A Couple of Blog Links

I wanted to point out a couple recent posts and blogs that relate to topics that I’ve touched on before:

  • Poweryogi’s post on interviewing experiences with consulting firms. I sympathize with his experiences – interviewing in B-school is not a fun process in many ways. I had an earlier post that described how interviewing can in many ways be like the "Pepsi Sip Test".
  • A blog on Intranet blogging, by corporate intranet blogger at Intel, Ricardo Carreon. Beth Kanter, thanks for forwarding the info! I had back in 2005 worked with companies regarding intranet blogging as well as created a whitepaper on intranet blogging here (note PDF file).

Update On Management Consulting Blogs

Close to two years ago (in February 2005) I wrote an original post that noted a dearth of blogs by traditional management consulting firms. Six months after that post, I wrote an update where I happened to run across a few more blogs by individual consultants.

Since that time, I’ve run into many more blogs that are associated with management consulting, such as Guerrilla Consulting, David Maister‘s blog, and the Management Consultants’ Blog.

I also ran into a few more blogs that I closely associate with big name, traditional consulting firms (either because the blog carries the company banner or is written by an executive at the firm). Note that even though the blogs likely reflect the perspectives of the individuals and not the perspectives of the company, I still have some loose mental association between the individual and the firm. In any case, the other traditional consulting firm blogs I’ve run into over the past two years are:

In the past, some folks had indicated that a dearth of management consulting blogs may have been due to concerns about unwanted disclosure of confidential information. I’ve not heard of any cases to date, not to mention any disclosures that would indicate that blog media increases chances of disclosure over other media. (That said, there are clearly cases where the blogosphere amplifies the transmission of information which could be argued increases general risks associated with corporate blogs or those loosely associated with companies).

As an additional note, I find it interesting that the four traditional consulting firms that I mention above all have a strong technology competency associated with their brand. For example, Accenture not only has a strategic management consulting practice but also has a strong systems integration practice.

Update (1/4/07): Per comments below (Thanks, Amaresh!), Diamond has a blog by its information and analytics practice. From the looks of it, it is a unique blog that sheds some light on more rigorous consulting practices that top consultants strive to implement for their clients.

Update (1/9/07): Booz Allen Hamiton podcasts here.

Update (3/8/07): Accenture has started a corporate blog here.

Update (3/12/07): Although apparently not officially attached to the "Firm", McKinsey alum Paola Bonomo commented here (thanks, Paola) and points us to a wiki of McKinseyite and McKinsey alum blogs.

Update (10/13/07): Consultant Ninja has a blog over here. Thanks for the links! Sorry I was not able to comment on your blog as it does not accept users without Google logins.

Goal Setting and the New Year

I’ve never been one to have new year’s resolutions stick very well. I think in prior years, I have had goals about exercising more, eating more healthy, spending more wisely, etc. The general sayings are that goals should be specific and that  one should regularly monitor and measure progress towards goals. No arguments from me there.

Still I’ve managed to make progress over the years and keep things in balance. Making progress and actively thinking about what I would regret if I did not do something – these are two things that have worked for me.

On "making progress", I remember working in one startup and working very hard. But after a year had passed, we had wondered whether we were pressing too hard and running the business model in the right direction. Of course, we had had some tremendous wins and beat the odds that year, but we had to step back and think about whether we were making significant enough progress. In the end, we decided to change directions, and people generally felt better and resolved about new direction.

To illustrate the second point on regret, on a personal front, I had a decided a little more than a year ago to "trade down" on my near-term career potential. The guiding principle steering that decision was that I was thinking about how much I was going to regret other things going on in my personal life if I decided to forgo those things for a "richer" professional life. Careers can always take new turns. They can restart at any point. But some things in one’s personal life only come once. Actively thinking about regret made me make the right choices. As another story, although I’ve never asked my father, I like to think that one of the reasons he stopped smoking many years ago was because he thought about regret scenarios. It wasn’t a twelve-step program that got him to make significant self-improvement. It was one wake-up call.

I don’t pretend to know what works for other people in terms of new year’s resolutions and setting personal goals, but feel free to share your stories. As 2005 closes out, I wish everyone a safe holidays and best wishes for the new year. Best!

An Illustration of the Consulting Spectrum: Giving Simple Opinions Versus Practicing Consulting “Science”

Here are some examples of how one might provide consulting support for a portion of a client project . The examples are based on real-world (but disguised) tactics taken by consultants who are posed with the problem of characterizing the threat of competitive entry by another company.

Person 1’s characterization:

  • The threat of competitive entry is moderate

OK. If one reads between the lines here, one might presume that the person is saying that competition will neither be heavy (potentially indicating price wars) nor light (where sales might go relatively unchallenged). Based on microeconomics-type conventions, the former case could mean that there are between 2 and 3 competitors and the latter case 1 competitor or close substitute. But the characterization leaves a lot to be desired.

A better characterization might be:

  • Competitive entry may occur within 2-5 years by one known competitor already operating in another region

This characterization gives a lot more specific details and timeframes (provided there are details to back up the claims).

Here’s some thoughts on an assessment which is also backed by facts ("science") to support the claim. When a consultant uses hard, quantifiable facts, the arguments and characterization become much less subject to potential challenges by others that results are biased by any personal opinions of the consultant.

Person 2’s characterization:

  • Competitive entry may be expected by one competitor, likely 2-3+ years out
  • Current market structure is mostly a duopoly, indicating moderate price pressure potential
  • The perspective on longer timeframe for competitor entry is based on regulatory requirements concerning X, Y, and Z ; of these the first two are relevant to client
  • The perspective on timeframe for competitive entry is based on public capital and operating expenditures filed in public financial documents and benchmarking of these current expenditures against comparables
  • Subjectively, the business structure that the competitor is using has a high failure rate
  • Historical entry of competitor is X, Y, and Z, and if history repeats itself where competitive entry does occur earlier than forseen, competitive entry will likely look like XYZ from marketing and sales perspective, ABC from a technical perspective, DEF from a financial resources perspective, etc.
  • Entry scenarios are further substantiated by number of retail points, form factor of product, etc. used by competitor and comparables in other markets.

Tea leaf reading aspects of consulting engagements can be hard. But sometimes tea leaf reading needs to be done, especially when stakes are high. All said, there are a spectrum of methods that consultants can use to support their clients through using business "science" or forensic-like methods as opposed to dispensing simple advice (which I dare call "consulting").

Venture Capital Test Suggests Some Weaknesses About MBAs and Consultants

Paul Brown tipped me on Guy Kawasaki’s post on the Venture Capital Aptitude Test. (Disclosure: Paul’s kind words come from years of he and I working together in a startup where he and the other developers did all the hard work) . Thanks, Paul.

In Guy’s post, Guy gives two positive nods two areas I’ve had lead roles with (engineering & sales) and disses two other areas I’ve been also been involved with (MBA and management consulting) in terms of how it affects one’s ability to be a venture capitalist.

Guy writes about management consultants:

The three worst backgrounds for a venture capitalist are management consulting, investment banking, and accounting. Management consulting is bad because it leads you to believe that implementation is easy and insights are hard when the opposite is true in startups.

Guy writes about MBAs:

Finally, there is the issue of the pertinence of an MBA to venture capital. The upside is that such a degree can provide additional tools and knowledge (such as calculating that 25% of $1.6 billion is $400 million) to help you make investment decisions and to assist entrepreneurs. The downside is that earning this degree (and I have one) causes most people to develop the hollow arrogance of someone who’s never been tested. All told, the downside of an MBA outweighs the upside.

While I won’t address Guy’s claim about the whether these areas are good or bad for venture capitalists (as I can’t claim to be an expert about picking good venture capitalists), what I will address is Guy’s claim that "Management consulting is bad because it leads you to believe that implementation is easy and insights are hard when the opposite is true in startups" and "The downside is that earning this degree (and I have one) causes most people to develop the hollow arrogance of someone who’s never been tested. All told, the downside of an MBA outweighs the upside."

On the point about management consulting I simply disagree (with no disrespect) with Guy. Guy’s statement is an overgeneralization. There are different types of consulting firms out there, and Guy’s perspective may be more influenced by pre-2000 practices. Consulting firms pre-2000 that were focused on strategy might have more of a tendency to be focused solely on stategy, but these firms got burned by making recommendations without focusing on ease of execution. On the other hand, there were firms that grew of of an implementation background (and potentially interim management background) and moved upstream into more strategy consulting. Although markets started to overlap a bit, structurally I think consulting firms and client were better off by having this type of cross breeding.

All said, if one has not spent any time managing or working in a business role prior to management consulting, I think this can be a weak point that one needs to work on careerwise. But there are strong benefits to management consulting that should not be underestimated either – by working in management consulting, one can get exposed to the internal operations of a lot more firms than one could by working for one firm straight for five to ten years. In five to ten years as a consultant, one may have seen the detailed operations of twenty to forty firms versus two to five as an operating person.

On Guy’s point, "The downside is that earning this degree (and I have one) causes most people to develop the hollow arrogance of someone who’s never been tested."

To this, all I can say is that my hypothesis would be that MBAs may tend to attract arrogant people [who overstep their bounds in terms of what they think they’ve accomplised over non-MBA entrepreneurs]. I don’t think the MBA naturally breeds this type of person.

Overall, I think Guy is onto something when he says people should value the difficulty of implementation and value and proximity of market insight. I also think he’s onto something when he talks about arrogancy affecting the ability of VCs to do the job effectively. But Guy’s characterization overly discriminates against consultants and MBAs. What about the negatives to engineers who only think about technical beauty and miss the market need? What about the salespeople who only sold what the customer already bought and never hunted for a deal?

Updates (12/4/06): Guy here. Charlie here.

Musings on Doing Versus Managing

When I was a practicing engineer early in my professional career, I remember alumni giving me a glimpse of the future of a typical engineer where the engineer would after a number of years move into a management role managing other engineers. Although I didn’t give it much thought at the time, what I didn’t think about was that moving into an engineering management role might make my engineering skills obsolete. Over the years, I did take a path that led me from detailed design engineering to systems engineering to project/product management types roles. Although I stayed on the cutting edge in terms of industry knowledge, along the way I became more interested in business, and I found that my specific engineering trade skills became anemic and obsoleted.

In business, similar things can happen too. For example, many successful sales executives started in an area such as marketing. Maybe down the road they became field sales people and then grew into roles of sales manager, area director, regional VP, or executive VP down the road. With each advancement, they may have become further removed from trench-level sales work. Or they may have helped the organizations become more specialized in productizing the sales process (e.g., for a large company with thousands of existing customers). In these cases, such executives may have set up separate people doing inside sales, other people doing proposals, other people pulling together the technology pieces of a proposal, etc. The executives end up maintaining relationships with customers at the executive level and having the final say in how deals are crafted and how things shape up. In these cases, the executive plays a tremendous role in the larger organization – the situation may be loosely akin to a general in the battlefield. The general becomes far removed from the front line but clearly has tremendous influence and can command respect without having to "do" anymore.

Down the line, management executives (like some military generals) may have more difficulty in moving from large scale environments to entrepreneurial or startup environments. They become accustom to having many resources and telling people what to do. While such executives may have invaluable knowledge and experience about the rise from nothing to sales monster, they may have forgotten what it is like to actually be in the trenches and/or have to do work. Or they may have forgotten what the rise actually entails (which would be a shame if that is the case). I know of many entrepreneurs who lament about venture capitalists or other investors insisting that executive sales VP of brand name Fortune 50 company should become head of sales for seed stage or Series A stage company only to find nine months and millions of dollars more poor that the entrepreneurs were better at selling an early market product with no brand name than the experience sales lifetimer.

This is not to say that managing only is bad. But managing only will create a specialization (which may be rewarded in its own right), and pursuit of that specialization should be a conscious decision. Some managers balance things out by ensuring that they perform a certain amount of work from time to time or visiting the field often. For example, sales managers may not only have regular, internal sales review meetings with field sales people but also travel with field sales people to visit client prospects. Multiple purposes are satisfied with the manager keeping skills fresh, monitoring performance of field sales, and smoking out end-to-end sales and marketing process problems that may be affecting the larger organization.

There are also tradeoffs with just "doing" too. People that get so focused on execution may find that they cannot scale the model. If managers focus on doing as opposed to managing, they may end up micro-managing, failing to utilize others, or failing to develop their managerial skills.

So what’s the answer here? Personally, I think the optimal choices depend somewhat on the nature of the game one is playing. In some industries (e.g., auto manufacturing), the sales and delivery process tends to require specialization to get scale. "Managing only" may be more acceptable. In other industries (e.g., consulting), scale may be harder to achieve and tend to require sales and delivery processes to be closer together. Managing and doing may need to be closer together.

So all said, one needs to recognize that there are different games that can be played. There are also tradeoffs in the types of players that can fill the roles too, much like a guard plays a different role than a center does in basketball. The key is to both match fit with appetite and skill with the game at hand and also to make sure that the process of renewal (e.g., maintenance, training, retraining) is in tune with long-run needs.

On the CEO Salesman

Ralph Muse, a fellow Texan, ex-Booz Allen management consultant, extremely experienced interim manager, extremely respectable father, and honored serviceman (among many other impressive things) recently started up a blog, and one of my favorite posts by him is entitled, "Super Salesman CEOs". The post is written in the context of trying to place a CEO in a startup, but I feel the post also reflects the situation in numerous client engagements I have seen, for example in cases where more mature companies are looking to enter new businesses or develop new product platforms. In Ralph’s post, he writes (bracketed text mine):

[An executive search firm] needed help finding the perfect person for a CEO search. The position description called for someone who had spent their whole career in Sales …

I have heard this request before. It seams to be a trend. While I think every good CEO is a salesman, not every sales VP can be a good CEO. If fact for most startups after the salesperson “makes the sale” the CEO will have to close the deal by convincing the customer that the company has a sound business strategy that will succeed.

One take that I have on this situation is that visionary and "salesy" (for lack of a better word) CEOs need to find someone or someway to complement their strengths if the CEO lacks execution skills, strong lieutenants, and/or the time and bandwidth to employ structured methods for tackling problems. I have seen a number of efforts fail or get stalled because they overlook some of the soft stuff to get businesses to work, like team building (as Ralph mentions). See Ralph’s post for more.