Author: Steve Shu

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Management Consulting and Getting Seated in Client Interviews (Part 2)

Changing gears from my prior post on the overall character of solution building in management consulting, I thought I would skip around a bit to cover the client interview. It is a very important topic in management consulting. Ethan Rasiel, in his book, "The McKinsey Way" dedicates a whole chapter to it.

One benefit of bringing in certain types of management consultants is that they can float up and down the chain from the CXO-level to the trench-level worker. I find it important to gather both hard data and soft information in the interview. Here are some examples of quotes I have experienced in the trenches (watered down from some past clients):

  • "I feel like I have failed. It’s hard to ask for help in this environment."
  • "Headquarters: The regional management will have the measurements you are looking for."
  • "I don’t have those reports. You should go to sourcing."
  • "I have no idea. You go to processing to get that information."
  • "Who cares about those reports? Headquarters does something with that. They should have the reports."
  • "People that deal with our personnel say that our competitor has a higher-class of industry expertise and it shows."
  • "Morale is really bad. We’ve tried everything but continue to show bad service."

Rasiel indicates that McKinsey usually conducts interviews with two management consultants at a time. I can see how this could be of benefit as it is hard to both ask questions and take notes at the same time. That said, I have generally conducted with interviews by myself or with one other person under special circumstances.

Rasiel also indicates that McKinsey generates interview guides before an interview. Preparation helps, and the amount of prep is a bit sensitive to how familiar one is with the industry and functional area you are working with. I often use a spreadsheet or Microsoft Word document that covers the main questions and topics that I want to cover.

The real key to a client interview in my mind though is getting seated properly. This is the question I get asked most by client prospects and business acquaintances. How do you get people to open up? I find it is one of the biggest risk points in a project. If you cannot get on the same side of the table as the client, project risk goes way up in being able to deliver.

I don’t have a formula for getting on the same side of the table as the client, but here are some things that have worked for me:

  • It is important that everyone up and down the chain know that you are there to help. You need to go in with the attitude that the client comes first, even if that means putting yourself out on the street. Your client sponsor has a right to "fire" you at any time if you are not adding value.
  • You must be sensitive to fact that people are people and not just a bunch of names or boxes on an org chart.
  • You must establish trust. If people confide in you, you must not violate trust.
  • You must make it clear to the people that you talk to as to who you are working for and what your goals are.
  • You should be there to solve problems without passion, prejudice, or politics. You should have enough fortitude to tell the client when they are wrong, but you should have enough sense and ethical grounding to admit when you are wrong, don’t know something, or can’t add value and need to redraw subproject scope boundaries.
  • You must realize that clients, in many situations, know their business better than an outside consultant does. The consultant brings other value to the table, such as being independent and less connected to politics, having structured analysis tools and specific functional expertise, bringing additional bandwidth to get over hurdles, providing an opportunity for change, and drawing in experiences from other companies.
  • You must strive to get concurrence with the client throughout the project – regular communication and working sessions.
  • You must learn to develop capabilities to become a servant-leader (some of the same capabilities required for an executive or chairman of the board).

The aspect of not playing politics is very key. Many new consultants get too involved with politics (I did too when I first started). Although you may feel that it is ingratiating yourself with the client, clients are not paying money for that. Playing politics can also create bad side effects and factions within the company. Take no part in that.

Finally, I have found that blogging has helped provide a personal side to my practice of consulting. In many cases, I know that a client has read my blog to figure out what I’m all about, what values I represent, and what kinds of business methods I believe in. I want that to happen. In the words of a famous song, "You’re so vain. I bet you think this (blog) song is about you". Perhaps it is. Whatever it takes to help the client. That’s my style of effective change management consulting.

Steve Shu

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Continue reading “Management Consulting and Getting Seated in Client Interviews (Part 2)”

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My Personal Purple Cow: Keeping the MBA Fresh (Con’t)

About a week ago, I picked up on a Seth Godin post that hinted the body of knowledge surrounding an MBA was limited. As a result, I posted my thoughts here as well as a number of other posts to help others sort through the question of whether to pursue an MBA. Regardless of where that discussion has gone on the net, what I do agree with is renewing oneself.

I recently completed Seth’s book, "Purple Cow". From the title of this post, I’ve hinted that I’ve taken a lot in. It’s a great book and a very quick read.

For me, I see his book as more of an innovation book than a marketing book, but in the end it could go either way. Perhaps what threw me was that the impression I got from net readers (before reading the book) was that it was a core marketing book. I see it as being an awesome complement to core marketing frameworks. In my mind it would be hard to facilitate an innovation session using the Purple Cow book as it stands though – some additional layer or framework would likely be necessary. Even Seth himself talks about not having a real framework or formula for innovation in the book. I think he’s likely smart enough to be able to come up with one, several, or many though.

Some interesting aspects of the book:

  • Seth motivates the book by comparing the "military industrial complex" to the "TV industrial complex".
  • In the military industrial complex, an increase in creation of weapons created a self-reinforcing cycle of bigger government, more taxes, more jobs, more taxes, etc.
  • Similar kind of buildup occurred with TV advertising, but with the amount of information overload, basically this leads to a decline in the TV industrial complex. As a result, a lot of the things that got built up are unwinding and new things are forming (note to self: may be interesting to explore this in further depth)
  • Skipping a bunch of steps in Seth’s argument for brevity, he basically winds up with the concept of "The Purple Cow". He relates the story of watching a field of cows and getting bored. Had there been a "Purple Cow" in the fields then that would have been something remarkable to grab his attention.
  • A key point he makes in the book is that companies need to make remarkable products (as distinguished from making outrageous products) that can spread word of mouth through the market. Making great products is simply not good enough. It’s bad.

Lots of good takeaways. Lots of good mini-case studies.

It is good to have innovation permeate whatever one does. As a results-oriented management consultant, the guidebook, process, and tactics I use to wedge it in will take some active thinking and doing.

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Offshoring: Far From Home, Close to Home, and In Your Driveway Aspects

As far as business goes and in terms of how life is affected, I often think about macroeconomic history in three areas: 1) the Industrial Revolution, 2) the Information Technology Revolution, and 3) The Offshoring Revolution. Not necessarily the perfect model but a working model that highlights key periods delineating changes in the way things are produced.

Offshoring is a big subject that has ranged from simple areas to more complex areas like the outsourcing of innovation.

In the first two areas of revolution, the output of the United States (in terms of GDP) went up drastically. Some economists and statisticians have estimated a "productivity constant" (which directly relates the GDP to key macroeconomic factors) and have determined that substantial (non-linear) increases in the productivity constant (and hence, the GDP) have occurred due to these first two revolutions. (See the second link in this post for one example of how this was done for the IT Revolution.)

Now as for the offshoring revolution, Mike Nevens (ex-McKinsey blogging at the Sand Hill Group) highlights,

The proximate cause of the offshoring phenomenon and ensuing debate is the addition of 300 to 400 million highly educated workers to the global economy over the span of less than a decade.

That’s the "far from home" aspect. Remember that there are approximately 290 million people in the United States. Keep the numbers in perspective though – the US Department of Labour shows that only 2.5% of all job losses during the first quarter of 2004 were the result of offshoring.

Mike goes on to write:

Offshoring is simply the first step in an inevitable process as companies in highly competitive businesses seek to lower their costs by moving work to where it the value, quality, cost tradeoff is best. We are already seeing the second step: wages are rising in those countries that are the recipients of outsourcing and working conditions are improving as the demand for local workers rises …

That’s the "close to home" aspect. While the offshoring revolution may not yield the non-linear increase in the productivity constant like the other revolutions (the future lies before us), there is a significant shift in deployment of capital coming.

The "in your driveway" aspect is this … Mike continues:

I believe the third step is happening as well, but it is harder to see in the available data. The third step is stagnating or declining wages in the U.S. and other industrial economies.

Mike offers some advice that workers should make investments in education and skill building. They should make investments in areas that are less vulnerable to global market forces.

In any case, everyone needs to keep their eyes open and stay renewed. The offshoring revolution is here.

Continue reading “Offshoring: Far From Home, Close to Home, and In Your Driveway Aspects”

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Pre-Paid International Calling Card Rates Sustainable?

Skype is the rage these days for many technology-savvy folks. Get free international calls when dialing from Skype user to Skype user from your computer. If you need to dial from Skype to a person in Europe who is on a regular landline, you can get rates in the range of 1.7 cents (Euro) per minute.

But have you explored international calling cards lately? I had to explore this because of some telecom issues reaching my wife in France and some of my international clients.

I had to do a triple take on some of the rates. Calling Europe can cost from 1.6 cents to 0.8 cents per minute for some calls using landline to landline calling. On top of that, some of these cards have toll-free 800/8XX numbers that people can call to initiate a call. Now 800 numbers in many cases cost the subscribing company around 25 cents per call to do the number translation from 800 to real telephone number. Now with an $10 international calling card that can do like 1250+ minutes of call time, you do the math to see whether these companies should be able to do this profitably. I mean off-the-cuff, 20 calls costs about $5 of the $10 card just to pay for the setup of the 800 call. Perhaps the prepaid card providers are profitable, but I wonder if there are either back doors or house of cards related to this (presuming that the technology to trunk the call from the United States to points of presence [POPs] internationally is IP-based). I mean someone has to pay for the underlying infrastructure IP is riding over.

Granted when you call the customer support line for some of these cards, it sounds like it is an answering machine from the 70s in someone’s basement, but heck, the call sounds perfect and of digital quality.

Anyway, compare the pre-paid international calling card rates to the $10ish/month fee that some local carriers have for making international calls plus the 8.0 cents/minute fees they are charging. Are any of these fees really outrageous fees? They are almost borderline outrageous on the low side. I feel bad for the traditional telcom customer service reps – people tell me that the reps are simply shocked when they hear about the international calling card rates being brought by pre-paid providers. The only thing the reps can do is try to cross-sell you into other service (e.g., mobile, satellite dish) when people drop their international call service.

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22 Million iPod Users Can Get Lifestyle in General Motors Auto

Not to mention that they can get the podcasts too.

Bob Lutz points us to the direct interface from iPods to 2006 Pontiac Solstice radios with additional discussions at Autoblog. Regardless of the mechanics of the interface, that’s selling lifestyle.

If you didn’t know how widespread the iPod has gotten, Andrew Sullivan provides perspective on the "iWorld":

What was once an occasional musical diversion
became a compulsive obsession. Now I have my iTunes in my iMac for my
iPod in my iWorld. It’s Narcissus heaven: we’ve finally put the “i”
into Me.

And, like all addictive cults, it’s spreading. There are now
22m iPod owners in the United States and Apple is becoming a
mass-market company for the first time.

(Note: US Census Bureau indicates that the population of the state of New York and United States is estimated to be 19 million and 290 million respectively.)

Now not everyone has an iPod, but I can already see the iPods being given away by local dealers in car promotions.

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In Search of Better Ways to Make Sure Interviewing Is Not a “Sip Test”

My better half reports from assignment at the business school at INSEAD that Dr. Jack Soll made a clever analogy likening most interviewing processes to the Pepsi Challenge "Sip Test". I should be somewhat careful here to note that I’m not sure how far the analogy went, and I want to be careful here because academics live based on being rigorous in approach and analysis. Suffice it to say that my wife and I had the initial impression that Jack’s analogy was very clever (and pretty darn good too).

First I’ll bring readers up-to-date on the "Sip Test", which has been highlighted recently in Malcolm Gladwell’s book, "Blink". Scott Liben gets at it pretty well in a recent article:

I’m more than old enough to remember the commercial campaign a couple
of decades ago called the Pepsi Challenge. It capitalized on what
marketers call a "sip test," in which even committed Coke drinkers
chose Pepsi over their usual cola when they weren’t told which was
which. Even when the makers of Coke conducted their own such tests, a
majority preferred Pepsi. Rattled by the results, they launched New
Coke, a direct product of market research — and one of the most
notorious product flops of all time. 
 
The problem, in short:
The "sip test" or CLT (for Central Location Test) in which Pepsi always
prevailed turned out to have very little in common with the way buyers
of soft drinks actually consume such products on their own. Gladwell
quotes Carol Dollard, of Pepsi’s new-product development department,
who says "Sometimes a sip tastes good and a whole bottle
doesn’t. That’s why home-use tests give you the best information. The
user isn’t in an artificial setting. They are at home, sitting in front
of the TV, and the way they feel in that situation is the most
reflective of how they will behave when the product hits the market."

Now research on how well interviews correlate with actual job performance once a person has been hired has shown that there is "very little" to "some" correlation. A person that did well interviewing may either do well or poorly on the job. The probability of getting it right, is measureably better than a flip of a coin.

So is interviewing for a job basically like a sip test where a 2-hour interview process has little bearing on how well a person will do in the long-run as a hire? Very disheartening. To top that off with the fact that most people are not aware of interviewing biases that may happen between first round and second round interviews with respect to interviews and the use of screening versus selection processes (that is, you need to be part of the crowd and on par in one case but stand out in the other case), the story just gets worse.

The second article I cited above hints that having more structured interviewing processes works better.

In light of that, some tactics that I have used that seem to work well (where each may also have some issues in different contexts [too detailed to go into here though]) are:

  • establishing an arm-length relationship (a 1099 relationship) first with contract-to-hire terms if all goes well after a period of time
  • establishing a trial period in an employment agreement (with somewhat higher salary terms in the trial period) to compensate the contractor
  • having some joint problem solving tasks with the prospective hire, prior to an employment agreement being established

So on the surface, hiring good people matters a lot. Are we certain that our hiring process is not a sip test though?

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Yahoo Acquires Flickr … Plus Ask Jeeves Acquired

A lot of people reporting today on Yahoo’s acquisition of Flickr (I can hear the Yahoooooo jingle in my head as I type). Om Malik has got the latest on what rumored deal terms are. Other big technology news today is the acquisition of Ask Jeeves. See venture capitalist Fred Wilson for his quick take comparing the two deals.

Consolidation in the software space is continuing up and down the
chain. I expect much more to happen in 2005. It’s not just going to happen in the more mature
segments of the software market (like with Oracle and PeopleSoft). It’s also happening with technology
that hasn’t gotten beyond the early adopter phases (in part because
Internet business models are shifting all around due to blogging, news and PR, and advertising changes). It’s very timely that venture guys like Ed Sim are talking about what happens when competitors are acquired.

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