One of the Best Ways to Market Yourself as a New Consultant

One of the best ways to market yourself as a consultant is by having someone refer you to a client prospect. This type of marketing can be viewed through the lens of “networking by helping someone” (in contrast to networking and just meeting lots of people). These are investments you make to both build your reputation and professional networks.

As an example, for one of my first clients as an independent consultant, I got in the door through the referral of an IT systems consultant (met at a local lunch talk) who needed to help their client do an operational analysis. I first helped the consultant and then the client to understand how operational analyses were done and provided them with some tools they could use (e.g., gave them some management one-pagers I wrote on their topic). They then invited me to propose to them.

Marketing as “networking by helping someone” is a key tool to have in your kit. It is the idea of helping before selling. Once you have successful clients, you can then refer to the general experiences as case studies (often anonymized, but not always). These case studies accumulate, and they serve as resources that can help your marketing efforts as a consultant.


Steve Shu specializes in incubating new initiatives with a primary focus on strategy, technology, and behavioral science. He is author of Inside Nudging: Implementing Behavioral Science Initiatives and The Consulting Apprenticeship: 40 Jump-Start Ideas for You and Your Business.

Thoughts About Finder’s Fees to Other Professional Services Providers as a Consultant

This answer is based on a question posed to me on Quora.

I’ve only used finder’s fees sparingly over the course of my professional services career. Here are some reasons why:

  1. Some of the best referrals for me have come from other people that currently work either for the client or as a consultant to the client. Providing a referral fee can sometimes create a conflict for those parties providing a referral. The same applies to me providing referrals.
  2. Other referrals come through people that know me or know of me. In these cases, I may provide a referral fee (or something else) more as a unwritten gesture than as a contractual, business regularity, mainly since business through these channels is very much appreciated but more irregular.
  3. Unless designed properly, the referral fee can be stranded between a space where not enough incentive is provided (or even insulting to the referrer), too much incentive is provided and margins are decreased too much, and/or an unwritten obligation is created where the referrer feels overly responsible as to whether the referred is successful or not (as opposed to being arms length from both the referred and the client).

Others may have different experiences, so make sure to get some other perspectives.

Reflecting on Innovative Methods That Management Consultants Can Use to Pitch Clients

I wrote the following post in response to someone on Quora who asked me about innovative methods that management consultants use to pitch clients instead of using PowerPoint presentations.


Surprisingly, one can go a long way with Powerpoint presentations. Outside of that, to sell to clients I have used these methods in more rare to less common circumstances (generally only in cases when I was an independent consultant):

  1. Facilitating an imagination exercise – Essentially having a person imagine that we’re at the end of the project, we’re looking backward, and we’ve gotten good results working together. I have them explain the kinds of things that happened to make the project go well, and I help co-construct the path that we used to get there.
  2. Writing a job description that is needed and that I could fulfill – In some cases it might be easier to outline general problem areas, desired outcomes, and probable activities as opposed to using a very linear project approach with engagement workstreams. So I created a new role within the company by writing a job description, and I filled that role on an interim basis via contract.
  3. Helping advise another person to get an executive role – As an example, I essentially provided coaching feedback to a person that was interviewing and pitching to lead a new business within another company. That person brought to the table specialized experience within a field. I brought perspectives on starting up new business initiatives. When they got the job, I was in the perfect position to continue to advise more formally.
  4. Using product exhibits – Essentially using software products or mock-ups as a centerpiece to describe the end goal of where we could potentially go together and then verbally describing how we would get there. This approach can make outcomes more tangible and vivid.

 

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.

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.

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?

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.

Perspectives on “The 24-Hour Customer” (Strategy, Marketing, and Innovation Book) in Context of Marketing Segmentation

Adrian C. Ott, CEO and founder of Exponential Edge Inc., included me on her distribution list for an advanced reading copy of her new book, The 24-Hour Customer. I cannot say enough good things about this book. In my mind, the book is excellent for executives, strategists, marketing, and innovators. From a strategy perspective, the approaches are well-structured and remind me of timeless, Michael Porter-esque classics. Yet the book goes beyond the classics and uses examples in the book that are cutting-edge, modern, timely, and technology-rich. Above all, Adrian Ott provides an innovative treatment of customer segmentation based on their propensity to pay attention and spend time. She additionally sheds light on various tools that can be exploited specifically with respect to dimensions of time and customer values. In this post, rather than addressing an overview of Adrian Ott’s total approach, I’ll simply point out one of the key frameworks and cover why it renews and gives marketing segmentation the respect it deserves.

One of the biggest laments I hear from marketing professors at various universities is with respect to how students and undergraduates look at marketing segmentation. Marketing segmentation is about subdividing markets into subsets of customers that behave similarly or have similar needs. But the craft of identifying segments is often under-appreciated or rushed. My wife, a professor of marketing at the UCLA Anderson School of Management, has often characterized a segmentation “pecking order” to students:

Segment based on “why” customers purchase first. Then look at what they purchase, how they purchase, and who purchases. (The Why/What/How/Who marketing segmentation pecking order)

The biggest segmentation error that people tend to make is that they start with the “who” because it is the most salient. Suppose one wanted to have a business that sold roses. If you started with the “who” dimension, you might start with a marketing segmentation strategy that is focused on middle-class families in a metro area. But a better strategy is to start by thinking about “why” people purchase. By engaging in this research, you might unearth important consumer behavior and situational aspects. For example, many males buy roses last-minute because they need to improve prospects with a key relationship. “Last-minute” is a key reason why people purchase – hence the presence of roses in places like grocery stores, 7-Elevens, and entrepreneurial, street-side vendors.

With that perspective on common customer segmentation errors as backdrop, Adrian Ott’s book offers up a series of methods and tools for understanding and applying how time (and the scarcity of time) affects a company’s potential approaches to engaging customers. One key tool (the “Time-ographics Framework”) that Adrian uses in her book is depicted below (image reproduced with permission of author and publisher):

24-Hour Customer

The Time-ographics Framework relates a customer’s propensity to spend time with the propensity to pay attention. (Yes! It is focused on teasing out the details of “why” people really purchase!) The significance of the stratification Adrian uses is that in order to play in one quadrant, one often needs to develop separate and specialized strategies. For example, to play in the “Habit” quadrant, one often has to tie into regular routines that cue the customer. Adrian Ott cites the example of P&G’s Febreeze, which was a great product that initially failed in the market because people forgot to use it. Once P&G helped to tie the image of Febreeze with the notion of the daily task of tidying up a room, Febreeze turned the situation around into one of the fastest growing brands. As another example in the “Motivation” quadrant, Adrian Ott introduced me to the concept of geocaching (which I have since purchased software and taken up with my kids). At risk of selling geocaching short, geocaching is basically a worldwide treasure hunt and trinket exchange system where users use global positioning systems (GPS) on their mobile phones to locate hidden boxes all around us (yes, sometimes hidden everyday in parking lots, by restaurants, etc.). Services by http://www.geocaching.com enable people to use slices of time to embark on quick, mysterious adventures. My kids are “motivated” by the mystery to check on the position of geocaches near us. Sometimes we’ll take a 1000-foot detour to find a hidden magnetic Altoids box that someone has tacked on the back of a fire hose box (where we drop off some items and pick up things like foreign coins, coupons, etc.). To bring Adrian Ott’s framework back full circle, she addresses the challenges of products in each Time-ographics quadrant and key tools that can be used for each.

The 24-Hour Customer is a book with rich thinking. It is sure to become a definitive source for professionals with respect to time-strategies, very current company examples and case studies, and timeless treatment of a marketing segmentation area that has not been comprehensively addressed before.

Adrian, excellent work on the book!

Update (6/30/2010): Catchy teaser video on Time-onomics just released. Link here.

Review of “Open Leadership” Framework (Leadership and Social Technologies Book)

Charlene Li, founder of the Altimeter Group and co-author of the bestselling book Groundswell, was generous to include me on her distribution list for an advanced reading copy of her new book Open Leadership: How Social Technology Can Transform the Way You Lead. Open Leadership both motivates and provides an excellent framework & toolkit for changing and opening up an organization through support of social technologies. In this post I overview key elements of the book and my favorite contributions to the business & leadership book landscape.

Charlene Li describes “open leadership” as “about how leaders must let go to gain more.” Stepping aside from Open Leadership’stable of contents, I created a one-slide summary figure (sort of like a “cheatsheet”) to help describe the key concepts. While the figure doesn’t capture every element of the book, I think the figure focuses on the key areas a company must address when designing and implementing social technology-based strategy.

Open Leadership

I see her book as tying together five key areas:

  • Openness Strategy and Design – This part of the book covers an audit of where your company is at in terms of openness. This part also frames open strategy in terms of four objective areas (applicable to company/brand/product) of learn, dialog, support, and innovate and increasing levels of engagement with constituents. I like this part of the book particularly because it starts to weave together marketing, branding, social technologies, and the fringes of innovation.
  • Benefits & ROI – For those that have read Groundswell, this part is similar in that it covers some qualitative and quantitative models for using social technologies. One area where the book goes further is in its segmentation of these models by the learn, dialog, support, and innovation objectives outlined in the openness strategy section. Here I see the models as inspirational and thought-provoking as opposed to being ready off-the-shelf. Readers should draw learnings from these and figure out how to best adapt for their specific management context (as there are a mixture of top-down and bottoms-up quantitative analysis and numerical sensitivity issues). Charlene provides some additional perspectives on customer lifetime value and net promoter score, the latter which is a personal favorite for tying brand management and social technologies together in an instructional context (e.g., business school curricula).
  • Openness Covenants – This part of the book covers social media guidelines and policies. Covenants are about how an organization defines the “safe area of the sandbox to play in”. The use of checklists and case examples makes for a nice reference and workbook to drive an organization’s development process.
  • Openness Orchestration – I found this part of the book to be one of the most important areas of the book. Because the use of social technologies involves openness across the entire organization (sometimes cutting across isolated departments and functions) this book provides a nice treatment of thinking about customers and constituents, specific workflow areas (e.g., customer service, marketing), and organizational models (e.g., centralized, distributed) and tradeoffs for implementing.
  • Organizational Change – There are sections of the book dedicated to nurturing organization change, and this involves mindsets and traits, leadership assessments, and something Charlene Li calls the “failure imperative”. While organizational change is a “soft” topic in many texts, Charlene Li does a nice job reconstructing a variety of real-life case examples of how companies and individuals failed in specific situations related to social technologies. Some of the companies and individuals managed to pick themselves up, re-adapt, and succeed eventually. Similar to use of social technologies, effectively dealing with failure is something core to innovation, improvisation, and leadership. So the sections covering organizational change are a nice wrap to the book and provides concrete inspiration from which to draw.

Open Leadershipserves as an excellent, end-to-end process toolkit and is well-suited for corporate executives, marketers, business information technology professionals, and management consultants looking for leadership frameworks supported by social technologies. Treatment of the subject is just above the technology-evaluation level (which would include determining whether technologies such as BuzzMetrics, Yammer, Radian6, Communispace, Umbria, Twitter, WordPress, and Facebook are appropriate).