Consultants Can Be Scary
by Rick Johnson, CEO Strategist LLC
August 1, 2010
They can provide
real value but can also be your worst nightmare.
As a CEO before I became a consultant 10 years ago I had very little
time for consultants and did not have a high opinion of them. One of the things
that has always stuck in my craw is seeing a consultant who has never actually
carried a bag conduct sales training. Some have very little if any experience
in the field as an outside salesperson.
Even more concerning is to watch a consultant give leadership or business
acumen advice when that consultant never has had to meet a payroll or run a
company personally.
Consultants can provide real value on many occasions but they can also be your
worst nightmare. Consultants have inspired some clichés, such as: “A consultant will ask you for the time and
then steal your watch,” and “Two things you don’t want to watch: Sausage being made and a group of
consultants trying to solve a problem.”
Worst Nightmare
Consultants can become your worst nightmare in many ways.
The Hanging-on
Strategy. Some consultants have perfected the hanging-on strategy
and use it as a tool for proactive growth. When a project starts nearing its
end, new problems seem to mysteriously get identified. It may start as a
training issue; the training issue grows into a management issue, a technology
issue, a channel issue. Each issue can turn into another consultant project or
an extension of the original project. Before you know it, your costs for the
consultant’s advice and assistance become a major factor on the expense side of
your profit and loss statement.
Unclear expectations.
Some consultants are so skilled at presentations and proposal writing that
deliverables become very intangible and cannot be measured. If they are not
measurable, accountability goes out the window. This alone can turn your
consulting experience into a nightmare. The scope of the project may have a
continuous creep that costs you more and more money. Deliverables should be clearly
defined and documented. However, even if you have done your homework and feel
you have clear expectations, things can go wrong.
Employee involvement.
Your risk of failure is exponentially higher if you have not involved your
key employees in the decision-making process of hiring a consultant. It is
essential that you have employee buy-in when you decide you need a consultant.
Accountability.
Consultants like to say they can lead a horse to water but they can’t make
them drink. In other words, consultants can’t execute the plan for the company.
As a result, it is very difficult to hold consultants accountable for the
results. Oftentimes the consultants make a fantastic presentation and sell
their firm based on expertise they don’t really possess. They are skilled at
quick research and can be convincing in demonstrating their breadth of
knowledge about your business based on this quick research. On many occasions
the partners of the firm may seal the deal and then send in a bunch of MBA kids
to do the work. It’s a fantastic learning process for the MBAs that you end up
paying for.
Who is in control.
Hiring the wrong consultant can be dangerous. It can cost you sales, profits
and even employees if you are not careful. Don’t turn your business over to a
consultant. Don’t make the mistake of thinking they know your business better
than you. There isn’t any consultant out there who knows your business better
than you and your employees do. If you hire a consultant, stay involved and manage
the process.
A variety of flavors.
Consultants come in a variety of flavors. They consist of former salespeople,
former vice presidents, MBA graduates, former CEOs, former accountants, and even former waiters. There are many
professional career-based consultants that have developed impeccable
reputations. There are also a lot of consultants who take on consulting
projects because they are between jobs or retired and bored. Most consultants
can be very convincing regarding their expertise and many can back it up with
performance. But there also are those who sound impressive simply because they
are exceptional speakers and presenters. Some quote problems similar to what
you may be experiencing from work with prior clients. That in itself does not
guarantee that they can help solve your problems. Some can, some can’t. Some
may do an excellent job for you, but some may not.
Walk the walk.
The problem with some consultants is the fact that they haven’t really walked
the walk. They haven’t walked in your shoes. Most have some business
experience, but many have never owned their own business. Many lack the
entrepreneurial experience of starting a business from scratch and growing a
substantial revenue stream. Some have never owned or sold their own business
prior to becoming consultants. Many lack the experience of running a
family-owned business, meeting payroll or managing cash flow. Some are
well-educated, some are not.
The Value of an Experienced Consultant
The right consultant can provide tremendous value to your firm. Just
having an unbiased, outside pair of eyes look at your firm can reveal things
that you as president and your executive staff can’t see. This is not uncommon,
because you’re caught up in the day-to-day operation of your business. Also, a
consultant does not have the emotional, compassionate attachment to people and
processes that you and your management team have developed. As a result, the
right consultant can help you identify and resolve issues that have gone
unnoticed or ignored.
Consultants provide value not because they can do things you don’t know how to
do, but because they are able to devote the necessary time — that you and your
team may not have — to address many issues your company may
face.
Training and employee development support are two areas where consultants
provide exceptional value. The consulting industry is a huge, growing industry
that is fast approaching the $100 billion mark. A market of this size attracts
many players. While there are many professional, competent and trustworthy
consultants out there, there are also some who may not be able to live up to
your expectations. A survey by Sales
& Marketing Management magazine found that more than 75% of
the business executives who responded felt that consultants are necessary for
business success. These same survey results concluded that more than 50% of the
firms utilizing consultants were dissatisfied or only somewhat satisfied.
There are some highly qualified, highly
effective consultants specializing in your industry. The more you are able to
define your expectations, the better your chances of being pleased with the
results. Do your homework. Go beyond
reading their bios. Ask specific questions about their personal business
experience. Ask how many employees they were responsible for, what was the
largest revenue stream they personally managed in their business career and
even ask if they ever had to meet payroll or started a company from scratch.
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By: Scott Benfield
Posted: August 18, 2010 2:18 PM
Experience is important when the subject requires it and when the solution is best derived from the current available or "tribal" knowledge in the industry.
Meeting a payroll, managing assets, making sales calls, etc. can give perspective for a consultant but assuming these are prerequisites for all consultants is over-reaching and misleading.
Many consultants may not have industry experience but have process experience or functional expertise that could and would help many in the industry. I'll give an example from my own experience.
As a consultant, I think I qualify for Mr. Johnson's prerequisites, or at least most of them. I've managed people, managed assets, been responsible for budgets, and been held responsible for profit centers. I've restructured wholesale businesses that missed their loan covenants, resurrected them, and set them sail under their own power. I've done legitimate managerial and executive work in operations, sales, marketing, and other functions both for leading wholesalers and Fortune rated companies selling through distribution. My experience, prior to consulting, spans 20 years and comes with a graduate degree from a top 40 US institution. However, this experience and education was poor preparation for my work in pricing that began over a decade ago.
The seminal knowledge I gathered in pricing was available through several sources including: Jim Narus-an industrial marketer at Wake Forest University, Tom Nagle-Pricing guru out of Boston and author of a perenially popular pricing text, Akshay Rao and Mark Bergen-pricing profs at the Carlson School (Univ. of Minn.)
When I released my pricing book "Capturing Value for Wholesalers" ten years ago there was very little to guide me that existed in the wholesale firm. Most pricing, for wholesalers at the time, was dismal. There was a well-known accountant who was pushing the subject, a decade ago, and he didn't even use segmentation or transaction types in his pricing. He was well indoctrinated in the industry but he was a career accountant with little understanding or, as I later found, respect for good marketing.
As it has ended up, my pricing text, has gone on to be one of the top selling texts for distributors. It has been used as a text for several schools of distribution or distribution classes. Additionally, I still do a fair amount of work in pricing for distributors and much of the theory, practice, and work I use didn't come from the industry because there was little of value within the industry and as pertaining to the subject.
Wholesaling is a staid industry that has always been long on experience and short on education. Mr. Johnson's comments appeal to that bias. But, when it comes to profit making, my records and experience find that wholesaling, as an industry, is a poor profit producing sector. There are many disciplines, better and more thoroughly researched outside the industry that can help in the quest for profits. The biggest single barrier to absorbing outside knowledge is the industry bias for experience over solid research, within a functional area, that can be adapted to the industry.
If you don't believe my comments about outside research or research as adapted to the industry, when is the last time your saw statistically valid research for the PHCP channel done by a functional expert from outside the industry? Or, how many footnotes do you see in books and articles referencing outside material? You won't find much because there isn't much. There isn't much because there isn't much money for it. And, there isn't much money for it because wholesaling has a bias for regenerating experience, which becomes ingrained as truism, over well researched outside knowledge.
Having experience within an industry is fine but assuming that a certain type of experience is a prerequisite for consulting is not necessarily accurate. If you want a good consultant, make sure they have a winning combination of experience, education, and current research with references from inside and outside the industry. If you want to move the industry forward, it could use some leaders, at the wholesale level, who lobby for good and cutting edge research and knowledge from outside the industry and/or adapted to the industry.
Otherwise, you may be hiring a consulting insider who does things the same old way and ends up with the same old industry problem of low profits.
It helps to remember the old saw, "If you do what you've always done, you'll get what you've always got."