Coping With the Transition from Management Consulting to a Startup

I wrote the following post (edited slightly here) in response to someone on Quora who indicated that they were having a hard time coping with the transition from management consulting to a startup in terms of the more experimental nature of the startup world and feeling like they were not using their past skills and knowledge.


When I first left a traditional management consulting firm, I went to a startup. The modes of working are quite different. Here are some things to consider for making the transition to the startup world from consulting:

  1. As opposed to focusing exclusively on the 80/20 principle and working on things that will work, use your experience to try to avoid the things that won’t work. Often this can be of significant help in a startup because startups cannot afford to make too many errors of large significance.
  2. In consulting, one has usually built up a lot of endurance to work hard. Use this trait to your advantage for working within a startup.
  3. Consulting teaches one to be systematic and to measure results. One often needs to do the same thing in startups in terms of measuring sales processes and figuring out what is working and not working (e.g., in operations or product management). If you haven’t read The Lean Startup by Eric Ries, dovetail the concepts of cohort measurements and startup accounting in that book with the stuff you probably learned in consulting.
  4. Often in traditional consulting, one has been trained to put in lot of processes in place for mature companies. Don’t overapply these concepts to a startup. Rather, think about how the startup is discovering its business model and how the organization might mature over time to include more formal processes often implemented by consulting firms (the “startup learning curve”).

 

How to Become a Go-To Person Within a Consulting Firm

I was asked to answer a question about how to become a go-to person when employed within a consulting firm. Here are some thoughts based on my past experience:

  1. Be known as a consultant that gets things done on projects in general. This goes a long way in consulting circles.
  2. Play a key role in developing new intellectual property or approaches for the firm. For one firm I worked for, I came up with “standard” framework approach for doing business plan analyses for municipal wireless deployments. My team also created an approach for doing wireless spectrum valuation.
  3. Pursue mastery in business development if you can (aka sales). If you can sell business (even if in a lead, supportive role) this will also help develop your name in partner circles or at least align you with a key partner in the firm that may sponsor you down the road.
  4. Publish articles in a focused area or practice (aka marketing). Although it depends on your firm, consider writing articles, whitepapers, or books. I should have done this more in my career, but when I did eventually publish a book on implementing behavioral science initiatives, it helped solidify a specialty in people’s minds.

Reflecting on Your Consulting War Stories Builds Character

I don’t claim this to be a good war story, but it is a war story has had a deep impression on me.

Early on in my career, I was asked by the managing partner on the project to help a struggling manager to help develop their plan for the business. When I got into the weeds, the problem was essentially an operations strategy and planning project. I brought a little rigor to the analysis, and I worked with the manager to break down scenarios and workflows and applying Little’s Law (i.e., average inventory equals average cycle time times average throughput) to validate the strategy, offer operational improvement suggestions, and calibrate the model. When the results were presented to the executives, they were pretty impressed. I was later privately told that I had helped to save the manager’s job. Take that for what it’s worth, but in any case, that made me feel really good. A key was that I helped to facilitate the strategy and analysis process, not completely do the work on my own.

Years later and in a totally different industry, I was asked to help with an operational assessment where the company had lost a tremendous amount of institutional business in the past year due to sales and operations processing issues. The executive team wanted me to take a look at the total business and dissect where things went wrong. There was some subtext that they believed that the one of the division managers had crashed the ship. Though it was never stated explicitly, I think the executives wanted me to find the implicating evidence. I ended up using similar techniques to the first project; first I tried to determine why people churned out as customers, and then once I attributed it to cycle times, I essentially used Little’s Law to determine why cycle times went up so drastically. In the end, what I found was that cycle time increases drove severe customer churn and that cycle time increases were not due to the manager in question. It was an issue caused by and owned at a broader level. I was done. Along with process recommendations, I presented the analysis results to the executive team. They were happy, but a bit surprised that I had not found implicating evidence for the manager. Once the project was complete, I was happy. I was happy that the client was happy, and I was happy with my approach and sticking to science as opposed to being swayed by biases or internal politics of the client company. Months later, I found out that the executive team ended up firing the manager. I’ve had mixed feelings ever since, ones that have never been fully resolved.

I ask questions like, do management consultants have impacts on people’s jobs? Or do management consultants feel that they are so important that they have impacts on people’s lives? Who owns the results? Is it the management team? Who owns the implications if people’s jobs are lost? What if jobs are gained? The answers to these questions are both debateable and situational. All said, to this day certain project types and situations trigger bad vibes for me, and I try to avoid them where possible.

 

Does a Person Need Passion or Expertise to Start a Consulting Firm?

Here are the situations regarding two people I know:

  1. Person 1 is terribly bored by the work he does in radiology, but he’s extremely good at it, and organizations like product companies, health systems, and providers seek out his consulting services.
  2. Person 2 is extremely excited and passionate about behavioral economics and wants to start a consulting firm. Unfortunately, this person has no experience in the area and can’t figure out ways to both find and close deals with clients.

To start a consulting firm, what matters is being able find clients and close contracts with clients. To stay in consulting for a sustained period, one also needs to be able to deliver the services. Passion (and expertise for that matter) can play a supportive role in all of these areas; it can make it easier for you to find clients, close contracts, and keep delivering quality services. I don’t believe passion is needed to get the ball rolling though. It might be something one should think about before starting to roll the ball, but business development is a must-know-thing for running one’s own consulting firm.

What Should an Experienced Consultant Watch Out for During a Consulting Engagement?

Here are seven things on my list:

  1. The problem statement for the engagement and the scope of work should always be in focus (including the value of the project); refine the problem statement as necessary.
  2. The engagement structure consists of the activities, deliverables, resources (both consulting team and client), and collective orchestration. Productivity and chemistry of the team at key points need to be watched.
  3. Engagement team should set expectations early on as to the tone of the engagement in terms of whether they will help to lay out options for the client to choose or whether they will make recommendations more strongly up front.
  4. In consulting the process is an essential part of the deliverable. The “train” needs to stay on this track.
  5. It is important to regularly communicate engagement progress relative to goals (say once every 1 to 2 weeks). The engagement manager needs to be completely in control, competent, and communicating effectively.
  6. New consultants should be closely mentored in the field by senior members on the team. Ideally, the engagement manager should establish a close relationship with the client lead so that honest feedback about consulting team members can be collected.
  7. When approaching the end of an engagement, both the client and consulting team should both plan and work toward a smooth transition/completion.

Lifehacks for New Management Consultants

It’s been nearly twenty years since I started management consulting. I tried to quickly reflect on lifehacks that really helped me in my first year so that other, new consultants might benefit from my learnings.

Here are a few to make your personal life better:

  • Never check baggage on flights.
  • Get airline status so that you can board planes as soon as possible (e.g., purchase airline credit card if necessary).
  • Plan your weekends at least one week in advance.
  • Spend some money to make your personal life more comfortable (e.g., dry cleaning, house cleaning).

Here are some random tips on the professional side:

  • Find mentors and develop advocates for you within the firm as soon as possible.
  • Get very familiar with the engagement kickoff deck if possible for your first assignment (it often outlines the problem statement, engagement workstreams, and roles in organization).
  • Get briefed on the industry of your client as fast as possible; ask others what they did to come up to speed.
  • Be nice to and get to know the secretaries and receptionists; they can help you navigate staff in the client company.
  • Don’t reinvent the wheel if possible. Leverage templates and/or Powerpoint plug-ins like ThinkCell or other; the goal is to use your brain more and offload mechanical tasks.
  • Try to avoid taking any crazy medicines that the client might offer you (lol – this is personal one for me that I regretted for my first client).

To clarify the last bullet point, the client offered me some homeopathic medicine with goose liver in it or something when I was ill. Pretty certain after that I developed an year-long allergy to my own blood serum where I had to take Actifed for a full year while at work because I would get welts all over me every four hours or so.

As a final thought, I wanted to point out my book, The Consulting Apprenticeship. While the book provides insights regarding management consulting, I feel its strength is really in highlighting some of the previously unwritten, nuances of the trade which can help new consultants navigate their way.

Edit 2/13/2019: Special mention to Kevin Johannes Wörner who has a nice video covering advice for new strategy consultants (9 lifehacks) based on his experiences, including at Roland Berger. I really resonate with Kevin’s comments about how to deal with massive amounts of data and information coming at you in the client environment and focusing on the few items that really drive results.

A Bread and Butter Method for Identifying the Right Organizational Structure

A common approach is to identify different options for organizational structure and then analyze tradeoffs (e.g., pros and cons or degree attractiveness by objective). That said, I wanted to share another perspective that has carried me a long way. It is the concept of first identifying strategy and second aligning structure.

Consider a very stylized example. Suppose you are trying to design a company whose strategy is to provide broadly accessible, lower-cost, optical glasses to customers within quick turnaround times of one hour. The strategy may require inventory, opticians, lab equipment, and lab personnel to be close to the point of purchase. It may also require a wider geographic structure.

On the other hand, consider designing a company that provides niche, high-end premium glasses, potentially with custom features requiring specialized equipment. In this case, inventory at the point of presence might be lower, and the company might have to send glasses requests to centralized lab, manufacturing site, and specialized personnel in order to fulfill the highly customized orders. Turnaround times might be much longer.

The concept of first setting strategy and then finding organizational structure and operational processes to match the strategy generalizes to many other situations. So remember to try to set strategy and priorities and then set structure. Find inconsistencies, ambiguities, and desirable or undesirable features. Iterate and reconcile.

A Helicopter View of a Management Consulting Proposal

I’ve often been asked by new consultants to provide insights on structuring a proposal. Here’s a conceptual, high-level summary of a typical proposal:

  1. Executive Summary and Overview – often articulates background relevant to the proposal, such as current issues and the specific problem statement that the consultant will be addressing for the client. This section may also list key goals of the client for the project.
  2. Scope of Work – can articulate the project structure for the engagement (e.g., see this example Gannt-like chart from my book outlining four illustrative workstreams), the activities within each area (both client consultant activities), key deliverables, key milestones, assumptions, etc.
  3. Roles and Responsibilities – articulates the consulting delivery team players (named individuals) or types of players (e.g., anonymous job-level descriptions), key roles expected to be filled by the client (e.g., project lead, owner, sponsor, core team, stakeholders, steering committee), and other site access and logistical items.
  4. Commercial Terms – contains pricing, performance terms, expenses, timings, policies, etc.
  5. Appendix – might include key case study summaries, CVs for consultants, and other schedules.

Often the proposal is incorporated by reference or as an appendix into a master services agreement which contains umbrella legal terms. Other methods are possible, such as just having a letter agreement (depending on context and conventions of the situation, e.g., certain countries).

Processwise, proposals are usually invited. It is generally a waste of time to create these proposals until the client prospect and consultant have had enough discussions to clarify the problem statement and scope of work at a high-level. Once draft proposals are submitted, the proposals are revised upon further discussions with the client.