Business Development – Page 2

July 25, 2014

Emergence of Formal Behavioral Insights Teams and Initiatives

I recently ran into a short video by the New South Wales government which does a great job of introducing the notion of behavioral insights and application in the governmental space. Although still early, behavioral insights and the application of behavioral economics principles have been going global in the public policy space. At some point in the future we will see a wave build in the private sector – the value proposition for getting smart about behavioral science is compelling. On the one hand, impacts can be large and returns can easily exceed 10X (see 22X cost savings for UK Nudge Unit). One the other hand, possibilities for competitive differentiation and new products seem limitless. For example, Opower tapped into a great market using software-as-a-service and a behavioral efficiency model for saving energy. Companies like Idomoo present companies with an opportunity to tap into behavior change using massively-automated and personalized videos.

But how do organizations get from here to there in the behavioral economics space? How will the wave build? The New South Wales government video really made me think about the gap in organizational knowledge about capitalizing on behavioral economics. It’s an opportunity. While some companies may be very sophisticated in their approach with behavioral economics, the broader industry is barely conscious of the power of behavioral economics (perhaps Behavioral Economics World 0.2 or 0.3) let alone able to reap large returns from it. How do we get to a Behavioral Economics World 1.0 or 2.0?

The UK Nudge Unit has a noteworthy approach. It is a consulting-like and scientific approach that essentially includes customized analysis and design, plus scientific testing and iteration.

As another example, when I was working with Allscripts we had more of a strategic, business unit approach. We took data we gathered in one market, build insights on top, and then tried to line up incentives and behavior change in complementary markets via offerings in a standalone business unit.

Yet as another example, at Allianz Global Investors we took another approach by setting up a Center for Behavioral Finance with a Chief Behavioral Economist and then establishing a number of initiatives within the Center to provide thought leadership and support the larger business.

Each of these routes is suited for different situations. For other organizations in general, I think it’s important to try and assess what the opportunity is, determine a strategy for moving forward, audit where you are and identify the gaps, and then design and execute on an operating model. Execution of the operating model could include building a behavioral team, outsourcing, augmenting, or partnering.

So to jumpstart your organization’s thinking on how to become a leader in applying behavioral economics, consider the following types of questions:

Opportunity Assessment

Where do we get ideas from now?
How should we get new ideas related to behavioral economics?
How might we change the game?
What’s the potential opportunity?
How can we test new ideas related to behavioral economics?

Strategy Development

What’s going on in the market?
What blue sky opportunities should we focus on?
What will our approach be with customers?
How will we competitively position ourselves?
What will the output of our efforts look like and how will we distribute?
How will we know when we are successful?

Audit and Gap Analysis

Where are we at and how can we get smarter about developing ideas based on behavioral economics?
To what extent do we know how to design and test behavioral solutions?
How can we develop the organizational fortitude to succeed?

Operating Model Development

What should a multi-year plan for the behavioral initiative look like?
What should our behavioral insights team look like?
To what extent should we build, outsource, augment, or partner for our team?
How should we incubate the initiative?

Please feel free to share your thoughts on other behavioral insights initiatives and teams, organizations implementing them, organizations not implementing but interested, who’s doing things right or not, unique approaches, new startups, etc.

March 21, 2014

Integrating Behavioral Economics and Consulting

Over the past few years, I have been involved with a number of projects that utilize behavioral economics principles to improve outcomes or change people’s behavior. Since this blog has a long history covering management consulting, I thought I would share some thoughts on integrating behavioral economics into the practice of consulting.

For those unfamiliar with the term “behavioral economics”, I generally describe behavioral economics as a combination of psychology and a traditional science like economics or finance. Whereas models in traditional economics and finance often assume that people are supercomputers and can maximize complex notions of utility over a number of parameters, behavioral economics tries to account for the beauty and shortcomings of the human mind and spirit. For example, why do some people help or punish others when it is not in their best economics interests to do so? Why do some people not help themselves (e.g., fail to save enough for retirement) when they clearly can from other measures and/or field testing? How do we know when a commercial or public system has been set up in a behaviorally unfriendly way, and what can or should be done about it?

These last questions get at the heart of one model I have seen for integrating behavioral economics into the consulting model. This model is the notion of integrating behavioral audits and recommendations into the consulting process.

In the book, “Save More Tomorrow” http://www.amazon.com/Save-More-Tomorrow-Practical-Behavioral/dp/1591844843, Dr. Shlomo Benartzi introduced the notion of a behavioral audit for 401(k) and defined contribution plans. In such an audit, questions are asked to the effect of:

Do employees have to opt-in or opt-out relative to joining the 401(k) plan? (This question addresses the behavioral challenge of inertia)
Are employee savings rates automatically escalated when a person gets a pay raise? (This question addresses the behavioral challenge of loss aversion)
Do participants get 401(k) statements that show projected income at retirement? (This question addresses the behavioral challenge of myopia)

The behavioral audit then opens the door for strategic recommendations such as defaulting employees into plan or at least providing them easy ways to get into a plan, changing employer match rates, restructuring choices in the investment menu, etc. If a company wants to go really deep on implementation, they have an opportunity to work with their consultant or financial advisor to create options, prioritize, and work on an implementation plan.

More generally, the notion of a behavioral audits and recommendations can be designed to assess many other processes. For example, how well does a software application work from a behavioral perspective in terms of getting people to take action? How effective are our management dashboards and processes for managing a portfolio of projects? How good is our website in terms of disseminating information and facilitating choices?

Beyond audits and strategic recommendations, there’s also a tremendous opportunity to apply behavioral economics principles to a second area: the design and implementation phases of consulting projects. Behavioral economics recognizes that people are influenced by things that won’t make a difference to a robot but do matter to humans – we have to pay a lot more attention to design, because design is there whether intended or not. And any design architecture, explicitly or implicitly imposes a value system. Such a value system could be to maximize value for a specific party. Another value system might be to do the most good for the most people.

So where to start?

A first step is to open your eyes more broadly to behavioral economics. I think that cross-functional disciplines (whether behavioral economics or other) tend to be underappreciated because appreciation requires knowledge that cut across areas that are not traditionally combined.

A second step is developing a good base of knowledge regarding behavioral economics and applications. You can do this by working with people experienced in the area. You can also start to get introduced to these concepts through reading books like “Nudge” (by Thaler and Sunstein) or “Thinking, Fast and Slow” (by Kahneman). Although I am biased (since I was part of team to help with the book), Benartzi’s “Save More Tomorrow” book is a great book for shedding light on how behavioral economics principles are applied in detail to a very specific problem (i.e., design of defined contribution plans for retirement savings).

A third step is recognizing that while it is important to draw from research and core principles (done by academics and from certain areas of the industry), it is important to test your application of behavioral economics, whether that application be for consulting, a solution, or a product. Sometimes we think one behavioral principle will apply in a scenario when something else turns out to be the case. The use of solid behavioral principles based on research should improve the odds of success. Yet in my experience how we make judgments and decisions as people is, at times, both scary and fascinating. So remember that your application of behavioral economics should be tested before it is rolled out.

June 20, 2012June 20, 2012

Secret Techniques to Overcoming Obstacles as a Manager or Consultant

Over the years, I have had to opportunity to manage different groups and perhaps more importantly observe how different managers and consultants face obstacles. Often these techniques for addressing obstacles are passed down through mentorship or peer exchanges, and as such, these techniques are less documented. Here are some of the techniques that come to mind and are especially more common in entrepreneurial or intrapreneurial situations:

The Experiment – In this case the obstacle that the manager wants to overcome is to make forward progress into an unknown area. For example, suppose a manager wants to adapt a software product for an adjacent customer market. The manager may allocate a budget to a small business development and delivery team to explore and develop a lead customer in the new market.
The Audition – In some cases, the problem to be tackled is either new or the prime resource to deliver is an unknown. For example, suppose the manager needs someone to serve as the principal consultant to lead a new group of services professionals. The unspoken audition may be that the manager may want the principal to lead one engagement with key folks on the delivery team as part of the engagement. The other aspect of the audition may be to have the candidate assist with proposal development and lead an aspect of a customer sales pitch meeting.
The Process Versus Milestones Approach – Some situations arise where it is not possible for one group to dictate the larger process that a company (or another group) should follow. In these cases, the basis of the conversation can be shifted so that groups agree to measure key milestones and outputs. For example, suppose one internal group wants a sales organization to follow a certain process to control focus and quality of customer messaging. While the internal group may find it difficult to instill explicit processes within the other group, the two groups can agree to have review meeting milestones and measurements to assess focus and quality indirectly. So the technique is based on the concept that processes and milestones go hand-in-hand. If one has trouble on the process, try working from milestones angle instead.
The Associations Versus Strategic Approach – Strategy ideally comes before tactics. However, strategy often requires a lot of top-down thinking and heavy analytical brain power. For example, in top-down marketing one may need to define targeting and positioning methods after one has done a complete analysis of the customer segments, value propositions, competitors, company strengths, etc. Yet the battles in the field are happening today & right now. What are the soldiers supposed to do at this moment? Here’s where intuitive thinking, improv, and emergent strategies come to mind. In these cases, immediate tactics are based on doing something consistent with what has been done in the past, creating connections, or taking actions that create consistent associations (such as brand associations).

There are obviously many more techniques that managers use for overcoming obstacles in dynamic situations. What are some techniques that you’ve learned in the field?

June 15, 2011January 29, 2015

Eight Secret Weapons of the Modern Consultant

Although I’ve developed a number of blog posts addressing the practice of management consulting, I have spent little time tying things together into a framework of secret weapons of the modern consultant. Secret weapons are a spectrum of tactics and skill areas – while some may be used widely, they are often passed through mentorship or apprenticeship in bits and pieces. A modern consultant is a professional that can work in dynamic industries, operate within multiple types of consulting organizations (e.g., niche, large traditional), and has experience as both an operating manager and an advisor.

So here are eight secret weapons of the modern consultant (arranged roughly in order from foundational to more advanced)

Problem Statement Articulation Skills – This skill requires a consultant (or manager) to define the boundaries of a scope of work. Implicit to this is being able to define what decisions points need to be met and the managerial significance of the issue at hand. Because the organization is preparing to commit resources to investigating a problem, this is core to getting started. For some further discussion on this topic, I wrote a management consulting post awhile back on “Articulating and Rearticulating Problem Statements” (https://steveshuconsulting.com/2007/04/articulating_an)
Structured Problem-Solving Skills and Industry Knowledge – Facility with structured approaches may be developed by learning key frameworks such the popularized McKinsey MECE approach (see here http://firmsconsulting.com/2010/09/22/a-complete-mckinsey-style-mece-decision-tree). Skills can also be gleaned from thinking about how one would practice consulting science versus giving simple advice (see post by me here https://steveshuconsulting.com/2006/12/an_illustration-2). Aspects of industry knowledge come through experience and specialization and can be augmented by reading trade magazines, etc.
Engagement Management Mastery – This skill ties together problem statement, structured approaches, and industry knowledge. Mastery goes further by synthesizing the resources that will solve the problem at hand along with managing advisor-level relations with the executive sponsor. For more info on the engagement management topic, readers may consider reading my post at https://steveshuconsulting.com/2007/05/perspectives_on.
Interpersonal, Facilitation & Leadership Skills – Interpersonal and leadership skills are pretty well-documented in other areas. One of my favorite foundational books on leadership is the Leadership Challenge by Kouzes and Posner (http://www.leadershipchallenge.com/WileyCDA). On facilitation skills, I have seen less documentation on the subject in a concise format. Facilitation skills are especially important because they help a professional in cases where authority does not exist and where influence must be used to achieve management goals. Here is a post on facilitation skills that I wrote before https://steveshuconsulting.com/2008/01/a-perspective-o.
Storytelling and Executive Analysis Skills – At least two core frames of thinking come to mind, when I think about this subject. The first frame is best illustrated by how one ties together presentation slides in a storyboard using “bottom-line titling” versus “topical titling” as described here (https://steveshuconsulting.com/2007/02/what_a_sample_c). The second key frame is driving towards answering “So What?” questions all along the way in an analysis presentation. An example of answering the “So What?” question might be, “Client needs to focus on improving six red-flagged areas which cost the client $X per annum in above average churn.” Without bottom line or prescriptive messages to analyses, consultants may find themselves in an unfortunate spot of brain-dumping information with no end purpose or goal.
Adaptation Skills – When I think of developing adaptation skills, I think of developing skills that improve behavior and communications skills “in the moment” a la Business Improvisations at http://www.businessimprov.com (Disclosure: Client). I also think of changing one’s reference of thinking with concepts such as “there are no sacred cows”. Something that I have a lot in consulting environments is the idea of constantly seeking better ideas, better ways to describe things, and new approaches. With this in mind, one can’t get too protective of one’s work because one’s goal is really to further the quality of work of the engagement team and ultimately the end goals of the client.
Business Development and Management Skills – Consulting services sales and marketing are unique topics, and turning to folks like Michael McLaughlin at http://www.mwmclaughlin.com, Ford Harding http://www.hardingco.com/blog, and Ian Brodie http://www.ianbrodie.com are some of the best investments that one can make. For the management of consulting firms, one of my go-to references is Managing the Professional Services Firm by David Maister http://www.amazon.com/Managing-Professional-Service-David-Maister/dp/0684834316/ref=ntt_at_ep_dpt_2.
Forecasting and Envisioning Skills – The eighth secret weapon is quite elusive. Do you develop these skills by understanding systems thinking (a la Peter Senge and the “Fifth Discipline”)? Does it come from understanding economics or innovation processes better? Does it come about by trying to apply social responsibility concepts (a la Umair Haque and “New Capitalist Manifesto”)? It is possible that the eighth secret weapon is analogous to the mysterious Dragon Scroll from the animated movie, “Kung Fu Panda”. For me, I see three prototypes of people that develop the eighth secret weapon: those that have innate talent and vision already, those that develop such skills by mastering a craft (or a practice area), and those that use their networks to help develop insights into the future.

So there you have it. Eight secret weapons to further one’s mastery of consulting.

April 26, 2011

What To Do When Your Professional Services Organization Is Not Professional Enough

In helping companies develop, tune-up, or reboot their professional services organizations, here are some example of complaints I’ve heard that reflect the need for change:

Customer: “Instead of providing consulting services, your organization is marketing its products to me and asking me to pay the bill.”
General manager of services organization: “I am not sure we know what services we sell versus what services are provided as part of the product pre-sales cycle.”
Manager of services organization: “We have project in XYZ area, we’re doing another thing with company ABC, and we also have a lot of internal work on DOG. It’s really hard to report on where our time is spent.”
Customer: “The consultants you’ve assigned seem to have good technical and analytical skills. I am not sure what they are doing to help me though.”
Field manager: “Customer A is pretty much dead and will need a restart. We got to step 10 in the process before we realized our services team forgot to perform step 2 for quality control.”
Manager of services: “How do we price jobs? How do we cost jobs? No particular method.”
General manager of services: “Our folks have traditionally provided services for free, and now we are trying to charge money for them because the services have value. But our quality is not there, and we don’t have the discipline built into our DNA.”

One way to think about fixing these organizations is from the ground-up (roughly from delivery to project management to sales to strategy):

Inventory the delivery team – What skills do these folks have on the technical side? What soft skills do they have in terms of dealing with clients? How can we develop the team’s leadership skills?
Inspect either the project management or engagement management areas – To what extent is a cadence and communication structure established between the organization and the customer? Have there been frameworks or tools developed to support the customer-facing processes? Are there knowledge management processes in place to help with delivering greater value to the customer? What role does mentorship play in the organization?
Analyze the sales process and key contacts with customer organization – What is the strategy for services? Do we have a crisp story on getting from needs to solutions and services? Do we proactively manage the sales pipeline? Who owns and follows-through on key customer contact points? Is there a customer satisfaction process that involves both direct parties delivering and independent parties objectively evaluating the quality of services delivered?
Assess what’s next for customers and how your company’s boundaries fit into a larger, whole solution for the customer – What role should thought leadership play? How can the services organization figure out how greater value can be added to the customer experience? Should we expand the offerings? Should we partner with other companies? Or maybe we should change the total mix of products and services so that the customer can derive additional value on their own?

Professional services organizations are complex, and the above framework enables one to start to think about how one can make improvements that affect services delivered today, while keeping other areas in perspective for handling somewhat further down the road.

Please feel free to let me know about your thoughts and experiences. Thanks!

March 23, 2011April 7, 2011

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?

March 18, 2011

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.

August 11, 2010October 2, 2010

A Peek At The Difficulties of Incubating New Initiatives Within Large Companies

Entrepreneurial situations in large companies differ from that of startups, yet one thing that they seem to share is that they often represent “hope” in one way or another. In the case of large corporations, these new initiatives can not only turn out to be profitable “ventures” but also boost morale and reward key employees through growth opportunities. Yet many of these new initiatives have difficulty getting off the ground. Frustration is common. This post provides a peek at some of the situations, complexities, and steps to resolution that I have seen.

First, here’s a picture of a common situation in a large company faced with the prospect of starting a new initiative or business line:

Perceivably significant yet amorphous business opportunity
No money committed / no budget
No or limited organizational resources
Established products and sales & marketing channels
Mature and complex business and product approval processes.

What adds a level of complexity to the situation (and sometimes leads to insanity for those working directly within the environment) is that:

Venture requires substantial investment to ultimately succeed
Finance cycle of start-up opportunities (opportunity timing) does not align well with the long, finance planning cycles of large companies (sometimes can be 14+ month delays!)
Star players in the current organization have limited availability for the new organization
Articulating and aligning on a business opportunity requires collaboration by many functions, and these functions are separate and overloaded in the current organization
Sales and product development processes often need to be understood at more than the surface-level.

Here are some ideas for addressing many of the above issues:

Recognize that it’s not usually possible or desirable to speed up the process by cutting corners
Break the process into smaller pieces to get rolling
Search for the right sponsor and core team
Secure a portion of time for each of the star players
Give the employees a real chance to make things work
Consider getting a commitment for small amount of money to get rolling
Start to articulate what the business opportunity looks like and document it
Consider using a facilitator that can pull the pieces together, help layout program plan, and frame strategic issues and options
Paint the vision for the org structure and build emotional attachment to the cause
Involve those from sales and product development that will be eager to provide input and testing grounds
Aim for pioneer sales and business development deals with lighthouse accounts (concrete wins)
Rinse, refine, increase committment, and repeat.

It may take a leap of faith to get things started. But the leap of faith can be smaller than the temptation of the opportunity as a whole. Sometimes the keys are to look for forward motion and to take some initial steps as opposed to wanting to knock it out of the park too soon.

Let me know your thoughts and experiences!