Management Consulting – Page 9

September 30, 2009

Musings On Winning and Losing Moves Within Startup Situations Within Larger Companies

Though anecdotal, I've seen a slight rise in activity with companies looking to incubate new businesses or start-up climates within a larger company. These are challenging situations to get off the ground. Based on a mixture of consulting to a number companies in these situations and being involved with at least one of these situations as a manager within the company, here are some thoughts on winning and losing moves:

Structure: Having a start-up sponsor in name or position only (losing move) – Successful, external startups have managers that will fight to win, pave new ground, work out kinks, get the best resources, etc. If the sponsor is a senior executive that provides only oversight, does not push or provide guidance, and does not empower delegates, this could be a warning sign for an effort that will not bear fruit. If you have a start-up sponsor that provides political and boundary management only, then it might be a good idea (winning move) to get a powerful delegate that answers to the sponsor and can help to "fly cover" in the organization. Situations where cover may be needed include designing new marketing material, getting special access to the sales team, breaking new ground in the legal contracts area, and getting financial budgets approved outside of normal (overly conservative) control mechanisms.
Strategy & Goals: Failing to clearly articulate the ultimately goal and problem statement of the startup early on (losing move) – I guess an addendum to this might be making the strategy too complicated. For example, when faced with the startup options of creating new revenue, helping cross-sell other services within the larger company, reducing customer churn, or all of the above, I would tend to advise leaning away from trying to knock down too many of these at once. All options can be on the radar and should be part of early brainstorming & strategy sessions, but viewing the startup as a standalone business may be the best option of getting traction first.
Core Team Makeup: Failing to bring in new blood when new blood is needed (losing move) – At risk of disrespecting both large company employees and entrepreneur-types, these groups often don't understand one another. For example, entrepreneurs-types can lack respect for large company bureaucracy, but this is dangerous because buy-in and tapping into the resources (people, structure, assets) of a large company can be tremendous. On the other hand, large company employees can become accustomed to the culture, pace, and processes of existing businesses - these may be incompatible with aspects of a new venture. Bringing in new blood for a start-up within a larger company is often a winning move, and the resources need to be different & complementary.
Extended Team Resources and Horse Trading: Failing to capitalize on resources of the larger entity (losing move) – If entrepreneurial types are brought into the new business, there needs to be complementary intrapreneurs (winning move) that understand the structure of the large company and can help get things like data from business units within other areas of the company, identify potential A-team resources already within the company that can help (e.g., marketing, business development, project management, finance), or tap into key channels and partners external to the company (e.g., lighthouse accounts).

There are many more winning and losing moves to create startups within larger firms. What are your experiences? Where do you see pain points?

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September 15, 2009

Consulting and Management Method: Finding And Relieving The Bottleneck

When thrust into a situation where either resources are constrained, there are competing management choices, and paths forward are unclear, I often find a consulting method of "finding and relieving the bottleneck" useful.

For example, suppose a startup is trying to figure out how to ramp up sales from its first (non-repeatable) deals. Or suppose a company cannot determine whether sales or operations processes are the primary lever for stabilizing revenues. Yet another case might be that there is an incubator unit within a larger company that is underperforming – how might you approach the problem of fixing the situation?

At its core, "finding and relieving the bottleneck" is an analytical method used in production and operations. There are a couple of predominant ways that I look at operations by default, the former being a more quantitative method involving system & process flows and things like Little's Law, and the latter (which I strongly recommend) method using visual inspection and interviews with client management. Here I'll address the latter.

So back to the case of ramping up sales for a startup, where its first deals are largely non-repeatable because they were unique and early in the learning curve. Suppose you have 1-hour with client management. How might you help to tease out how where to start looking for improvements?

In a nutshell, the bottleneck method approach might simply be organized around finding where one gets the biggest bang for the buck in terms of making a change. I might ask the client if they had another resource or an additional day in the workweek, which of the following would ultimately result in more sales:

Refining Strategy – this might involve breaking the customer base into segments based on type and prospect awareness profile. Where's the lowest hanging fruit? What kind of marketing and sales material is each segment getting? If you had a choice to improve the marketing collateral or sales processes for the higher priority segment, which would you choose? Are there backlogs in the system (e.g., uncalled sales lead prospects), which would indicate bottlenecks? If you made the change, would it really address the end goal, e.g., getting more sales?
Changing Management Approach - in many situations, entrepreneurs may make the first sales, but they often have problems transferring knowledge on how those sales are made. Alternatively, they may have problems letting go of other areas that could be delegated or outsourced (e.g., finance and accounting, inside sales, meeting scheduling, and/or field sales). Would it be helpful to have someone shadow key executives to distill the sales processes and real value propositions that various customers are buying? If we could clone key people to offload some of the burden, would there be enough prospects and deal flow to make things worthwhile?
Adjusting Technology or Product - if the product were made less complex or if we simplified choices, would we get better yield and flow from the awareness to interest phase of the customer purchase process? Is there a way that we could get people to sample or experience the product before purchase to skip people past bottlenecks of overanalyzing things too much up-front?
Obtaining Financing for Expansion– if you focus time on more sales versus financing for expansion (presuming company has sufficient sales), what would you do and why? What if choosing one path doomed the other? Would the chosen path still be worthwhile? What kind of results could we expect by financing a new online versus a physical market for services delivery?

Optimal diagnosis clearly involves a mixture of tools and approaches, but the bottleneck method is an important method to learn in consulting because it can be increasingly used in facilitative situations where a client has substantial implicit knowledge (and such knowledge must be better formulated explicitly and transferred for company operations to scale).

I've also used this method in management situations (as opposed to in consulting situations only). The method can be particularly good when troubleshooting a problem that cuts across functional areas.

What are your thoughts? Have you ever used this type of approach? If so, how effective was it for you?

Update (9/19/09): Readers may also be interested in post by Seth Godin on the priority list.

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August 18, 2009

Mini-Brand Audit of Guitar Hero By Activision (Independent Research)

Listed below is a pre-release, draft copy of a brand audit on the Guitar Hero brand by Activision. I performed this mini-brand audit as a self-funded, independent party, and I created this document for reasons related to business development, marketing, and teaching purposes (brand management & consulting).

The purpose of a brand audit is to provide a company with a starting point for managing brand architecture, brand identity, and brand-building activities. Brand audits are often refreshed every one to two years and may be done by either internal staff of the company or external consultants.

Although I am a stickler for crafting problem statements, I did not explicitly articulate the problem statement assosciated with this audit (which is something I typically recommend in a consulting deliverable). That said, the general notion of an audit performed by an external 3rd party is to provide a wholistic, and independent view of strategy and tacics. I believe this document accomplishes that goal within the described limits stated in the document.

For the coming weeks, I would appreciate input and feedback from folks. I would also appreciate help in spreading the word as I am not a mainstream media channel. 🙂

Again, there are few angles I am thinking about in terms of releasing this note in the public domain:

business development purposes for consulting
general marketing & personal brand development
instruction and teaching purposes

I plan to finalize version 1.0 of the document and re-release around September 1, 2009 before key milestones are reached by Activision and competitors.

Thanks for your interest. Please help to spread the word!

Draft copy of brand audit here (PDF file replaced by update below).

Update (8/30/09): Version 1.0 of Guitar Hero brand audit here (PDF file).

Update (9/4/09): Guitar Hero and related subbrand logos get a bit of a refresh (see here and here). The changes are consistent with the strategies outlined in the audit.

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August 5, 2009

Interview On The Ethics Of Consulting

I was recently asked to do an interview at the consultant website, "Think Like A Consultant" on ethics & consulting. The full interview is posted here.

One question particularly of note was "What are the best ways to handle a client who appears to have unethical practices?" For that question, I responded as follows:

Fortunately, I have not been posed with many situations that are obviously troublesome. One area that comes to mind, however, is when a client asks a consultant to perform competitive intelligence, especially when soliciting for primary market information. Let’s say that a client has asked you to masquerade as customer and try to obtain information on a competitor (e.g., on pricing). Some company codes of ethics would strictly disallow this, as would many people’s personal ethical value system.

What I would try to do in these circumstances is to rework the problem statement and methods with the client. For example, perhaps the problem statement may be more about getting higher confidence in prospective pricing levels that the client is looking to put in the market as opposed to getting the exact pricing levels from the competitor. With the problem statement refined, you may find opportunities to solve the client’s problem in a more palatable way, such as through running focus groups with customers or industry distributors, conducting benchmarking studies, and other approaches.

Articulating and rearticulating problem statements are something fundamental to consulting and something which I've addressed before. For example, see here.

In any case, I'd be interested in feedback on the interview from folks. It is my third or fourth serious post in the blogpshere related to ethics, and I don't expect it to be my last.

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June 15, 2009

Perspectives On Providing Feedback On Client Staff To Client Management As A Consultant

Dustin Thostenson raises an interesting (and dicey) question in his Twitter log as to "how honest should your feedback be of full-timers to their mgr when it is requested?"

My general rule of thumb on this topic is to:

tread very carefully
try to avoid commenting on staff, but
if you must comment, be *clinical* and precise on the context and the limitations of your observation or interaction with staff (make sure you think through both positives and negatives of client staff performance)

Here's are some reasons for my thinking:

a consultant is usually an outsider and does not have to live with the implications of giving positive or negative feedback
observation periods are often short (since limited to a subset of the engagement period, which may be days or weeks)
consultants are often hired to address a particular problem statement for the client, and unless the charter was to evaluate employees (which in most cases it is not except for niche practices or statements of work) then your perspectives may not be grounded enough
consulting engagements often require working up and down the chain of organizational structure, and your reputation and effectiveness as a consultant could be damaged if people think that you are talking about them or evaluating them "behind their backs"
you must be extra careful that you have not been unduly biased (e.g., prior to the evaluation request) by either the client sponsor or other significant players in the client organization.

That said, a fear may be that the client sponsor will not look to you as a trusted adviser if you do not provide your perspectives. Many consultants would argue that the client is paying you good money and that you need to provide your perspectives. The ground can be tough here. Be clinical, think through pros and cons, and couch your caveats. Above all, act responsibly and ethically.

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June 3, 2009

Candid Interview With Will Weider On Consulting (From A Customer Point Of View)

This past week, I had the opportunity to speak with Will Weider, CIO of Ministry Health Care and Affinity Health System, about using consultants. His perspectives are interesting because they are from a customer’s vantage point – not from a consultant’s viewpoint. Will Weider is author of the one of the earliest CIO blogs on the Internet, the famed “Candid CIO” blog.

Steve: Will, thanks for talking with me. As a management consultant myself, I’ve approached you for a “candid” view on using consultants. I am interested in constantly improving the practice of consulting and management. Hopefully this interview will shed light for both consultants to improve their practices and peer organizations of yours to improve their selection and use of consultants. To that end, when do you look to consultants, and what do you look for in consultants?

Will: There has to be a specific reason for using a consultant, and my philosophy is to use consultants as little as possible. A couple of thoughts immediately come to mind. The first is that consultant costs can give me heartburn (e.g., when comparing loaded hourly rates of internal staff against the consultant). Now as context, it is infrequent that my organization does not have the skillset to either get a project done or solve a particular problem. A second perspective is that I have had some disappointing consulting engagements where the results have fallen short of my expectations. Part of the blame may fall on the consulting firm which may oversell themselves in order to get a deal done. Some of the missed expectations may be in part that the buyer has elevated expectations when using a consultant.

Steve: Do you have any thoughts on aligning an organization and its expectations when using consultants?

Will: I’ve found that the worst time to use consultants is when my organization is saturated. A client organization needs capacity to bring the consultant on board, ramp them up, manage them, provide feedback, etc. As an example, if I have estimated a project at requiring 100 hours to do internally, then I may need to allocate 125 hours when accounting for budget and overhead of managing the consultant. As far as aligning expectations, I have mostly seen consultants provide incremental value as opposed to exponential value and miraculous benefits as marketed. Consultants can get oversold on their value proposition too easily. I also wanted to note that some consultant agreements have unacceptable terms, rivaling those of my software vendors. These include such terms as up-front payment, termination clauses and advance notice requirements, etc. Where these terms go in the new environment we are in is still to be determined, but they have to be more client-favorable.

Steve: What kind of advice can you provide on using consultants?

Will: For me, the best time to use a consultant is when you need a 3^rd party advisor. For example, suppose there is a big, multimillion dollar project going off course. A consultant with the right background can provide an independent project audit. Our needs are aligned when using the consultant in this manner. We need a specific skillset (perhaps not a scarce resource), we don’t have time (e.g., because we have 60-70 projects going on), we need a fresh look, and we need an independent view. This is the perfect type of situation for a consultant because the scope is well-defined, the scope is narrow and the timetable is short.

Steve: Great insights, thank you. Changing gears bit, I think readers may be interested in your views on the federal stimulus package and its impacts on consultants.

Will: The package has clear intent, but everyone is still waiting for the clinical IT requirements to be defined on both the medical group and hospital/ambulatory side. Less than 2% of hospitals have real Computer Physician Order Entry (CPOE), so once the requirements are defined, there may be a flood of work for implementation consultants with CPOE and specific Hospital Information Systems (HIS) expertise. I’ve estimated tens of millions of dollars of eligibility for our provider organizations (medical groups and hospitals). We are working with a number of vendors and suppliers to plan for various scenarios so we qualify for these funds and deliver on the President’s vision for a more efficient and effective health care system. It’s all a new process – I’m not sure that anyone has an “inside track” as to how to get these funds.

Steve: Terrific info. Let’s change gears again and cover social media. How have things changed since 2005 when we first met via the blogging world?

Will: These days I use both Twitter and blogging, although there has been some shift towards using Twitter. I will say that consultants that I use have connected with me via social media. Some of these consultants demonstrate their expertise to me for free before I use them. These consultants may be those that are helping me with technology, preparing for swine flu impacts on my organization, or other dynamic areas. Consultants that are confident in their abilities to provide value are not afraid to pursue either risk-free or non-traditional models for engaging me.

Steve: Will, this has been a great dialogue, and I appreciate your candor for the benefit of the business community. Thanks for your time.

Will: Steve, thanks for the opportunity to be interviewed.

Will Weider is CIO of Ministry Health Care and Affinity Health System, and his blog is at the Candid CIO at http://candidcio.com.

Steve Shu is a management consultant focusing on organizations that use technology, and his blog is at http://steveshu.typepad.com.

May 1, 2009

Blog Interview On Consulting For Chicago Booth Corporate Strategy and Management Group

I did a blog interview for the Chicago Booth Corporate Strategy and Management Group (student-run organization for part-time and evening program). The interview (link here) covers areas such as typical week in the life of an independent consultant, common problems currently facing clients, and the most helpful MBA training I received at Chicago.

Aside from the fund raising item I mentioned in the interview section on current client issues, I also shared the following (which characterizes one current client philosophy on approaching prospective consulting projects):

… The other theme I have been seeing more of is in the operational process improvement area. The themes here, however, have not been so much around improving profits as they have been about weathering the economic storm and making improvements that increase either customer satisfaction or quality of services and products. Clients, on the balance, are more conservative right now. Whereas the smart executives and managers may have been going for broke before and taking bigger chances, they now see making continuous improvements as a must-do (not necessarily demonstrating immediate margin or revenue improvement until after the storm lifts). As additional light, some executives are missing their revenue numbers in the current (bad) market climate, but they are making their net profit numbers. These companies are using the stable net profits as their bulletproof vest with their Boards while using consultants in very targeted ways or in controlled “entrepreneurial experiments” to help build for the future.

As an independent consultant, I increasingly need to use my network to read the market (as opposed to having information flow to me from "The Firm". Don't know whether others are seeing similar things or not. Please feel free to share your thoughts.

April 9, 2009May 30, 2015

Crash Course Consulting Reading List

Readers of this post may be interested in The Consulting Apprenticeship (update May 30, 2015).

Situation: You are stuck on a desert island with no lifeline access. What are the essential books and tools you need for management consulting?

Well, I can’t say that I have a complete list compiled, but here is a crash course consulting reading list (PDF doc) that I have provided in the past to new consultants (including experienced professionals new to consultative methods) as bread-and-butter references and knowledge areas. May provide ~80% coverage of a core foundation for general management consulting. Perhaps it is of use to new consultants and/or those looking to develop their consulting practices. I know that this list could probably use expansion and updating – I tried to create a list that was based on pre-packaged, ready-to-go stuff, and there are some limitations with that method.

Please feel free to post in the comments section any other sources you think others may find useful.

Update (8/3/09): Updated the reading list a little. For example, I included some blogs from traditional management consultants that shed light on the practice and industry.

Update (8/21/09): Updated the list to include some strategy books and other books recommended by consultants.

Update (9/1/09): Updated the list to include the latest versions of two of the best professional services sales books ever (by Ford Harding). If you are a professional services or consulting organization and could use help and/or an introduction to Ford, feel free to let me know, and I can broker a connection.

Update (2/3/2010): Got some great feedback from Florian Hollender at Killer Consultant. Based on his feedback and some other things on my mind, I updated the consulting reading list. Includes more updated blog and book references to Michael McLaughlin‘s material, some links on client facilitation, and books on negotiations and innovation. The reading list also includes some more consulting blogs.