Special Discussion on Starting Consulting Services Organizations Within Product Companies

When people think about consultants, they often think about those that work for companies like McKinsey, Accenture, Deloitte, etc. These are companies that are essentially independent from product vendors. However, there are a number of companies that provide consulting or professional services as part of product companies (e.g., companies like Cisco, Avaya, Nortel, Ericsson, IBM) that may sell things like hardware or software. I’ve had the opportunity to incubate and/or reboot the management, sales, marketing, and delivery for a number of these types of consulting practices, and they definitely face a number of issues that are unique from independent consulting firms.

As an example of a jumpstart “Consulting Services for Product Company” engagement, I have often found four common failure points to look out for when examining the organization from an end-to-end view from strategy through sales and delivery (see figure below which hints at the sales learning curve an organization must work through). The failure points are:

  • Unclear, strategy for providing consulting services – An example of unclear strategy includes not being able to articulate to what extent consulting services should be designed to protect product lines versus providing a new revenue stream. Also, what are the types of consulting services to be provided (the services portfolio)?
  • Unclear method for getting leads into the pipeline – Depending on strategy, consulting services organizations within product companies are often implemented as overlay organizations, and as such, the process of getting in front of customers and managing prospects can lack proper definition, discipline, and support tools. Often the buyer in the organization is different too.
  • Improper tone for sales meetings – Product companies are often used to marketing-push type sales strategies (e.g., “here’s the benefit and features of our product – its the best”). On the other hand, consulting services sales are often more diagnosis, empathy, and solution-driven. Getting the right mix between product and services messaging takes some work.
  • Irregular quality of consulting services project delivery – In some cases, consulting services may be may be provided as an afterthought or on a “free” basis to customers (e.g., subsidized by product sales). Unfortunately, a customer’s time is money, so even if the service cost is covered elsewhere, the consulting organization still needs to provide quality work to the customer.

Implementing consulting organizations within product companies can be a great opportunity. That said, I’ve provided a peek at some of the hazards involved. What has your experience been with consulting and professional services organizations within product companies?

Business Development Chronicles – The Story of Us (Doesn’t Have to End in Tragedy)

It’s a tale of Big Company and Small Company.

Big Company likes Small Company’s:

  • focus and style
  • entrepreneurial attitude and skills.

Small Company likes Big Company’s:

  • scale of resources
  • scope and number of customers.

Big Company hates thing like:

  • getting embarrassed by Small Company in front of customers
  • getting burned and stuck with Small Company’s software source code
  • worrying about loose cannons in Small Company’s organization
  • working with Small Company’s legal paper.

Small Company hates things like:

  • working with Big Company’s cumbersome processes
  • getting whipped round navigating Big Company’s large organization and jumping through hoops
  • waiting for the whale to speed up
  • failing to get real deals cut
  • getting RFIs from Big Company and worrying whether Big Company is playing around with others
  • answering the RFI question about financial stability of Small Company
  • getting paid six months late by Big Company.

The Story of Us doesn’t have to end in tragedy. “Us” requires hard work, like courtship. It requires an honest assessment of values and one another’s strengths and weaknesses. It requires regular communication. It requires bridge building skills on fluctuating ground, and should be viewed as an opportunity for those up to the challenge.

Endnotes:                                                                                                     

  • Business Development is about new initiatives and incubation
  • The percentage of alliance failures cited often exceeds 60 percent (example Entrepreneur article).
  • The title for this post was inspired by Taylor Swift’s song, The Story of Us from the Speak Now album
  • I wrote this post reflecting upon doing consulting & contract business development activities and representing mega, mid-market, and small companies over the past year.

What I’ve Learned From Buyers of Management Consulting Services

Many blog posts and articles address when to use management consultants versus not. Some argue that using consultants for strategy development intimate incompetence by management (example here). Others argue that consultants should be used in cases when expertise is higher than that of existing employees.

Companies should definitely examine the needs and tradeoffs for using management consultants. Tradeoffs include expertise, background in similar projects, knowledge retention, cash outlay, incentives, organizational dependency issues, etc.

But I’ve learned something entrepreneurial from a number of buyers that deeply understand how to use consultants and how to lead:

Many smart buyers of management consulting services focus on making forward progress. They focus on solving problems. Whether using consultants is the cheapest option or the best discount of future profits that a client has ever seen or anywhere in-between – the choice of whether to use consultants is less relevant than getting things done with a positive return.

As a long-time consultant, I am clearly somewhat biased. But I’ve been on the buyer side for consulting services too. My main point is to encourage folks to spend a balanced amount of time focusing on how to solve a problem as opposed to pointing fingers.

Facilitation Technique: “Painting the Ends of the Spectrum”

While I don’t often write about leadership, management, and consulting “techniques”, there’s one that I wanted to share as I’ve found it useful when facilitating a diverse group of folks. I call it “painting the ends of the spectrum”, although I’m sure there other varieties and names for this approach.

Here are a couple of examples of “painting the ends of the spectrum”:

  • Trying to hone in on a direction related to strategy – In discussions with a client, framing the discussion by saying something to the effect of, “On the one spectrum, we can focus on simply reviewing the documents to make sure all parties understand. This will require a fairly short period of time. On the other end of the spectrum, we can work towards developing a common solution. Such an approach will require more time and strategy planning on our end.” This can be followed up by either the question, “Where on the spectrum are thinking we should be aiming for?” Alternatively depending on the bias you feel acceptable for the situation, you may indicate, “I think the former end of the spectrum is preferable. That said, what do you think?”
  • Attempting to gauge direction on customer preference – The technique can often be used in primary market research or sales situations. Here you may ask, “On the one end of the spectrum you can have a solution that covers X, Y, and Z, and will meet your end needs (for a premium fee) of being able to sleep at night. On the other end of the spectrum, you can have a narrower solution that has smaller out-of-pocket fees and may require greater coordination and integration on your part. Which direction do you prefer and why?”

Painting the ends of the spectrum works in many situations, particularly if complexity is somewhat linear (i.e., moving from simple to complex). In some cases, you may find it useful to paint other colors in the middle of the spectrum too. I tend to find that this latter situation works more in written or visual presentations.