What I’ve Learned From Buyers of Management Consulting Services

Many blog posts and articles address when to use management consultants versus not. Some argue that using consultants for strategy development intimate incompetence by management (example here). Others argue that consultants should be used in cases when expertise is higher than that of existing employees.

Companies should definitely examine the needs and tradeoffs for using management consultants. Tradeoffs include expertise, background in similar projects, knowledge retention, cash outlay, incentives, organizational dependency issues, etc.

But I’ve learned something entrepreneurial from a number of buyers that deeply understand how to use consultants and how to lead:

Many smart buyers of management consulting services focus on making forward progress. They focus on solving problems. Whether using consultants is the cheapest option or the best discount of future profits that a client has ever seen or anywhere in-between – the choice of whether to use consultants is less relevant than getting things done with a positive return.

As a long-time consultant, I am clearly somewhat biased. But I’ve been on the buyer side for consulting services too. My main point is to encourage folks to spend a balanced amount of time focusing on how to solve a problem as opposed to pointing fingers.

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!

The Business Plan Is Alive And Well But It May Not Be What You Think

As many times I have written a “business plan”, it seems the flavor of it can vary quite substantially. I think the notion of this catches a good number of people by surprise. And why shouldn’t that be the case? Many textbooks and templates seem to cover business plan outlines with relatively similar structures. My suspicion is that the perspective that gets lost in the mix is intent. The intent of a business plan affects its format and content dramatically (more than outline). For this post, I thought it would be good to share some perspectives on why the process and plan should vary.

Business plan as a process – The process of vetting ideas, getting buy-in, and achieving alignment is most important in these situations. Example situations are new business launches in larger companies (e.g., intrapreneurship). Business plans can often take the form of workshop sessions and Powerpoint documents as opposed to a traditional textual Word document. See a popular post of mine, “In Consulting The Process Is An Essential Part Of The Deliverable“.

Business plan as a sales document – This situation is particularly appropriate for fund raising (e.g., angels, VCs). Key goals of the document are to establish trust with prospects, enable the investment idea to be shared via networks, and persuade people of the merits of an investment opportunity. Often need a mix of instruments here (Powerpoint & Word docs, napkin drawings, demo), depending on the team, industry, and phase of product development (e.g., technology feasibility, commercial feasibility, ramp-up).

Business plan as a hypothesis test or investigative framework – An entrepreneurial way of looking at a business plan is more as a framework or series of hypotheses tests. Questions may be: do customers really want product aspect A, do customers prefer this variation over that one, do customers perceive me as Y relative to my competitors, and will the dog eat the dog food? The business planning effort can be more organic than written and involve focus groups, customer prospect interviews, etc. But the framework process should be systematic in determining which hypotheses are true/false to prove out aspects the business over time.

Some other ways that come to mind are viewing the business plan as a communication tool, a dissertation (that must be closely inspected), debate tool, product development stage gate requirement, and RFP response requirement (e.g., for government grants).

How do you view you business planning efforts? To what extent could you benefit from new ways of thinking about them?