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Meet the MasterMinds: Ross Dawson on Knowledge-Based Client Relationships

Ross Dawson is Founder and CEO of Advanced Human Technologies, an international consulting firm that works with professional service firms to enhance their strategic client relationships. He is the author of Developing Knowledge-Based Client Relationships (now in its second edition), Living Networks, and more than sixty articles on international business.

We asked Dawson for his opinions on how consultants can use the power of client relationships to build their practices.

McLaughlin: What is a knowledge-based client relationship?
 
Dawson: It struck me early on that knowledge is the real heart of the value consultants provide. I don’t mean just the knowledge of the consultant, but the way that the consultant applies it so that the client learns or is transformed as a result of the engagement.

I distinguish between black-box consulting relationships and knowledge-based ones. In a black-box relationship, the client engages the consultant to come up with solutions, processes, or implementations and, hopefully, a result is achieved for the client. But, at the end, the client is none the wiser.

In contrast, a knowledge-based relationship has a higher degree of interaction and, as a result, the client actually learns to change. Maybe your client becomes better at making decisions, or managing processes, for example.

McLaughlin: Is black-box consulting still alive and kicking, in your view?

Dawson: Many consultants do still have a black-box mentality. That is appropriate for some client engagements, but not all.

One of the implications of the black-box relationship is that it’s very easy to commoditize. When others can claim to do the same thing you do, competition often gets driven by price.

In a knowledge-based relationship, you strive to develop a collaborative outcome from the beginning. The complementary expertise and capabilities you and the client bring to the table combine to achieve an outcome that neither one could bring about without the other. That is at the opposite end of the spectrum from black-box engagements.

This approach to client relationships is, I believe, more and more critical in the current day and age because we’re facing so much commoditization, price pressure, and increased competition.

Consultants need to be very clear about the decision to invest their efforts in specific clients. For some clients, it’s just not going to be worthwhile.

People talk a lot about client relationships, and some still think it’s about taking clients to football games or having lunch—which is not to say that’s bad. But it’s not the same as developing mutual value that others could not create for the client.
 
McLaughlin: Do you think consultants are improving how they manage client relationships?

Dawson:  Well, I think there’s no question that the industry has progressed a long way and is continuing to move forward. When the first edition of my book came out in 2000, the knowledge-based approach was a new way of thinking about client relationships, whereas today it’s part of the vocabulary.

That progress has been partly driven by clients because they have come to expect more collaborative engagements. When it comes to client relationships, we have not achieved maturity in the industry, but at least we see significant structure and a solid approach that were not in place even five years ago.

McLaughlin: Many clients rely on procurement professionals in the consultant selection process. How do you build knowledge-based relationships when the buyer is not the client?

Dawson: That makes it very challenging. I think the trend toward procurement or third-party selection underscores the need for firms to carefully pick and choose the clients they invest in.

If a client relies on procurement people, that can limit your ability to create value for that client. As long as you recognize that, you can invest in the relationship accordingly.

You should invest in the clients who have a greater potential to shift as a result of your work together. That way, you’ll have that opportunity to create more value for them. Some clients will consistently resist developing deeper relationships, whether that’s due to the company culture, processes, or people.

Consultants need to be very clear about the decision to invest their efforts in specific clients. For some clients, it’s just not going to be worthwhile.

McLaughlin: There’s often debate about the impact of brands on buyers. What have you found to be the impact of a firm’s brand on building relationships? Once you start working with a client, does it really matter anymore or not?

Dawson: Relationship development is almost the same thing as trust development. The degree of trust you have limits how far the relationship will be able to go.

Your brand provides an initial default degree of trust. The client may recognize, be familiar with, or have heard good things about your brand. So the client may start off with a certain amount of trust. But the quality of the relationship is still contingent on the client’s experience with the consultant.

I see four stages in the relationship development process: Engaging; aligning; deepening; and partnering. Engaging is an exploration on both sides about the potential for a relationship, and that is when your brand is the most critical.

From that point on, the primary issue is the quality of the work and the quality of the relationship that evolves. It’s certainly possible to walk in with no brand recognition and to develop at least as solid a relationship as someone with a very strong brand.

The importance of the individual practitioner, whether you work solo or you’re a specialist within a larger firm, is waning.

Essentially, your brand is the door opener.

McLaughlin: Many people believe that doing great work is enough for clients to bring you back for more. Is that true?

Dawson: It’s a great start because if you don’t do well, you’re definitely not coming back.

Great work may get you repeat business but I don’t believe it’s enough. You need to work collaboratively with the client to create unique value which the client could not achieve in any other relationship. Unless you get to that degree of lock-in, then you’re replaceable.

The three keys to lock-in are, first, do you know your client better than your competition does? Second, do your clients know you better than they know your competition? And third, are you embedded in your client’s processes?

These are key elements of a knowledge-based relationship. That is, mutual knowledge—you know each other’s organizations and people better than the competition does. If that is the case, you have advantages beyond the power of great work. Clients would lose unique value if they turned to somebody else.

McLaughlin: Might there be a fourth point, which is your client knows that you know more about them than your competitors do?

Dawson: I refer to industry surveys that ask consulting firms, how well do you know your clients? Then they ask the clients, how well do your consulting firms know you? Often they find a disparity.

One possible reason for that disparity is that consulting firms don’t know their clients as well as they think they do, and that’s probably quite frequently the case. But there is another potential reason. Some consultants actually do know their clients very well but they do nothing to demonstrate that knowledge.

That’s part of the virtual circle of client relationships. The deep knowledge you have about your client should mean that you provide uniquely relevant service, delivery, and communication to that client.

You demonstrate and create value because you know your client better. That in itself doesn’t give you lock-in with the client, but it is the source if you use and apply that knowledge better than your competitors do.

McLaughlin: If you were leading the marketing efforts for a firm that was attempting to implement a knowledge-based client relationship approach, where would you invest?

Dawson: For the last few years, much of my focus has been on client relationship teams. That is, people in a consulting firm who work together to build powerful relationships. I’d focus efforts in this area because it continues to be at the core of differentiation, particularly for larger firms.

Client relationship teams should be part of an overall program of ensuring that the right people are in client leadership roles and that you are providing appropriate support for them so that they can both develop their skills in team leadership and bring exceptional value to clients.

McLaughlin: If you look out over the next few years, how do you think the profile of a successful consultant will change?

Dawson: One of the driving forces in the economy is increasing specialization. As time passes, consultants will need deeper specialization.

Clearly, that in itself is of limited value. In part, increased specialization implies that greater collaboration within a firm will be necessary to succeed with clients. But as individuals, we need both an area of deep specialization and carefully selected areas in which we have a generalist understanding.

The importance of the individual practitioner, whether you work solo or you’re a specialist within a larger firm, is waning. The ability to work effectively in teams will continue to be the real driver of success.

Personal networks are another factor that has been important in the past and will continue to resonate. Clients are increasingly seeking out consultants, not just for their expertise, but for the consultant’s access to the unique insights of others in their networks.

McLaughlin: If you could give a consultant one piece of advice about succeeding in this industry as it matures and evolves, what would it be?

Dawson: No matter how good your expertise is in one domain, you have to keep coming up with new, good ideas for clients. Innovation applies in consulting as much as any other industry and if you rely on ideas from the past, you are in danger of becoming a commodity.
 
McLaughlin: Thanks for your time.

You can find out more about Ross Dawson, his books, and services at www.ahtgroup.com, or check out his Trends in the Living Networks Blog.