to consult, not to manage or to lead. Now, having said all this, comparing consulting to other roles does to some extent depend on the type of consultant being talked about. There are two dimensions of consulting we should be aware of and differentiate: 1 Internal or external consultants: An internal consultant is a full-time employee of an organisation who has a role as a consultant to the business. Typical exles include human resources (HR) or internal change management specialists. An external consultant is someone who is engaged for a specific consulting project, but otherwise is independent of an organisation. Internal consultants tend to have a greater understanding of an organisation’s culture and are familiar with many aspects of a business that an external consultant will take some time to learn or understand. External consultants will typically have a broader range of experience and have done work similar to their current engagement in other organisations. 2 Strategic, operational, implementation or specialist: Many consultants work in a wide range of roles and float between providing strategic advice, helping with implementing it and supporting operational managers. But generally we can differentiate between consultants (and consulting companies) who advise organisations at a strategic level – what direction a business should be taking; at an operational level – how the business should be run on a daily basis efficiently and effectively; or at an implementation level – how to deliver projects and changes (which may be derived from the advice of a strategic or operational consultant). There are also specialist consultants who focus on a particular area of advice. Arguably all consultants should be specialists, but what I mean here are, for exle, consultants who focuses on very specific areas such as regulatory compliance advice or on minimising technology costs. Another thing to consider is whether the work being done is consulting or another related profession. There are several job titles in common use which are often employed in relation to consultants, or in relation to people doing work that can seem similar to that of a consultant. The main exles are: 1 I Consultants and consultancy I Contractor: A contractor is a temporary employee who is usually paid a day rate to complete some work which is of a transitory nature, where it is not appropriate or not possible to employ a permanent member of staff. This covers a wide range of areas – from office cleaners to very short-term senior staff. The overlap with management consultants is that many projects require temporary staff, and these are often contractors. Organisations are often left with a choice of whether to use contractors or consultants. A rough difference is that a consultant is employed to advise or provide skills the client does not have access to, and a contractor is employed as an extra pair of hands to increase the capacity of an organisation beyond that available with existing permanent staff. I Interim manager: An interim manager is a specialised form of senior contractor. An expert manager is engaged to perform a management role for a limited period of time – for exle because a senior manager is ill or on maternity leave. Interim managers should be expert managers, who fit quickly into even the most senior management roles. It is really impossible to define hard and fast boundaries with consultants, as many consultancies offer interim management services and some consultants regularly work as interim managers – but when they do they are not working as a consultant. I Coach/mentor: It is common to pay for professional coaching and mentoring, to help individual managers. Such work is normally done on a one-to-one basis. Coaches and mentors are slightly different, but they are both concerned with helping individuals to reach their full potential. A consultant may work as a coach or mentor to individual managers, but there are also professional coaches and mentors, who rightly do not consider themselves consultants. I Facilitator: A facilitator is someone who uses facilitation skills to help a group or team resolve some issue or problem. Facilitation is one of the most misused words in business and is explored further in Chapter 7. Facilitation is often closely associated with workshops, but it is possible to use facilitation in other situations. Facilitators do not advise directly, but help clients to solve their own problems. I regard facilitation skills both as an expert profession in its own right, but to a certain degree also a core skill of all consultants. It is worth understanding the differences in these roles, which can be real, but the boundaries are often exaggerated for commercial or personal 11 12 Understanding consultants and consultancy reasons. Professional interim managers, facilitators and coaches have valid reasons related to the nature of the roles to differentiate themselves from management consultants, but it also makes commercial sense to do so as well. Many consultants have the necessary skills and often work in one or more of these roles, but you should not assume that all consultants can or even need to be able to perform such roles effectively. Put another way, you can be a successful consultant without, for exle, having the capability to coach or be an interim manager. Varieties of consulting organisations There are many different organisational structures you can work in as a consultant, and the choice is important as it will affect the type of projects you do, the nature of the day-to-day work, and the level of risk and uncertainty you expose yourself to. There are essentially four ways you can work as a consultant: 1 as a solo or independent consultant working for yourself or your own company 2 as an employee of a major consulting company 3 as part of an organisation offering a portfolio of services of which consulting is only one – the most common is the consulting, IT development and outsourcing company, but there are other variants 4 as part of a small consultancy company. To some extent the choice depends on personal preferences, and what opportunities are open to you. I have worked in organisations in all these models. The independent consultant is usually either someone who has worked in a larger consultancy but wants a more self-sufficient lifestyle, or an exsenior manager who now wants to advise rather than manage. There are many reasons for choosing to become independent. I now prefer to work for my own company as it enables me to maximise my personal flexibility. The cost is that I am organisations completely dependent on my own ability to find always need help projects and generate an income. However, once you have an established reputation this is not that hard. Organisations always need help. Additionally, as my business costs are comparatively low, and I have other revenues, should I choose not to work for a few months I do not need to generate significant revenues to cover my “ ” 1 I Consultants and consultancy business costs. I have access to a wide variety of work. I even undertake some very large engagements as I have a network of trusted colleagues, and we work together often to deliver larger engagements than a single consultant can manage. At the other extreme are the major consulting companies. If you have little experience, are a recent graduate or like to combine consulting with a corporate culture these are the organisations for you. The big consultancies can be attractive places to work. For exle, they tend to give great opportunities for professional development, international working and arguably reduce your personal risk as you have teams of people around you also helping to win and deliver engagements. Additionally, the larger firms often win massive projects which may require leadingedge thinking and techniques, although on the largest projects you can feel like a cog in the machine rather than a real consultant. If you become a senior manager (or partner) in such organisations the rewards can be high. But it does mean all the baggage that comes with corporate life such as annual appraisals, fitting in with company culture and worrying about things like brand risk. Big consultancies are also notoriously political environments. Some are focused on people who fit their specific organisational culture, which can give the consultancy a very defined feeling that will not suit everyone. Companies offering a portfolio of services beyond consultancy provide a large variety of career options. However, if your firm is not purely a consultancy, there is always the tension over how independent the consulting advice is and whether it is really just a sales channel for other services. Some outsourcing firms have very successful consulting divisions, but there is always a doubt in some clients’ minds as to whether the consulting is impartial advice or a funnel to win outsourcing contracts. Whilst I am happy not to work for a large firm any more it is fair to say that I probably could not do what I do now had I not learnt what I did working for the major consultancies I was employed by. It is by no means a bad place to start. There are many smaller consultancies, which offer a compromise between the complete self-sufficiency of the sole trader and the corporate hierarchies of the larger firms. Some of the smaller consultancies are industry leaders in specific consulting niches. For instance you can find consulting firms who specialise solely in financial regulation, telecommunications, customer services or cost control in manufacturing. If you 13 14 Understanding consultants and consultancy have a particularly focused specialisation there may be a firm for whom you are a perfect fit. Why do you want to be a consultant? If you roughly understand what a consultant is, then it is time to reflect on whether and why you want to be one, and if your reasons have a realistic chance of being fulfilled. The best reason for wanting to become a management consultant is simply because you enjoy the process of consulting with clients. Of course, if you have never worked as a consultant what ‘consulting with a client’ means will be unclear. If you do know, and this is the reason for becoming a consultant, then you are well set for a successful career. However, most people have more pragmatic grounds for becoming a consultant. A common reason to join the profession is the potential variety of the work. Although as a consultant you may work in a specialist area, you will work in many organisations. The context and culture of the organisations and details of the problems will vary significantly. I find consulting work highly varied. I have worked all around the world, for companies in a wide variety of sectors, with clients of differing levels of seniority, to help resolve a divergent range of problems. However, if the service you will provide to organisations is very specialised – for exle, helping them to be compliant with a specific piece of industrial regulation – what variety you gain from different clients you may also lose in essentially doing the same piece of work again and again. Some people join consulting for skills development. This typically arises from one of two sources. Development may happen because of the wide variety of challenging work you are involved in. And there is no quicker way of improving your skills than doing a wide variety of challenging work. Alternatively, and this is most true for graduates coming into consulting, it is because you join a company who understands that its key asset is people and hence is willing to invest significantly in their development. Consulting does provide a great way to develop a powerful set of useful skills, such as problem analysis, communication skills and influencing skills. One important exception to this is that if you want to learn how to manage people then you will be better off seeking an operational line management role. However, this brings me to another potential advantage of consulting. If you want to, you can avoid much of the burden of line management that 1 I Consultants and consultancy goes with a corporate role. Some individuals love managing people, some hate it. If you work for a large consultancy you may still have staff whom you have to performance manage and motivate, but the teams tend to be small. As an independent consultant staff management is not something you have to worry about. Graduates often want to join consultancies for the lifestyle and travel. There are a few professions which enable you to travel even more and to wilder places, such as mining and oil exploration, but generally there is a fantastic opportunity to travel as a consultant if you want to – especially if you are multi-lingual. Such travel can be exciting and rewarding. Working in foreign countries gives you a perspective that other travellers never gain, but it is a double-edged sword. working in foreign Travelling all the time can be dull. You have to be countries is a doublea little shallow to be really interested in having edged sword gold frequent flyer cards with several airlines. Often the locations sound exotic, but an office is an office wherever it is in the world. Continuous travel will also play havoc with your social life. “ ” Some people want to enter consulting for the money. The money earned as a consultant can be good, but of course it depends what you are used to. Few consultants achieve the rewards of the chief executive of a major company, unless they happen to become a senior partner in a big firm. On the other hand, most reasonably successful consultants earn more than senior middle managers and junior executives in most other industries. There are much more down-to-earth explanations for becoming a consultant. Some people just fall into it. I was recruited by Coopers #038; Lybrand out of industry, and frankly I had no idea what consulting was but it was better money, which for a young man with a family seemed an attractive proposition. I was lucky in that it is a career that has suited me immensely. Other people come into consulting because they feel they have no other choice. Perhaps they have been senior managers who find themselves late in their careers having been made redundant and, irrespective of age discrimination laws, cannot find a suitable alternative role. These are not necessarily bad reasons for entering the consulting profession. We are all, at times, hard-nosed about our careers, and just because you entered the profession as way of overcoming redundancy does not mean it will not be a huge success. On the other hand, simply because you have some business skills does not mean you will thrive as a consultant. 15 16 Understanding consultants and consultancy A phrase that has become common recently is the ‘portfolio career’. This is a career in which you mix various different types of work together. This is definitely possible as a consultant, especially if you are self-employed. Some types of work can complement consulting very well. I know many people who manage to control this mix very successfully. I have several professions: as well as running my consulting business I write, deliver training courses and seminars and take regular time out to study. Whatever your reasons for considering consulting, don’t fool yourself that it is always an easy ride, or that it will give you a completely flexible lifestyle. For exle, as a self-employed consultant you may well be able to take more holiday, you may well be able to work part time – but, and it is a big but, within the constraints of your clients’ needs. You may decide to work only nine months a year, but that does not mean you can definitely choose the three months you don’t work to be 1 November to 31 January every year whilst you are in the South Pacific, and expect at the same time to be 100 per cent fee earning until 31 October, and have an immediate start again on 1 February of the following year. Clients won’t usually wait for a particular consultant: if they have a problem they want someone to fix it, and if you are not available they can usually find someone else to do the work just as well. Consulting opportunities cannot simply be turned on and off. They have to be searched out and won. Clients and engagements do not easily fit a predictable pattern. If you want flexibility you do need to have some flexibility yourself. Whatever flexibility you want from consulting is effectively a constraint on your ability to service clients. If you are clever and pragmatic there is no reason why the constraints cannot be overcome and you can manage to balance your own and your client’s desires very well. But you cannot both maximise your income and maximise your personal flexibility (unless, perhaps, you really are a world renowned industry guru). I know many people who love working as a consultant. But consulting does not suit everyone’s personalities. If you are constantly working in different organisations, it changes the relationship with the place you are working. To some extent you will always be an outsider, which does not suit everyone’s personality. Consulting can leave many people with an ongoing feeling of uncertainty and risk. As one project ends, where is the next and when will it start? If you are an independent consultant there is no career path as such – you may want to vary your work, and may over time increase your rates, but there is no management hierarchy to be promoted through. If you work in one of the large consultancies, 1 I Consultants and consultancy promotion is possible, but for most firms seniority beyond a certain level does not just depend on your consulting skills and expertise, but on your ability to sell. Consulting offers great opportunity, but it is different from other types of employment. It offers potentially high rewards and significant flexibility. If unmanaged, it can intrude into your personal life, but arguably so does any senior role. If you are pragmatic and flexible, then you can get a good level of rewards and flexibility in return. The economics of consulting The past few decades have brought an increasing stress on the work–life balance and less on the financial factors of employment. However, a key aspect in deciding whether to be a consultant is whether you will make the income you desire. Whether a career in conthis is not a sulting can provide you with the money you want business plan for a depends on your expectations (or income needs), consulting your degree of success, but also the inherent economics of consulting. Before entering this business profession you should understand your potential income. I am going to look at this only very, very simply. This is not a business plan for a consulting business, but it does explain the basics. “ ” Let’s start by considering the case of a single independent consultant as this is the simplest to understand. I will only look at revenues. Costs for independent consultants are generally low, and most of those that are incurred are attributable to clients and can be recharged as expenses. So, I am going to ignore them for now. This is of course a gross generalisation, but it is fine to begin with as it will not change the overall outcome. There are two factors that determine how much money you generate as a consultant: 1 the number of chargeable days a year you achieve 2 your daily charge-out rate. (Not all consulting projects are charged on a daily basis, but this basis is accurate enough to understand the general economics of the business.) It is really as simple as that. So how do you know how many days a year you will work for and what daily charge-out rate you will achieve? There are huge variations between different consultants. Taking account of fee rates and number of chargeable days it is quite easy to find two apparently 17 18 Understanding consultants and consultancy similar consultants, one of whom has an income three or four times higher than the other. At the extremes, comparing the lowest to highest revenue-generating consultant then the multiples are much greater. Some estimates To estimate the daily rate you will achieve it is best to do a little research, but it is not straightforward finding accurate information. There is no easily available database of rates as there is no transparent market in consultancy, and it is generally not in consultants’ interests to make it transparent. A good place to start is the internet. There are websites dedicated to sourcing consultants and other temporary staff that will give you a rough idea of potential daily rates, but they do tend to focus on the lower end of the market. There are studies of the industry, but they are not always freely available. Even if you get hold of one, their categorisations of consultants may give you some ideas, but generally are too broad to base your own fees on. A good source of information is your personal network. Ask a few friends who hire consultants regularly, and you may be able to get a feel for the sort of rates the big firms charge. These tend to be higher than independents achieve, although this is not always true. The best way to get a feel for rates is to find someone with some experience of the industry and ask them what they think you will be able to charge. Never forget, whatever fee rate you expect or want, it actually depends on a client being willing to pay it. Next you need to estimate how many days a year you will work. If you are new to consulting, do not be overly optimistic. Can you really work 5 days a week for 52 weeks a year? That gives you 260 chargeable days a year, but you should never assume that what you make is 260 times your daily rate. You will rarely be 100 per cent utilised – and even if you can be, do you really want to be? As a rule of thumb, assume you will be busy 100 days a year. You may well be a lot busier, but if you cannot afford to be a consultant working only this many days you are taking a significant risk. Many consultants make a very comfortable living on this, and many more are busy for considerably more than 100 days a year. But it is best to be conservative at the start of your career. Other factors There are several other factors you must consider. There are possible tax efficiencies of being self-employed or running your own business. You 1 I Consultants and consultancy need professional advice to understand these fully, and tax legislation can change at any time. Remember, if you are becoming a self-employed consultant after a career in industry there are none of the benefits that you may have received in your previous job. There are no extra pension contributions, no bonus, no paid holiday, no health care or sick pay, no car allowance, etc. Additionally, you should not confuse income with cash flow. Consulting tends to pay big bills in dribs and drabs, and some clients can be very slow in delivering cash into your bank account. I am usually paid reasonably promptly, but some invoices have languished for six months before finally being paid. You need to have a float of money to cover for these periods. For a consulting firm with multiple employees the economics are much more complex. Costs cannot be ignored. Business costs for premium office space and facilities may be high. Staff you employ will naturally expect many benefits on top of salaries. There will be the costs of nonfee-earning staff and senior staff: although they may be able to charge some fees, these may not cover the full cost of their salary and expenses. Bad debt has to be considered – that is clients who will not or cannot pay. I have never (yet!) experienced this and it does seem to be rare. However, in the largest firms, simply because of the volume of work they undertake, occasionally a client may not pay. Whatever the size of firm, slow payment remains a far bigger issue. Profitability of consultancy companies can be very high when chargeable utilisation is above a certain level, but drop below this level and all those large salaries and fancy offices can soon lead to big losses. Hence the tendency of some firms to recruit heavily in the boom times, but also to be quick to make staff redundant when the economy is struggling. In the end, although an accountant could find a million flaws in my simple views, the profit of a consulting company can be approximated by a very simple piece of arithmetic: Profit = (days charged × average charge-out rate) – cost of business The rate you charge and the number of days you work are dependent on clients, but your costs are largely under your own control. With modern technology and services you can run a consultancy on a shoestring, and still look completely professional. Therefore the most important considerations will always be making sure you charge enough days at a high enough fee rate to generate the income you require. If you are committing yourself to significant costs before you have started to generate 19 20 Understanding consultants and consultancy revenue, think again. You can always make those commitments once you are sure of your income. Finally, what about the situation in which you take a job within a consultancy, as an employed consultant, rather than someone who runs their own business? Here your salary is to some extent divorced from the economics of the consulting business, and is down to what you can negotiate. The big firms tend to have a standard package for graduates. For more senior staff the salary and package will big firms tend to depend on how valuable you are to the consulhave a standard tancy and what you can negotiate. At a more package for senior level your value to a consultancy is more graduates related to your relationships and personal network than your pure consulting skills. Generally, the large consultancies pay well and provide a good set of other benefits. There are professions paying higher, but consulting has to be considered as towards the top end of the market in terms of salaries. As an internal consultant it is different, and your salary will depend on the market rates associated with your specialisation and the remuneration policies of the specific firm you are being employed by. Generally, salaries are lower than in the consultancy companies. “ ” What is a good consultant? By this point you know what a consultant is, why you might want to consider it as a profession and whether you will make any money. In this final section I want to consider what makes a good consultant. Much of this book is taken up with giving advice on how to be a good consultant; this short section is concerned with what would be assessed as a good consultant. When I told a friend of mine, who is a successful and experienced consultant, about this book he responded with the comment that there is little to write. He said the book would only be about 10 pages long, but then went on to advise that I should not write a book, but a haiku! The truth behind this jibe is that it is quite simple to define what a good consultant is – but most of this book is about how to achieve this rather than defining it. My poetry skills are limited, so I will stick to prose rather than the haiku. A good consultant: continuously adds value to clients commensurate with his or her fees. 1 I Consultants and consultancy We will explore what adding value means in later chapters. There is a significant difference between being good at something and being a good consultant. There is an old joke, aimed rather unfairly at teachers, saying: those who can, do; those who can’t, teach. This joke can be extended to become: those who can, do; those who can’t, teach; and those who can’t teach, consult. The joke for teachers is unfair, but it hides an important truth – there is a difference between being good at something and being a good teacher. As many students will attest, being a good university lecturer is quite a different skill from being a brilliant academic. I am sure we have all experienced the giant brain who cannot explain anything, and the person with a nominally lesser grasp who explains it very well. While most teachers are perfectly capable of doing, that is not what they are employed for – they are employed to impart and embed knowledge and skills in their students. Whether or not they can actually ‘do’ is to some extent irrelevant. It is similar for consultants. There are many advantages in having management experience, but consulting is not about managing. Equally, having been a great manager is an advantage for consulting, but it does not guarantee that you will be a successful consultant. From your perspective you are a good consultant if you achieve your personal objectives through consulting. I cannot tell you what your personal goals should be, and the rest of this book is about how you can continuously add value for your clients. However, you may wonder whether you have the right type of personality to succeed as a consultant. There is no single personality type who makes the best consultant, but I will pick on a few factors which I think are important. Firstly, as a consultant you should be a people person. It is not necessary to be a natural extrovert, but you must be happy engaging with others. You will constantly be working and interacting with people, and if this does not excite you then consulting is not for you. Next, you should be flexible and adaptable. Client needs and expectations vary enormously, and you need to flex to the situation. It may surprise some people, but it also helps if you are not status conscious. Although you may end up as a hugely successful consultant earning much more than most of your clients, when you are on a client’s site you are just a consultant doing a job for them. Consultants must be orientated to resolving problems. A client has engaged you to help; there are many forms this help can take, but all of them must result in resolving a client’s problems. Next, whilst a consultant is there to help, they must not be over hasty in determining solutions. You must have the personality that wants to solve problems 21 22 Understanding consultants and consultancy properly, rather than resolve the most apparent symptoms. You want to be like the doctor who finds out why a patient has spots rather than the one who just gives a cream to make them less itchy. Finally, you must be someone who listens. To be objective and to provide a diagnosis that is most helpful to the client requires listening and assessing the situation. Solutions must be tailored to the specific context. There are many other factors which influence your ability to be a great consultant, but the above are critical. Summary If you are new to consulting there are some essential concepts you must understand. You should now be familiar with the main concepts covered in this chapter. They are: I The role of a consultant and the difference between it and other roles, especially that of a line manager. I The skills of a consultant in relation to those of other professions such as contractor or interim manager. I The core consulting jargon. I The variety of consulting organisations. I Why you want to be a consultant and whether it is a profession that can fulfil those needs. I The economics of consulting. I What a good consultant is. The rest of this book explains how to be a good and successful consultant. chapter 2 Why does anyone buy consultancy? C onsultants regularly present the consulting profession as highly intellectual and just a little bit special. Yet underneath the hype, management consulting is merely an industry providing a service in response to a customer’s need. All the normal lessons from sales and marketing apply. The customer may be called the client, but it is only on this client’s willingness to provide money in exchange for the consultant’s service that the industry is built. Selling consulting is not especially difficult, but it is essential for anyone who wants to succeed as a consultant. If you never make a sale then even the best consulting skills in the world are only of theoretical value. In this chapter I explore the basis for selling consultancy – a client who buys. Later in this book we will discuss interesting and powerful ideas about consulting, but I want to start relatively simply and prosaically, as success as a consultant must start with your feet firmly on the ground! Although the chapter is aimed at external consultants, the lessons are applicable to internal consultants. Whilst the challenge of ‘selling’ services internally within an organisation is different in some respects, for instance the lack of a formal contract, the essential need to identify opportunities and encourage a client to ‘buy’ is still there. No matter how wonderful, unique or valuable your skills are, no one buys consultancy simply because of your abilities. Clients buy consultancy because they have a need or desire which consultancy is perceived to be capable of fulfilling. This chapter explores what these needs are. One of the fundamental mistakes new consultants make is to misunderstand that it is 24 Understanding consultants and consultancy not skills that create the opportunity for consulting services, but client needs. Skills are required to market and deliver consulting, but if you do not understand your client needs, then you will struggle to sell an engagement. Before you spend time perfecting skills, gaining qualifications or acquiring accreditation you should heed the most basic marketing lesson: to understand what your customers desire. Having a need is an essential part of a client buying consultancy, but there are additional prerequisites which determine whether a client can and will buy the service you offer, even if it fulfils their it is useful to look needs perfectly. Before considering what makes a at the prerequisites for client buy, it is useful to look at the prerequisites for purchase. I explain these in the first two secpurchase tions of this chapter. “ ” Much of this chapter considers the client as if there is an obvious individual client. The final section of this chapter looks at one of the possible minefields of consultancy, in answering an often surprisingly complex question: who is your client? The prerequisites for selling consultancy What are the prerequisite conditions which must be met for it to be possible to sell consultancy? I have identified eight basic prerequisites which must be present in order to sell a consulting engagement: 1 There is a client. 2 The client has a currently unfulfilled need. 3 The client believes that they require help to resolve this need. 4 The client knows about you and your services. 5 The client perceives that you are capable of fulfilling this need. 6 You (or someone else acceptable to the client) are available to fulfil the engagement. 7 The client has a budget/finances to pay for your services. 8 The client has authority to spend the budget/finances. Without over analysing these prerequisites let’s quickly review them. The first prerequisite is the most obvious, so obvious it can seem like it need not be stated. Hidden in the obviousness is an unchallenged assumption. The assumption is: if I have business knowledge and skills I can 2 I Why does anyone buy consultancy? be a successful consultant. Documenting prerequisite 1 may appear unnecessary, but I know of consultants with all sorts of esoteric and interesting skills, for which there is no client. So, unsurprisingly, they do not find work. They moan and ponder about how to increase their skills further, thinking ‘surely then I will gain work’, without noticing that there are many more poorly qualified, but highly successful consultants. Before you spend time analysing and perfecting your service line, check that there is likely to be some form of client. Whatever skills or service line you have – no client, no income! When there is a potential client, to sell a service, they must have a currently unfulfilled need, and a belief that this need can be fulfilled by consulting. Unfulfilled needs exist aplenty in business. Ask most managers if there is anything they would like help with or problems to be rid of, and you will soon get a very long list. This list radically shortens when you ask them which of these problems is a candidate for resolution by a consultant. Let us suppose we have met the first three prerequisites. There is a client with an unfulfilled need that they accept they need help fulfilling. We are getting closer to the possibility of selling an engagement. Prerequisites 4 and 5 relate to you personally. The client must know about you. A client cannot buy goods and services they know nothing about. This is a common problem in consulting. If you happen to be working for a major international consultancy most potential clients will have heard of you – although even then, they may well not know your full range of services. On the other hand, if you are a small consultancy or an independent consultant most of your potential clients have no knowledge of your existence. Clients not only need to know about you, but to even get a sniff of real work you need to be perceived as potentially capable of fulfilling their needs. Simply put: are you a known and credible supplier? Unlike the first three prerequisites, prerequisites 4 and 5 are largely in your control and depend on your marketing and networking skills. If you are in a situation in which the answer to this question is no, the follow up is obvious: what will you do to become a known and credible supplier? (See chapters 3, 5 and 9.) Of course, to perform an engagement you, or someone else you can put forward who meets prerequisites 1 to 5, need to be available to do the work. Consultants use the term availability to refer to time when they are available to work on a live engagement – i.e. time when the consultant is not working on another engagement, busy with business 25 26 Understanding consultants and consultancy development, sick or on holiday, etc. Availability is difficult to predict. Engagements don’t just end on a fixed date, and the time it takes to sell a consulting engagement does not usually neatly align with the time it takes to complete whatever else you are working on. Get your timing wrong and you may win some work when you are still busy with another client. You do not actually need to be available to perform the engagement to sell the engagement to a client. It is possible to sell work without being available to deliver it, but unless you can make yourself available quickly, the sales activity is a waste of your and your client’s time. Prerequisites 7 and 8 relate to money. You are a commercial business, and therefore are only going to work if there is access to finance to pay your fees. There are obvious situations in which this is not going to be true; for instance, companies going bankrupt or organisations with very restricted budgets. Commercially, these are to be avoided. As an exception, you may choose to take on some pro bono work for a good cause. I say as an exception not because I want to put you off undertaking pro bono work, but for the simple reason that unless you are privately wealthy it can only be a small proportion of your work or you will not stay in business long. A more common problem is not that an organisation has no money to pay your fees, but that the individual manager who is your potential client has no direct access to a budget or no ability to influence someone else to spend. It is always useful to ascertain early in your client negotiations if a client has sufficient money which they are authorised to spend. In this section I have summarised the core prerequisites for a client to buy consultancy. Without these prerequisites being in place, no matter how hard you try, there will be no sale. But there is another side to the equation. Not the client perspective, but yours. Although it is not a prerequisite for buying, it should be a prerequisite for selling – that the client can provide you with whatever you need to do your work. Few consulting engagements can be undertaken without any client support. For instance, you may need access to human resources, almost always require some data and information, and will always need time to complete your work. Clients may not want or be able to fulfil all your prerequisites. As a consultant you must be flexible as a consultant and often ingenious in finding ways to complete you must be flexible engagements without all the ideal things you and often think you need to do your work. However, whilst ingenious you may be able to compromise there are some “ ” 2 I Why does anyone buy consultancy? minimal prerequisites that must be met. If the client cannot fulfil these prerequisites for the work, the engagement should not progress (see Chapters 5 and 12). Obstacles to selling consultancy The existence of an opportunity, which meets the prerequisites outlined above, is the starting point for a sale. We are going to look at identifying opportunities and selling consultancy in detail later in the book (Chapter 5), but just because there are opportunities does not mean you will necessarily gain work. Clients have choices. There are many consulting companies, and there are thousands of individual consultants. For every opportunity there are also many possible obstacles to sales What are the main impediments to selling consultancy? Here are some key obstacles to sales: I You may not convince your client that you are the right choice. Clients will not just select you – you have to overcome the obstacles of their natural scepticism and doubt. Doubt may arise if you do not have a sufficiently established reputation, or if you write a poor proposal. Scepticism of your skills will be reinforced if there is bad chemistry between you and the client. The latter is one of the most difficult issues to deal with. Each of these problems can be overcome, but each reduces the likelihood of a sale. I You are often in competition, and each credible competitor is an obstacle to your sale. You not only have to be able to meet the prerequisites of a sale, but you must be the best from a competitive position. What the client regards as the best will vary from situation to situation. A key activity in a competitive situation is to extract the client’s decision-making criteria for selecting a consultant. Typical criteria are your fee rates, experience and skills, availability, and your demonstration of your understanding of the situation. But there will be less tangible factors as well, such as how much the client likes you. I Your needs and the client’s may not match. This is explored in more detail in Chapter 5, but is summarised here. A client does not just have a need to buy, but you must have a desire to sell. An opportunity not meeting your needs can be an insurmountable obstacle. A client may not be offering a high enough fee rate to interest you. There may be some physical or geographic prerequisites 27 28 Understanding consultants and consultancy you are not willing to commit to – working at nights or thousands of miles from home. I There is another more complicated reason why an opportunity may never become a sale. Imagine your client meets all the prerequisites to sell to. Further than this, you have had a series of productive conversations during which you have reached a mutual conclusion that you can help the client and they will meet your prerequisites of engagement. What can go wrong now? Client needs can change. During the process of engaging and selling to a client it is not unusual for needs to change. This is particularly frequent if the sales process is protracted. The reasons are many and varied. Common reasons include a change in the client’s business circumstances, an evolution in understanding of needs as your discussions become more detailed, or the involvement of another stakeholder with different ideas from the original client. In the first two sections of this chapter I have explored the various prerequisites that must be met and obstacles that must be overcome in order to make a consultancy sale possible. It may be that after reading this list you think it is never going to happen. Don’t despair – these prerequisites are regularly met, which is proven by the vast volume of consulting sales that are made all the time. I have listed them not to put you off, but to enable you to align all your ducks in a row, painlessly. On numerous occasions, I have seen consultants (including, on reflection, myself) making epic efforts to gain a sale, only to end up wasting time as one or more of these prerequisites was not met. This cannot always be prevented, but frequently the wasted effort is avoidable. It is often determinable early in the sales process that some crucial prerequisite cannot be met. Frequently, getting a client to answer a simple question like ‘what budget is available for this work?’ is enough to determine there is no real opportunity. Unless you have some power to change the situation, then you are much better off moving on to the next opportunity than working hard where no engagement will be available. I have never heard of a client deliberately wasting a consultant’s time – as it is their time too – but sometimes it can feel as if they are! A client may simply have not thought through all the implications of engaging you, or sometimes they value just talking to a consultant without committing. 2 I Why does anyone buy consultancy? The client’s explicit needs for buying consultancy Let’s explore prerequisite 2 from the list earlier in this chapter in more detail: the client has a currently unfulfilled need. This is the most complex and important item on that list, and the one that consultants spend a significant proportion of their time identifying and exploring. What sort of needs do clients have? Clients have a huge variety of needs and desires. I cannot write a list of all the possible client needs that exist, but I can place them into a short set of categories. These are not mutually exclusive, but the core needs clients typically fall into one of more of the following categories: I The client thinks something along the lines of: ‘I have a problem which I want solved – and I think a consultant would be able to solve it for me.’ This is the traditional reason for buying consultancy. Variations on this theme include: – I want a bit of fresh creativity, innovation or new ideas which I cannot find in my existing employees. – I need some facilitation or workshops to solve a problem. – I want access to some specific IP (intellectual property), tools or techniques that a consultant has. I A client has a new or ongoing initiative/project but does not have all the required resources. They think: ‘I will ask a consultant to fill a role on the project.’ Depending on the precise type of work this may be truly consulting, but more often it is really contracting. However, if the work is interesting and the fee rate is right there is no reason not to pursue it. I A client has some operational work and the normal manager is away, unavailable or still needs to be recruited. Alternatively, there is a temporary operational role to fill. This is the realms of interim management, but the boundaries between interim management and consultancy are fluid and many consultants make excellent interim managers. I A client has too much to do, juggling too many tasks at once and needs a little bit of relief or else risks dropping one of the balls. The client wants a consultant to come in and seamlessly take control of one or more of the juggling balls so they can give a bit more time and attention to the remaining ones. This is a factor in many consultancy sales. 29 30 Understanding consultants and consultancy I Occasionally, a client may be told to get some assistance from a consultant. This instruction may come from a supportive or frustrated senior manager telling a subordinate how to fix something that should have been resolved long ago. Alternatively, it may be a demand from an external source, such as an industry regulator telling a company to quickly become compliant with an area of regulation. I Finally, a need can be created. Consultants with time to spare and a bit of creative insight can come up with all sorts of appealing and exciting service lines. Occasionally, a client will listen to a cold sales pitch and be interested enough to buy your service. The client may not have known they had a need, but after listening to the consultant’s pitch finds that they do. It’s like advertising: you did not know you wanted chocolate until you saw the advert! However, unless you have a strong relationship with your client, this is a hard act to pull off. It is possible, and successful consultancies do regularly achieve this. One of the reasons for fads in consulting services is to establish competitive differentiation and to create demand. Chapter 9 explores the situations in which this is possible. Hidden grounds for buying consultancy What a client tells you, when discussing their needs for consultancy, may provide a clear and complete picture of why they are considering your services. However, this is unusual. Most people have other grounds that they do not divulge. Sometimes they are embarrassed to tell you everything or maybe they feel it is better if some things remain confidential. They may think if they tell you the truth you will not do the work. Sometimes they do not tell you because they do not realise the information is relevant or important to you. Often they do not tell you because they have not analysed all the reasons they want to use a consultant and are not consciously aware of the grounds themselves. Irrespective of the situation, you will usually start a consulting engagement with an incomplete and sometimes incorrect understanding of why the client is engaging you. In practice, this is neither always avoidable nor necessarily an intractable problem. But, generally, you are in a better position to fulfil the client’s needs if you understand what the hidden grounds are. You may not understand all aspects of the client’s grounds for buying consulting because the problem is complex and cannot be easily fully 2 I Why does anyone buy consultancy? involvement can only happen when the engagement starts “ explained without some time involved in the organisation. This involvement can only happen when the engagement starts. It is not unusual for understanding of needs and selection of approaches to fulfilling these needs to change as the consultant fulfils the engagement. This is one reason why it is often effective to start a large engagement with a smaller scoping exercise, when both the specific problem and nature of the client’s organisation are explored. ” There are many other motivations for employing consultants which will not be immediately apparent when you are first engaged. Typical exles of hidden grounds for buying consulting include: I Risk reduction: a client does not know how to overcome a problem, does not have confidence to so, or thinks there’s too much risk in doing it themselves. These are perfectly valid grounds for engaging consultants. As a consultant, if you do not reduce a client’s business risk as part of your work – for exle the risk of taking the wrong decisions or performing a poor implementation of change – then you have not really added value. If you have a very strong relationship with your client they may admit this, but reducing business risk is rarely explicitly stated as a rationale for engaging you. I The client has tried already, but has failed or is struggling to overcome a problem. Rarely will a client admit this directly to you, but it is important to try and ascertain if this is the case. If a client has previously failed to resolve a problem then their need for help increases, but their emotions towards the work and the consultant are easily prejudiced. Although this situation is common it does need to be treated with care. If mishandled, you can be perceived as positioning yourself as ‘better’ than your client. This is never popular with clients! I The client wants to gain buy-in to an idea or project. A client can simply want something confirmed that they already know. They may ask for advice, when what they are really asking for is your agreement to their existing position. A client is unlikely to say directly to you: ‘I am engaging you to confirm my opinions.’ This can be tricky, as of course you may not agree with their standpoint, and can easily stray into an ethical dilemma (see Chapter 10). I Clients sometimes engage a consultant because they need to be seen to be doing something, not because they actually want anything done. Clients have many stakeholders they need or want to keep 31 32 Understanding consultants and consultancy happy. These include more senior managers and external stakeholders like regulators. By explicitly employing a consultant, to perform an engagement which the client has no interest in, they can sometimes artificially satisfy such stakeholders. The risk to the consultant is limited, other than that findings and advice may never be implemented by the client. This is by no means an exhaustive list. The central point is to be alert for the true, covert motivations clients have for engaging you. The only way to understand the hidden grounds is by observation and entering into exploratory dialogue with the client. If you meet all their explicit needs, but never fulfil their hidden needs, you will not satisfy your clients – and often the hidden needs are more important than those explicitly stated. As all good marketers know, client satisfaction is a crucial element in a successful business. In Chapter 5 we will explore this further. Having sold an engagement to a client, the subsequent challenge for a consultant is to continue to remain involved. There are many reasons why a client may retain a consultant, the most obvious being the need to follow on from a completed engagement. A less overt reason is that the client values the ongoing advice and support of the consultant. Much of the value of consultants can come in peripheral activities: extra value that the client gains simply by the consultant being around. This can be small tips, advice, problem solving, tools and so on. Who is your client? New consultants often talk about their client as if it is always absolutely clear who the client is, and also use the term client and the name of an organisation interchangeably. As in ‘my client is XYZ Corporation’. Your fees will be paid by XYZ Corporation. XYZ is the client organisation, but you cannot interact, advise or have a relationship with an organisation. Your client is one or more human beings. There are many situations in which there is clearly one client, and you can be sure that the interests of the client and the client organisation are aligned, but often this is not clear cut. This can result in two related problems: firstly, the difficulty of identifying the true client, and secondly, conflict in the views of different stakeholders and clients. You need to know who your client is because the client is the person (or group) who your consultancy is aimed at. The client is the person who will judge whether the consultancy has been successful or not. If you do 2 I Why does anyone buy consultancy? not clarify who the client is you may never be judged to have completed your work successfully. A different problem is that without a clear-cut client different people in an organisation can legitimately ask you to do all sorts of work. Not having an unambiguous and single client can be compared to the situation in which as an employee you do not know who amongst a group of managers is your boss. One reason for this lack of clarity is that there are often multiple stakeholders in a client organisation who have different views and interests in a particular engagement. Although it is theoretically meaningful to differentiate specifically between a client and other stakeholders, in reality the boundaries are not always clear cut. There can be a wide variety of interested parties in any consulting engagement. there are often On some engagements this is a minor issue. On multiple stakeholders others, different clients/stakeholders can be in direct and explicit conflict over the needs and in a client direction of a consulting engagement, with the organisation consultant left like some UN arbitrator in the middle trying to resolve the dispute with limited resources. The conflict may be explicit, but sometimes it is hidden, which is worse, as the consultant can progress the engagement with one understanding and only in the latter stages when feeding back to one client comes against another stakeholder who denigrates the work. “ ” Another situation arises when the person who engages you, who you take to be the client, is actually hiring you under the direction of a more senior manager. The senior manager is really the client. The person who engages you may not accurately represent the true client’s needs. This can lead to all sorts of misunderstandings and problems. Different stakeholders are quite likely to have different views on what is required from an engagement, and even how the work should be approached. Some stakeholders may think you are the ideal candidate to perform an engagement, others may doubt your suitability to do the work. Various stakeholders will have all sorts of different decisionmaking criteria. Ideally, you need to clarify all of this. Another source of confusion is the difference between a client and an organisation. A client is a tangible person. You can speak to them and through dialogue get an understanding of their wants and desires, needs and wishes, interests and foibles. An organisation is an abstract entity, and if such an entity can be said to have interests you can only determine them indirectly – by speaking to the staff and managers of the 33 34 Understanding consultants and consultancy organisation. Problems arise because the interests of the individuals in the organisation probably never align with those of the organisation. Even if a member of an organisation’s staff is trying to be objective and ignore their own interests, they will be constrained in achieving this by their biases, inherent assumptions and lack of full understanding of what the interests of an organisation are. One reason for clear and simple vision and mission statements in organisations is that all staff can then determine what the interests of the organisation are and are not. We are therefore in a situation of imperfect information and limited consensus. One of the tasks a consultant initially has in any engagement is not only to understand the client’s wants and needs, but to clarify who the client is. Ideally there is one clear client who has the remit and authority to describe exactly what you should do. In practice, this is not always achieved. Power in organisations does not always fit the organisational hierarchy, and you will not always be so lucky as to have one main stakeholder in your work. Why is this a problem? Because a lack of clarity over who the client is, and no real understanding of the client’s need and desires, leads to all sorts of other difficulties. Your engagement may be perceived as a failure if you please one person you perceived as a client, only to find someone else – who is really the client – is displeased. You cannot complete an engagement successfully without understanding client needs, which you won’t do if you have not identified the client correctly. You may have difficulty finishing your work as you try to satisfy more and more client stakeholders. If you are working to a fixed fee, trying to satisfy everyone causes you to lose money. There are many variations of these sorts of difficulties. How can you solve this issue? There is no foolproof way to resolve it in every situation. Your role as a consultant may be explicitly to help reach consensus between all stakeholders. But it will not always be, and even if you are there to drive consensus your role can never be to sort out all the differences of opinion in an organisation. However, you do have to achieve at least a sufficient consensus to be able to complete your engagement effectively. There are five main steps to achieving this: 1 Openly discuss the issue with whoever first engages you, and try to get them to support you in identifying and resolving any differences of opinion. If this is not possible, you should strive for the manager who engages you at least to accept the implications of an imprecise understanding of needs. 2 I Why does anyone buy consultancy? 2 Understand who might be clients and stakeholders in the work, and then explore and analyse the specific situation, identifying true clients and exploring their needs. 3 Ideally, identify one primary (or ‘real’) client who will resolve any conflicts and arbitrate in any disputes with other stakeholders. 4 Take a commonsense check. When you do have an understanding of the different client and stakeholder needs, do they form a coherent and consistent set? Can you fulfil this set of needs in a sensible and achievable engagement that feels right for the organisation? 5 Write down your understanding of the situation in your proposal. Then if things are not as they appeared to be, you at least have a document you can point to with your understanding as agreed with the client. However, for some sensitive needs this is not possible. We will look at the points in this list again in Chapters 5, 9 and 10. For now, I want to focus on step 2. Who might your client be? This will vary from situation to situation, but the choice of the person who is your client starts by considering the person who first engages you. Typically you will be approached by an individual about the work the client organisation wants performed. This person may or may not be the ‘real’ client. I call this person the client interface. Another possible client is the manager who has instructed the client interface (usually a more junior manager) to engage you. In some situations, it was a personal decision of the client interface to engage you, but it is quite common for a more senior manager to direct the client interface to hire a consultant. This senior manager is the real client. Ideally, you want to develop a direct relationship with this person, as they are the one who really wants the work done and are likely to be the judge of its success. There will often be senior managers or executives with no direct involvement or interest in the work you do, but who influence the work indirectly by being concerned or even assessing the performance of the manager who engages you. This is the underlying client. The underlying client is important, as in the end this is the person or group your real client mostly responds to. There are budgetholders and approvers who need to be convinced before you invoices are paid. You are a commercial business and need to be paid for your work and therefore must be comfortable that such people will authorise your invoices. Usually the person you work with as a client is 35 36 Understanding consultants and consultancy whoever authorises your bill is the financial client “ ” also the person who authorises your bills for payment, but not always. Whoever authorises your bill is the financial client. The financial client is important as of course you want to get paid! Finally there is a whole host of other client staff who review, approve or may simply be asked an opinion about your work. They may also work for you on the engagement. Such staff are not really clients, but you cannot ignore them as they have the ability to influence the judgement of your client both positively and negatively. Behind these various people lies another group, who will be more or less important depending on the nature of the engagement. These are the client organisation’s stakeholders. These include external groups who may have an interest in the work, for exle shareholders and owners, and for some industries, regulators. Many consultants never interact with these groups, but for some consultants they are a major influence on the success of the consulting engagement. A typical set of clients is shown in Figure 2.1. The solid lines represent typical direct relationships relevant to the engagement. The dashed lines represent other possible relationships relevant to the engagement. When considering this set of clients and stakeholders the following points should be taken into account: I The client is always a person. You may be paid from a large corporation’s bank account, but you are engaged by, interact with and take instructions from an individual or group. An individual or group responds to your advice and accepts your invoices. For many reasons we may say ‘my client is XYZ Corporation’, but in reality it is always a person. I Ideally there is one client, which is sometime achievable, but there will always be more than one stakeholder. I The bes…

Order from Academic Writers Bay
Best Custom Essay Writing Services


Why Choose Us?

  • non-plagiarized Papers
  • 24/7 /365 Service Available
  • Affordable Prices
  • Any Paper, Urgency, and Subject
  • Will complete your papers in 6 hours
  • On-time Delivery
  • Money-back and Privacy guarantees
  • Unlimited Amendments upon request
  • Satisfaction guarantee

How It Works

  • Click on the “Place Your Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
  • Fill in your paper’s requirements in the "PAPER DETAILS" section.
  • Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
  • Click “CREATE ACCOUNT ; SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
  • From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.

About AcademicWritersBay.com

AcademicWritersBay.comnbsp;is an easy-to-use and reliable service that is ready to assist you with your papers 24/7/ 365days a year. 99% of our customers are happy with their papers. Our team is efficient and will always tackle your essay needs comprehensively assuring you of excellent results. Feel free to ask them anything concerning your essay demands or Order.

AcademicWritersBay.com is a private company that offers academic support and assistance to students at all levels. Our mission is to provide proficient andnbsp;high quality academic servicesnbsp;to our highly esteemed clients. AcademicWritersBay.com is equipped with competent andnbsp;proficient writersnbsp;to tackle all types of your academic needs, and provide you with excellent results. Most of our writers are holders ofnbsp;master's degreesnbsp;ornbsp;PhDs, which is an surety of excellent results to our clients. We provide assistance to students all over the world.
We provide high quality term papers, research papers, essays, proposals, theses and many others. Atnbsp;AcademicWritersBay.com, you can be sure ofnbsp;excellent gradesnbsp;in your assignments and final exams.

error: Content is protected !!