Management Consulting News

For the first time in ages, last month I settled into my favorite chair to re-read a book. With so many new books clamoring for my attention, it seems as though I don't make time to revisit the ones I have. It wasn't too surprising, though, that I absorbed so much more on the second reading than I did on the first.

That experience led me to surf back through the past MasterMind interviews stored on the MCNews Web site. I figured there was value that I hadn't taken full advantage of, and I wasn't disappointed. I studied the interviews with Al Ries, Tom Peters, David Maister, Andrew Sobel, Ford Harding, Seth Godin, Harry Beckwith and many, many others. Even though I conducted those interviews, I still pulled something new and valuable from each one that I've added to my own practice.

If you're a new subscriber or a veteran of MCNews, give the library a second look. You may be surprised by what you find.

"Trust only those who stand to lose as much as you when things go wrong." - Murphy's Law

Top-Consultant.com reports that the global Management Consultancy recruitment market has gone crazy--creating immediate career opportunities for you at firms like:

With all the declarations made about the progress, health and state of the consulting industry, we thought we'd ask your opinion. We've devised a three-question survey, which will take one precious minute of your time to complete. Your answers are completely anonymous, and we'll report the results in next month's issue of MCNews.

Just click the link below (or paste the URL into your browser) to help your fellow readers get a sense of the market we're facing.

MCNews talked to Stevenson about how consultants can create enduring client relationships by getting back to the basics that made firms so successful in the past.

MCNews: How would you characterize an ideal relationship--if there is such a thing--between a client and a consultant?

Stevenson: The word that comes to mind is interdependent. In an ideal relationship, the client and the consultant focus on working together for the mutual satisfaction of the client. The consultant transfers the necessary skills and process to the client so they can truly collaborate. By that I mean they're working together because they choose to. They could just as easily choose to work apart, but the relationship is so strong because of the focus and the value that they become interdependent.

MCNews: So what's your view on the current state of the typical client-consultant relationship?

Stevenson: The fact is that a lot of trust has been broken. The corporate and accounting scandals have tarnished consultants, bankers, and top executives alike. As a result, client relationships with consultants are not as strong as they were. They're more tenuous. Consultants have to work harder to maintain relationships (and their billing rates) because of the events of the last four or five years.

I also noticed that, toward the end of the boom in the 1990s, some consulting firms abandoned their traditional pyramid approach: Instead of matching the level of the consulting practitioner to the corresponding level in the client organization, they brought in salespeople or business development specialists to go out and close business with clients. Most of these salespeople didn't grow up in the firms and didn't have the firms' culture and values. And that's dangerous.

That's exactly the plight of the corporate sales force that I've been trying to address. So when I saw consulting firms do it, I was really surprised because consultants wrote the book on keeping those relationships intact at all levels with the client. Abandoning that has been doubly harmful because trust was damaged at the same time that relationships were being handed off to closers who were hired off the street.

I think many of these salespeople have since been let go, and now consulting firms are trying to figure out how to get back to the relationships they had before they transitioned into the business development model. I know not all consulting firms went in that direction but I was surprised when I saw many consulting firms fall into the corporate sales trap.

MCNews: By corporate sales trap do you mean putting a salesperson between the consultant and the client?

Stevenson: That's exactly right. Think about the corporate sales model. In the technology area, for example, corporate sales force turnover is 35% to 40% a year. At that rate, it doesn't take long to turn over an entire sales force.

If relationships are based on trust that is built over time and you're delegating the relationships to salespeople, you're entrusting that function to the most junior people in the firm in terms of their longevity. That's why this approach has never worked.

As long as you keep handing relationship responsibility off to the newest people in the firm, they will continue to turn over because they can never really meet the expectations of the senior practitioners have who should be doing that job themselves.

MCNews: Is it your view that when these business development people go into client organizations instead of the partner or senior manager that clients see them as pure salespeople rather than problem solvers?

Stevenson: That hits the nail on the head. And even if they do have the inclination to be problem solvers or problem finders, they don't have the history with the firm and knowledge of its processes to do that. They can't execute.

All they can do is make an appointment and hope they can bring in someone else. And, as you know, that first appointment is critical. If you use it just to set the second appointment and you can't execute real-time in front of clients, you're perceived as wasting their time.

MCNews: If a consultant does have the ideal, interdependent relationship with a client, does that necessarily translate to loyalty from that client?

Stevenson: Well, I think attaining that relationship advantage with a client implies that you do have loyalty. But that's not a free pass. I think it was Eastern Airlines that said you have to earn your wings every day. You have to keep the focus on the relationship or it will slip away from you.

If you lose that focus or if the partner or senior manager expresses less interest or shows up less frequently, I've seen once loyal relationships fizzle. When weekly visits become monthly and then yearly visits, clients may be disappointed.

MCNews: Besides having an interdependent client relationship and delivering work as promised, what other factors drive client loyalty?

Stevenson: Presence. There's a tremendous impact when you show up at the right time and you show up consistently. Too often, once you start a project, the partner or senior manager fades into the background. You've got to deliver the work, but you've got to continue to deliver it through the lips of the people who got it started. That way, the client sees that there's consistency in the handling of the relationship and knows that person is always going to be there which leads to the promise of more work in the future.

Of course, you can't just make appointments with clients purely to develop the relationship. If you show up without a focus on a specific client issue--without a client agenda--I think the trust meter starts to run backward on you.

MCNews: Are there two or three innovative relationship strategies that you think help build client loyalty?

Stevenson: Continue to use the pyramid approach so that you keep all the different levels covered in the client's organization. And deliver on time. One other thing: I've noticed that consultants are particularly good at meeting the client on neutral ground by participating in community organizations and events.

When partners or consultants participate in the March of Dimes or work on the Olympics or chair committees for non-profits, that brings them together with clients, executives and potential clients. To me that is the best referral mechanism for consulting work. It's a strategy that corporate people don't employ and generally don't know how to employ.

MCNews: Why don't corporate salespeople do more in community activities?

Stevenson: I think they choose not to because they're not around very long. It's also because of the productivity stress on salespeople. If they're not making sales calls or sitting at their computers entering data into their sales information systems, they're perceived as being time wasters.

It seems consultants by their very nature are involved in community work all the time. In many firms, consultants are given incentives to participate in such events. The idea is to meet more people and build your own network.

If something comes from it, that's fine, but if it doesn't you've done something that's worthwhile anyway. Getting business is not the primary reason for doing it. If you say I'm going to volunteer in a specific organization because these three people work there and I want to get business from them, it often doesn't work.

MCNews: When you work with consultants or clients to help them gain the relationship advantage, what one thing do you see that needs immediate improvement?

Stevenson: I think it's the ability to truly focus on the person who needs the help. There's a lot of lip service paid to that, but it's easy to lose focus.

What's out of whack is this incredible focus on oneself and one's need to talk about how great one is and how many of these problems one has solved before. Instead, consultants should go back to the fundamentals of doing research, understanding the client you're talking to, understanding the client's customers, suppliers, and issues and probing to find out if there's mutual ground where you can meet to solve a problem.

Consultants have gotten away from that and have become a little smug. When you meet a client, if all you're doing is talking about yourself, even if the client is giving you time because you're highly recommended, that translates to arrogance.

So I work with people immediately around that perception of arrogance and say look, you've got to focus on that person and you can't do it unless you invest the time to learn about her or him before you meet. And then the guiding principle once you're with the client is this: it's not what you say; it's what you ask. That's what's going to get it started, and I find that's broken everywhere.

That's why we hammer so hard on research. When you talk to clients and you've really done your homework, you can feel that there's a different level of engagement because of the quality of the questions that you're asking. If you haven't invested any time or if this is one you're sliding by on without research, you either ask superficial questions or you revert to talking about yourself. Those are the only two options you have.

MCNews: If you could give our readers one piece of advice, what would it be?

Stevenson: I would say to keep the integrity of the consulting business as pure as it can be. Because of the trust that's been broken, people look at you differently these days than they did five years ago. We've been through a bloodbath, but clients need somebody to help them, and that's where consultants come in. But I think they've got to be very careful to go back to their roots and approach clients with all of the tools and process that created trust in the past. Because I sense it's a little haywire right now.

MCNews: Thanks very much for your time.

If you want to find out more about Tom Stevenson, email him at TomS@austin.rr.com.

Negotiate This!

Consulting with clients is often a series of negotiations, whether it's about fees, project scope or the implementation of recommendations. Here are a few resources to help hone your negotiating skills.

Strategic Negotiation: A Breakthrough 4-Step Process for Effective Business Negotiation, by Brian Dietmeyer with Rob Kaplan.

Start with No, by Jim Camp.

Artful Persuasion: How to command attention, change minds and influence people, by Harry Mills.

"Becoming an Ethical Negotiator," by Martha Lagace, Senior Editor, HBS Working Knowledge. http://hbswk.hbs.edu/item.jhtml?id=4139&t=strategy&nl=y

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Making Change Work

Consultants can tell war stories about client change programs that just didn't go right. Maybe it was an ill-conceived business process, poor communication or a buggy, new information system that sabotaged the effort. But, in the end, the change program didn't meet the client's objectives.

A study by McKinsey & Company of 40 major change programs found that 58% of companies failed to meet their targets and 20% captured only a third or less of the expected value.

McKinsey's consultants offer us 12 widely recognized factors for managing change, organized by level in the client organization.

Senior Managers
Commitment	Put initiative at the top of the agenda
Communication	Relate single, clear, compelling story--no mixed messages
Financial incentives	Reward senior managers if initiative is successful
Non-financial incentives	Provide recognition for strong performance
Leadership	Identify owner/champion
Stretch targets	Uphold goals with mantra-like consistency

Middle Managers
Decision authority	Exercise consistent control over a defined set of tasks
Skills in managing people	Provide feedback to employees on status of initiative
Skills in managing projects	Achieve measurable milestones in timely manner

Frontline staff
Skills	Consider training on key aspect of initiative
Tools	Make technology and techniques available to employees
Motivation	Clearly reward excellent performance to improve morale

McKinsey's study also found that strength on any one level of the organization--senior managers, middle managers or frontline employees--gives companies a better chance of success. Take a look at your own projects against this simple framework to estimate your client's "chances" of success.

Source: The McKinsey Quarterly Chart Focus, June 2004.

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The Meta Group, a provider of information technology research and advisory services, released a study of 650 companies which indicates that 72% of those companies believe that low IT employee morale is currently a serious issue in their organizations.

It's no wonder why. Computer system design firms, professional service firms and the IT subsidiaries of large companies now employ almost 250,000 fewer employees than in March 2001, according the Bureau of Labor Statistics.

You can chalk up the reduction to any number of factors, including downsizing, outsourcing and more efficient operations, but the situation is bound to drive morale in most IT shops into the single digits.

Meta found that most companies have responded to the crisis with typical short-term fixes like employee recognition programs, employee satisfaction surveys, minimal spot bonuses for good performance and even suggestion boxes. To their credit, many firms have loosened the purse strings and let employees pursue additional skill development.

Savvy consultants will advise their clients that these tactics will only temporarily win the hearts and minds of their highly prized workers. Today, transparency is the key.

Corporate executives must be clear about their intentions with initiatives such as outsourcing, layoffs and other activities that impact the perceived security of their IT employees. Sure, short-term pay adjustments and feedback mechanisms will help, but they won't stop that valued employee from sending out a resume if the grass looks greener on the other side of the street.

Dr. Stephen P. Leatherman, AKA "Dr. Beach" recently released his 2004 rankings for the top ten beaches in the US.

Dr. Beach's top ten list is now in its fourteenth year. According to the Tampa Tribune-Times, "Leatherman's list of America's Best Beaches has become to the seashore what the Oscar is to actors and movies."

No doubt beaches in other parts of the world could give these some competition, but in the US, the ten on the list are some choice spots.

1. Hanauma Bay, Oahu, Hawaii
2. Fort De Soto Park, Florida
3. Ocracoke Island, North Carolina
4. Caladesi Island State Park, Florida
5. Main Beach, East Hampton, New York
6. Hanalei Bay, Kauai, Hawaii
7. Crescent Beach, Siesta Key, Florida
8. Coast Guard Beach, Cape Cod, Massachusetts
9. Cape Florida State Park, Florida
10. Coronado Beach, California

Jay Conrad Levinson, the father of Guerrilla Marketing, has teamed with Michael McLaughlin, Editor of MCNews, to develop the new book, Guerrilla Marketing for Consultants. It's due out in October 2004.

The book is an owner's manual for a consultant's career. In it, you'll find strategies and tools for handling every aspect of marketing a consulting practice--from building market visibility to creating winning proposals and pricing your services.

You'll also find unbeatable guerrilla strategies for selling your services and creating profitable client relationships once you've been hired.

On July 3, 1929, foam rubber was developed at the Dunlop Latex Development Laboratories in Birmingham, England. British scientist E.A. Murphy whipped up the first batch using an ordinary kitchen mixer. His colleagues were unimpressed--until they sat on it.

On July 4, 1054, Chinese and other astronomers observed a supernova, a violently exploding star that was visible in daylight for twenty-three days and at night for almost two years. Rock paintings in North America suggest that Indians in Arizona and New Mexico saw it too.

On July 5, 1865, speed limits of 2 mph in town and 4 mph in the country were imposed in Britain. The "Red Flag" Act also required three drivers for each vehicle-two on the vehicle and one to walk ahead carrying a red flag.

"If you don't have the right strategy, you're toast," says Jack Trout, best-selling author and marketing consultant.

Trout, who recently published Trout on Strategy, is recognized as one of the world's leading marketing strategists, and he'll give us his best advice for creating breakthrough strategies for consultants.

We'll also have an interview with Jerry Weinberg, author of the classic book, The Secrets of Consulting. The secrets Weinberg reveals are as relevant today as when they were written almost twenty years ago.

Look for the next issue of MCNews on August 3, 2004.

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." - Winston Churchill

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