Category: Management Consulting

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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.

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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.
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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.

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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.

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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.

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A Couple of Perspectives for Consultants on Startup Consulting

Startup consulting is a challenging thing to do. Some considerations:

  1. Think about which startups have enough money to be able to afford consultants. They may have raised some significant venture money (say post Series B or C round).
  2. If partially going with some sort of securities compensation, then track record of the management team and strategic attractiveness of the company play a role. All said, as a consultant, depending on how many deals you can do and the stage of the venture you many run up against constraints. Just as an example, as an early-stage venture capital firm with a $50 million you may be able to do 25 deals, have 50% of them go under, 25% be flat, 15% be good, and 10% become rockstars, and that is after culling through thousands of deal opportunities with a team before getting to closing the portfolio vintage. As a consultant, it is hard to do anywhere close to that level of investment portfolio management and due diligence when selecting startups to do consulting with.

Note that there are some emerging shops that seem to blend venture investing with entrepreneur-in-residence models and consulting-like project phases. Purposes are to find viable business models rapidly and then fortify the team.

I’ve done some startup consulting in the past (but only as a fraction of my client base) and generally require a mix of cash an equity (and sometimes commissions for sales or deals). I sometimes also require holding an interim management position within the company. All said, I have generally found it easier to do “startup”-like consulting with carve-outs or new ventures and business units of larger companies that have more financial capital.

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I’ve finally released Inside Nudging: Implementing Behavioral Science Initiatives

InsideNudging-3D

Inside Nudging is written for management professionals and scientists to feed their thinking and discussions about implementing behavioral science initiatives (which includes behavioral economics and finance) in business settings. Situations include the incubation of innovation centers, behavioral science overlay capabilities, and advancement of existing organizations. Companies need to develop grit – the ability and fortitude to succeed. The book introduces the Behavioral GRIT™ framework and covers key takeaways in leading an organization that implements behavioral science. Behavioral GRIT™ stands for the business functions related to Goals, Research, Innovation, and Testing.

The chapters are complemented by an appendix which covers ideas to introduce behavioral science initiatives. I argue that first a company needs to identify its goals and identify what type of predominant organization model it wants to pursue. There are five predominant organizational models I’ve seen. I also offer that a company should consider a number of implementation elements that may play a role during execution. Example elements include an advisory board and a behavioral science officer.

Note that the purpose of this book is not to teach people about behavioral science; there are many other books out there for those purposes. That said, Inside Nudging introduces some behavioral science concepts to provide context and help develop a common language between management professionals and scientists.

I see the application of behavioral science as still being in the early adoption phase. Many companies will benefit if they take time to develop the right approach. I hope Inside Nudging helps you with your journey.

Steve Shu

Praise for Inside Nudging

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