The Management Consultant
The Management
Consultant
Mastering the art of consultancy
Richard Newton
PEARSON EDUCATION LIMITED
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First published in Great Britain in 2010
© Richard Newton 2010
The right of Richard Newton to be identified as author
of this work has been asserted by him in accordance
with the Copyright, Designs and Patents Act 1988.
ISBN: 978-0-273-73087-3
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Newton, Richard, 1964The management consultant : mastering the art of consultancy / Richard
Newton.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-273-73087-3 (pbk.)
1. Business consultants. I. Title.
HD69.C6N495 2010
001--dc22
2009050850
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Contents
Acknowledgements / vii
Preface / ix
Introduction / xi
part 1
Understanding consultants and consultancy
1
Consultants and consultancy / 3
2
Why does anyone buy consultancy? / 23
3
Your consulting service / 41
4
The three core processes of client-centric consulting / 58
part 2
Consulting engagements
5
Finding and winning work / 77
6
Delivering consulting engagements and satisfying clients / 108
7
The alternative approach – process consulting and facilitation / 132
8
Closing engagements and sustaining results / 147
part 3
9
High-performance consulting
Developing long-term client relationships / 169
10
The ethical dimension / 181
11
The language of consulting / 199
12
Knowing when to say no / 220
13
Key consulting tips / 234
14
The client’s perspective – buying consultancy / 251
Conclusion / 269
vi
Contents
part 4
Additional resources for consultants
A
The tools, processes and materials of a consultancy business / 275
B
References / 279
C
Sample proposal letter / 281
Index / 285
Acknowledgements
I would like to thank five consulting colleagues who I started working
with years ago in Coopers & Lybrand. Although our careers have moved
on in different ways, we still work together from time to time. More
often we meet up, share stories and enjoy laughing about the occasionally pretentious side of the profession. They are: Graham Jump, Peter
Meredith, Perry Childs, Richard Ellis and Andy Macey.
Dedication
This book is dedicated to my son Konrad for inspiring me to write the
book, when he admitted that he really did not have the faintest idea
what I did.
Preface
This book is a personal guide to the art of management consulting. It sets
out to help new and experienced consultants to do one thing: to become
better consultants. In simple terms, better means providing help that is of
the most long-term value to your clients. The approach is also simple: to
identify what it is that the best consultants do that their less effective colleagues do not – and how you can do it, too. Underlying this is my belief
in client-centric consulting.
The contents are derived from three sources. The first source is my experience as a consultant (working for Coopers & Lybrand, A.T Kearney,
Ernst & Young and my own company Enixus). Secondly, my experiences
in industry as a client – negotiating, buying and managing consultants.
Finally and most importantly, I have a network of trusted consulting colleagues whose ideas have flavoured the book. Like a magpie I have picked
up ideas and concepts throughout my career. I have shifted through
them, throwing away most, keeping hold of the ones I like and think are
precious. Many ideas in this book are my own, but of course I have learnt
from others. I can’t remember the sources of all of these, so I am sure
more credit is deserved than I have given.
There were several reasons for writing this book, but two of them stand
out. Firstly, there are comparatively few books on consulting, unlike
many other management disciplines. Look at the business book selection
in a good bookshop or online, and you will find many on strategy, leadership, marketing, delivering change and project management, to name a
few areas. But consulting books are relatively scarce, scarcer than an
industry of its size justifies. There are a few good books on consulting,
but they do not approach the audience in the way I want to.
x
Preface
The second reason comes down to my frequent frustration when I work
with or engage other consultants. The simple truth is that the profession
often does not live up to its own hype. This is not to deny that there are
many brilliant consultants out there, and I have been lucky enough to
work with and learn from a few of them. But there are many consultants
who know they should be better to justify their fees. Worse, there are
some very mediocre consultants who mistake being paid a lot with being
good. As supposed experts in business, it is amazing how often consultants provide inadequate value to their clients.
Management consulting is a large and very varied industry. The range of
skills and services that fall under this title are huge. The difference in the
type of work of the most expensive strategy houses compared to a project
management consultant is so great that they may not even recognise
each other as being in the same profession. There are some books that set
out to address components of this industry. They tend to describe various
tools and techniques of consulting. The best tools and techniques are
only applicable in some situations and even if you know them it does
not make you necessarily an effective consultant. I wanted to write a
book for all management consultants.
The book contains tools and techniques, but it is also intended to make
you think like a consultant: how do effective consultants think about their
work and their clients? Consulting experiences are varied, and each is
unique. By thinking like a consultant, irrespective of the situation you are
in, you will be able to deal with any situation in the most effective way.
Introduction
Ask someone in business to define the title ‘management consultant’,
and you will get a wide variety of responses, not all of them complimentary! The title covers an extensive range of roles providing a variety of
services. There are no universally recognised standards for being a management consultant and as a result there are very varying levels of
quality. In addition, many people want to be management consultants
but do not know what it entails.
There are many consulting success stories, and numerous people have
become comfortably well off as consultants. Given this success, it might
be thought that the world was full of praise for management consultants.
Yet, if you ask many customers in the private and public sector about
their feelings and experiences of consultants, you will often be met with
sceptical and even highly negative comments. There are numerous causes
for these responses, but they can be summarised into three major categories. Firstly, too many consultants simply do not provide sufficient
value to their customers and rely on churning out the same old work
time and time again. Secondly, even good consultants with valuable
knowledge often fail to understand true client needs. Thirdly, it is unfortunate to say, but there seems to be a number of very poor management
consultants. This problem is compounded by the already mentioned
lack of widely recognised standards for consultancy which can be used to
judge or benchmark consultants against.
A key reason for the negative perception of consulting is the fact that too
many consultants are focused on what they have to offer and how they
make money, rather than what clients need. Too many consultants provide context-free and generic advice, whereas what clients need is advice
that is tailored to their specific culture and context. Overall, too many
consultants spend too much time trying to be clever, rather than asking
themselves what actually makes a good consultant?
xii
Introduction
This book will describe those factors that make good consultants and
how consultants can go about providing client-centric consulting. It
describes consulting from the viewpoint of the client, and so will help
consultants understand what will make them successful. The book will
help in deciding on how to provide the most
the book focuses
appropriate services and advice to clients. Rather
on the skills of success- than considering the tools and processes of consulting, as most other consulting books do, it
ful consultants
focuses on the skills of successful consultants –
what they do that makes them successful, success in this context being
defined as client results, not only in terms of financial returns for the
consultant. Finally, the book contains many tips from the author’s and
his colleagues’ years of experience in consulting.
“
”
There is a huge number of management consultants and business advisors of one form or another. Management consultancies have been one of
the great business success stories of the past 40 years, with some now
employing tens of thousands of people in worldwide businesses, delivering significant profits to shareholders and partners. At the other end of
the scale there are thousands of small consultancies and independent
consultants. As employment patterns change, more and more people are
choosing to work as consultants.
There are many attractions to a career in consulting. For some, consulting
may seem the only choice following redundancy from a senior position.
There are many examples of initially despondent redundant managers
finding not only a better income, but more enjoyable work in consultancy.
For others, it is a lifetime career choice that starts from university, even
though few students have any real concept of what being a consultant
entails. Many people enter the consulting profession for a more flexible
lifestyle, although this is harder to achieve in practice than it might seem.
Whatever the reasons for considering it, consultancy is a great opportunity. Companies appear to have an increasing and insatiable demand for
advisors and interim managers. Providing services can be very profitable
and give consultants a high standard of living. But consulting also has
risks. It’s an increasingly competitive environment as more people are
drawn to the profession. Select the wrong services or sales approach, and
consulting will be a stressful profession. There is also the constant uncertainty about what happens when the current engagement is complete.
Many people assume that simply because they have some specialist
expertise, they can be a good consultant. Certainly, expertise is an
Introduction
essential foundation. This book assumes you have an area of specialist
knowledge and can competently apply the techniques and tools of your
specialisation. But specialist knowledge is not enough. It is not intended
as a tautology when I say that the core competency of a successful consultant is the skill of being a consultant. It is not a profession for everyone
– there is a specific art to being a consultant.
Although the consulting industry is successful, that success is in jeopardy. Fee rates for many organisations, including some of the largest
firms, are lower in real terms than they were previously. Clients are
becoming more adept at controlling consultants and extracting the best
value from them. More and more people are entering the consulting
industry, meaning that to excel the standards are rising all the time.
Consultants need to raise their game.
This book sets out to provide you with guidance to what makes a great
consultant, irrespective of where you fit amongst the incredible variety of
management consultants. It avoids the constraints of focusing on specific
elements of consulting or approaches to consultancy, and instead takes a
client-centric view of what is needed to provide expert consulting.
Although this book contains approaches, the fundamental questions it
seeks to answer are what makes a great consultant and building on that,
how do you achieve this?
Contents and structure
There are 14 chapters and two short additional reference lists in the
book. The book is broken into three main parts. In the first part
(Chapters 1–4), I explore what it means to be a management consultant
and how to go about setting yourself up as one. In the second part
(Chapters 5–8), I discuss how to go about winning work and delivering
value to clients. In the third part (Chapters 9–14), I discuss a range of
broader issues which set the context for consulting and will give you
some additional tips and techniques to being a successful consultant.
The book has been designed to be read from cover to cover, but you can
dip into it as you require. If you want to reference parts individually, the
detailed contents of each chapter are described in the following table:
xiii
xiv
Introduction
Chapter title
Chapter summary
1
Consultants and consultancy
Introduces the key terminology and concepts used
in the book and provides an overview of what being a
consultant means.
2
Why does anyone buy
consultancy?
Explores how successful consulting starts by
understanding the reasons clients have for buying
consultancy. This is essential knowledge for anyone
wanting to provide client-centric consulting.
3
Your consulting service
Looks at the range of services you can offer as a
consultant and how to position your skills and
experience as a saleable client service.
4
The three core processes of
client-centric consulting
Discusses the core engagement process and then puts
it in context with the client’s change process, and the
client’s operational process. Understanding this
relationship is at the heart of client-centric consulting.
5
Finding and winning work
As a commercial business, consultants must find
opportunities and sell their services to clients. This
chapter discusses the processes and approach to
winning work.
6
Delivering consulting
engagements and satisfying
clients
Investigates the central work of a consultant –
delivering consulting engagements which add value
to the clients.
7
The alternative approach –
Describes an alternative approach to expert
process consulting and facilitation consulting – process consulting – which can be
used to deliver entire consulting engagements or as a
tool on an engagement.
8
Closing engagements and
sustaining results
All consulting should result in some change in a client,
otherwise it delivers no value. Often the change takes
place and must continue after the consultant has
finished their work. This chapter considers how to
achieve change, and how to sustain it after a
consulting engagement is complete.
9
Developing long-term client
relationships
Describes the advantages of having long-term client
relationships and how to develop them.
10 The ethical dimension
Considers the ethics of consulting, and the potential
ethical dilemmas that regularly face consultants and
ways to deal with them.
Introduction
Chapter title
Chapter summary
11 The language of consulting
The central tool of the consultant is language. This
chapter describes some approaches to communications
and explores the topic of consulting jargon.
12 Knowing when to say no
Not all consulting opportunities are worth pursuing.
This chapter describes the characteristics of
engagements which consultants should avoid if
possible.
13 Key consulting tips
A summary of useful key tips from experience.
14 The client’s perspective –
buying consultancy
A short review from a client’s perspective of issues to
consider when purchasing consultancy.
Conclusion
A brief summary of the role of the management
consultant and topics covered in this book.
A
The tools and processes of a
consultancy business
A summary of the key processes and tools any
consulting business requires.
B
References
A short list of references that have influenced the
author’s thinking, and may be useful to readers.
C
Sample proposal letter
A sample proposal letter for readers to adapt.
xv
part
one
Understanding
consultants and
consultancy
chapter
1
Consultants and consultancy
T
his chapter answers the questions: what is a management consultant and what is management consultancy?
You may be an experienced consultant who wants to pick up a few new
tricks. On the other hand, maybe you are new to consulting and want to
gain a better understanding of what it is all about. This chapter is aimed
primarily at the novice consultant, whether you are considering joining a
major consultancy, are starting out as an independent consultant, or
have been recruited as an internal consultant. It provides an overview of
some of the fundamental concepts in consulting. Most of the book is
about how to be a consultant. As an opening to the subject this chapter
answers what being a consultant means.
To gain the most from this book it is important to understand what a
management consultant is, to be familiar with some common consulting
terminology, and to appreciate the difference between being a consultant
and other roles. If you want to be a management consultant, it is helpful
to recognise why you want to be a consultant and to think through
whether or not it is a profession that can meet your desires. To achieve
this it is useful to have at least a basic grasp of the economics of a consulting business. This chapter sets out to do all of this. There is nothing
complex here, but it is important as it provides the foundations for the
rest of the book. This chapter covers a disparate range of topics that combined give a basic, but essential, picture of consulting.
4
Understanding consultants and consultancy
One small, but noteworthy point: rather than write the phrases ‘management consultant’ and ‘management consultancy’ repeatedly, I shorten
these to ‘consultant’ and ‘consultancy’. There are other types of consultants and consultancy, and many of them could find something useful in
this book, but the focus is on the management variety.
What is a management consultant?
There is a large and growing band of people who call themselves management consultants. Some people are management consultants but do not
use this title, preferring labels such as business advisor, strategy consultant,
operational consultant or even leadership consultant. These and related job
titles encompass a divergent and eclectic group of individuals.
The work such people do varies enormously. The fee rates range from low
to very high, and the length a consulting project may vary from hours to
years. Clients who use consultants can be the owners of firms, managers
of one level of seniority or another, or the main board directors of major
corporations. Clients can also be staff in the public sector and not-forprofit organisations. Some consultants are employees of the firms the
consulting takes place in, others are external but
it is not easy to
regular faces within an organisation, while many
come up with a concise are individuals who appear in a client organisation for a short time and never reappear again.
definition
Their areas of specialist expertise go from obscure
pieces of business to generalist management advice. Given this huge variety, what is it that is similar that enables them to be bundled together as
management consultants? It is not easy to come up with a concise definition that covers this assortment of roles.
“
”
The problem with describing the role of a management consultant is
compounded by the fact that some existing definitions have been written by people who are not consultants, and who do not understand fully
what consultants do. But listening to professional consultants can
equally be misleading. Those who are consultants have a vested interest
in making the role sound majestic and magical, and to bias any description towards the type of work they specifically do. I have read definitions
of management consultancy in sales brochures, books, dictionaries and
various online encyclopaedias. A few definitions are the hopeless summarisations of people without any real understanding, some are correct
but focus on irrelevant aspects of the role, many are good, but do not
quite manage to encapsulate the role and its variations.
1
I
Consultants and consultancy
Given the wide variety of consultants, rather than starting with a definition, I will list characteristics to provide an appreciation of the role of a
consultant. As little in this world is absolutely black and white there are
caveats with each one of these characteristics.
Consultants do the following seven things:
1 They provide advice and recommendations to managers, and may
provide assistance with the implementation of the recommendations.
Caveat: Consulting companies may provide a whole range of services,
from pure consulting to training and outsourcing. Not all of this is
consulting. Consulting is about providing useful advice, and helping
managers to implement the advice.
2 They base their advice and recommendation on a set of skills and
expertise, or intellectual property they have available to them.
Caveat: This is what should happen. However, ask any experienced
manager and they can probably tell you of the time they spoke to or
even engaged someone who purported to be a consultant but who
had very limited skills, experience or intellectual property.
3 They consult. This may sound obvious given the name, but it is often
forgotten. What I mean by this is that consultants engage in dialogue
with an organisation and its staff, and apply their expertise to develop
recommendations, taking account of the specific needs and context
of that organisation.
Caveat: Some firms called consultancies do not consult. Such firms
may be very successful in selling research, benchmarking data or other
types of information. Consultants do not sell products or give the same
advice to everyone. There is nothing wrong with selling a product, but
irrespective of how it is branded, it is not management consulting.
4 They are involved with a given client on a temporary basis.
Caveat: The length of a consulting project may be anything from
hours to months. Occasionally, it may be years, although it is difficult
to argue that someone who has worked continuously in one
organisation for years is still working as a consultant. (Internal
consultants work for one organisation, but they will be working on
different projects across a range of departments or divisions.) It is not
unusual for a consultant to work regularly for the same client, but
each piece of work is of a limited duration.
5 They are independent. A consultant should be providing advice or
recommendations irrespective of the internal politics and vested
interests of an organisation or the managers who are their client.
5
6
Understanding consultants and consultancy
Caveat: Consultants are human, have their own business interest to
consider, and naturally have their own biases. But a consultant’s
biases should be independent of a client’s biases.
6 They are not paid for from an organisation’s normal staff budgets.
Caveat: A manager who wants to employ a consultant needs a budget
for it. This is often true even for internal consultants who charge back
their time, and if they do not, they remain an overhead to the rest of
the business.
7 They add value to a manager and the client organisation by helping
them to change. Value can take many forms, such as improved
decision making, faster change implementation, reduced business risk
and so on.
Caveat: At least they should do! Reality is not always so clear cut.
If we take these seven characteristics of a consultant and take the most
pertinent points it is possible to develop a definition of a consultant that
is true in most situations:
Definition
A consultant is an independent advisor who adds value by helping managers to
identify and achieve beneficial change appropriate to their situation.
Essential consulting jargon
To get the most from this book it is important that we start with a
common understanding of the basic terminology surrounding management consultancy. Some words, or pieces of consulting jargon, will be
used repeatedly through the book, and if you are new to the industry
then it’s important you become familiar with these concepts. I am not
generally a big advocate of jargon (see Chapter 11), but there are words
and phrases that are continuously used by consultants. Most of these
may be obvious and intuitively understandable, some are not specific to
the consulting industry, but they are essential to know.
Consultants tend to talk about clients, rather than customers. The concept of a client is explored in the next chapter. In general terms, the word
is used both to refer to a specific manager who gives the consultant direction on a consulting project, and the organisation in which that manager
works. Hence a consultant may think of the client as Mr Peter Smith
of the XYZ Company, or may consider it to be the XYZ Company. To
1
I
Consultants and consultancy
differentiate, when I refer to a client I am talking about a person (or
group of people), when I am talking about the organisation the client
works for I use the term client organisation.
Once employed by a client, the specific consulting project being undertaken is usually referred to as an engagement or sometimes a live
engagement. A client is one of a larger group of stakeholders a consultant
must deal with. Stakeholders form a set of individuals who consultants
must take into consideration when delivering an engagement.
To win some work consultants engage in business development. Business
development relates to time that is not (usually) chargeable to a client,
and includes activities that are associated with marketing a business and
pursing specific sales. The aim of business develconsultants must
opment is to identify opportunities, and then
normally write a
convert these opportunities into live engagements
description of the
and hence have some chargeable time. An opportunity is the situation in which a client has a need
service they will
for some consulting support. To convert an opporprovide
tunity into an engagement and hence be able to
charge fees, consultants must normally write a description of the service
they will provide to the client. This description is called a proposal.
Chargeable time is the time when a consultant is billing fees to the
client. Once an engagement is complete, consultants often seek to sell
on, that is to sell a subsequent consulting engagement to the client so
the consultant can remain chargeable.
“
”
In order to sell regularly, and for proposals to be successful, consultants
may have service lines. A service line is a specific area of expertise that a
consultant or a consultancy company invests in (see Chapter 3). For
instance, one consultancy may have a service line in improving the management of IT departments, and another may have a service line to
increase innovation in business. Service lines may be the informal
labelling of expertise of individual consultants, but they can also be the
formal documentation of processes and approaches to consulting by
larger consulting companies. Service lines and any other knowledge or
approaches are often called intellectual property or intellectual capital
by consultants. Intellectual property has a specific legal meaning, but
many consultants use this phrase in a looser fashion than the legal definition requires (see Chapter 3).
One of the most important measures of a consulting business is utilisation or chargeable utilisation. Utilisation is a measure of the proportion
7
8
Understanding consultants and consultancy
of time a consultant is working on fee-paying work on a client site.
Hence, a consultant who is billing three days a week is 60 per cent
utilised. It is normally not possible for a consultant to be 100 per cent
utilised because some time must be spent on business development, the
creation and maintenance of service lines, and holiday.
How does consulting differ from other roles?
Developing a full understanding of the role of the consultant is helped
by understanding the difference between a consultant and an employee,
a manager or a business leader. The boundaries between being a consultant and, for example a manager, are grey, but there are important and
definite differences.
Let’s start by considering the role of a consultant versus an employee in
the organisation using consultants. The obvious point is that a consultant is not an employee of the organisation they are helping, but an
employee of a consulting business. Why does this matter? Most consultants want to do a good job that satisfies a client, but their performance
assessments, pay increases, promotions, ongoing praise and criticism are
not done by the client organisation. All these are influenced by their performance with clients, but consultants have different motivations from
client staff. Consultants are never fully part of a client organisation’s
team. For example, a client may regard a consultant as having done a
brilliant job by providing fantastic advice. A consulting company may
judge the same consultant to have only done an average job because he
did not manage to make any additional consulting sales.
A consultant can be part of a client organisation’s project team, and in
doing this share some goals with other client staff, but consultants are
always to some extent independent from the client organisation. Their
incentives and performance drivers are different. This is true even for an
internal consultant. Obviously, an internal consultant is employed by the
same company as their clients, but is not employed by the same department or part of the same management hierarchy. This is not necessarily a
bad thing – a consultant who is as much part of your team as any other
employee will struggle to give truly independent advice.
What about the difference between being a consultant and a line manager? Like managers, consultants often are hard working and want to
produce a quality result, but this is relative to the scope of a consulting
engagement. They do not and arguably cannot deliver an end result in a
1
I
Consultants and consultancy
client organisation, and do not live with the outcomes of their recommendations. If a consultant is providing advice, then, if the advice is
accepted, a line manager has to implement this advice somehow. Even if
consultants help with implementation planning or a change implementation project, they do not end up working with the results following the
implementation. Consultants are temporary visitors to an organisation –
it is line managers who must live with the results of any consulting
engagement.
There is another point about consultants compared to managers. Many
consultants are ex-senior managers with a good understanding of the
challenge of managing a department. On the other hand, whilst all consultants advise, some have never managed anything of any significant
complexity. Even relatively senior career consultants, who became consultants from university, may never have managed a team of more than
20 people. For someone in an operational role with several thousand staff
and a budget of hundreds of millions, a consultant’s understanding of
the reality of dealing with this number of people and scale of budget will
appear limited. The consultant’s response to this should not even
attempt to be an expert line manager, but to provide focused specialist
expertise beyond that of a normal manager.
Finally, what about a consultant compared to a business leader? Many
consultants fancy themselves to be great leaders, and some have the
potential. There are well regarded business gurus who have come from a
consulting background, but a guru is not a leader – a guru is an influencer and a shaper of opinions. Sometimes you
you can be a very
see a successful chief executive with a background
good consultant
in consulting, and they are probably a great
without having the
leader. But on the whole I am sceptical about professional consultants as leaders. The consultancy
ability to lead or
profession encourages the development of a range
inspire
of skills which sometimes can be mistaken for
leadership, such as strong communication and influencing skills.
Normally though, consulting does not require significant leadership
skills. You can be a very good consultant without having the ability to
lead or inspire.
“
”
The fact that consultants are different from employees, managers and
business leaders should not be taken as a criticism of consultants.
Consultants are not employees, managers or leaders – because that is not
what the role entails or requires. Consulting is a very different role from
9
10
Understanding consultants and consultancy
being an employee, manager or leader. Consultants must appreciate these
roles, be able to work with them and be able to influence them. Some
consultants may have a background in organisations which required
them to manage or to lead, but this is not universally true. Consultants
should not forget that the role of the consultant is to consult, not to
manage or to lead.
Now, having said all this, comparing consulting to other roles
does to some extent depend on the type of consultant being talked
about. There are two dimensions of consulting we should be aware of
and differentiate:
1 Internal or external consultants: An internal consultant is a full-time
employee of an organisation who has a role as a consultant to the
business. Typical examples include human resources (HR) or internal
change management specialists. An external consultant is someone
who is engaged for a specific consulting project, but otherwise is
independent of an organisation. Internal consultants tend to have a
greater understanding of an organisation’s culture and are familiar
with many aspects of a business that an external consultant will take
some time to learn or understand. External consultants will typically
have a broader range of experience and have done work similar to
their current engagement in other organisations.
2 Strategic, operational, implementation or specialist: Many
consultants work in a wide range of roles and float between providing
strategic advice, helping with implementing it and supporting
operational managers. But generally we can differentiate between
consultants (and consulting companies) who advise organisations at a
strategic level – what direction a business should be taking; at an
operational level – how the business should be run on a daily basis
efficiently and effectively; or at an implementation level – how to
deliver projects and changes (which may be derived from the advice
of a strategic or operational consultant). There are also specialist
consultants who focus on a particular area of advice. Arguably all
consultants should be specialists, but what I mean here are, for
example, consultants who focuses on very specific areas such as
regulatory compliance advice or on minimising technology costs.
Another thing to consider is whether the work being done is consulting
or another related profession. There are several job titles in common use
which are often employed in relation to consultants, or in relation to
people doing work that can seem similar to that of a consultant. The
main examples are:
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Consultants and consultancy
I
Contractor: A contractor is a temporary employee who is usually paid
a day rate to complete some work which is of a transitory nature,
where it is not appropriate or not possible to employ a permanent
member of staff. This covers a wide range of areas – from office
cleaners to very short-term senior staff. The overlap with
management consultants is that many projects require temporary
staff, and these are often contractors. Organisations are often left with
a choice of whether to use contractors or consultants. A rough
difference is that a consultant is employed to advise or provide skills
the client does not have access to, and a contractor is employed as an
extra pair of hands to increase the capacity of an organisation beyond
that available with existing permanent staff.
I
Interim manager: An interim manager is a specialised form of senior
contractor. An expert manager is engaged to perform a management
role for a limited period of time – for example because a senior
manager is ill or on maternity leave. Interim managers should be
expert managers, who fit quickly into even the most senior
management roles. It is really impossible to define hard and fast
boundaries with consultants, as many consultancies offer interim
management services and some consultants regularly work as interim
managers – but when they do they are not working as a consultant.
I
Coach/mentor: It is common to pay for professional coaching and
mentoring, to help individual managers. Such work is normally done
on a one-to-one basis. Coaches and mentors are slightly different, but
they are both concerned with helping individuals to reach their full
potential. A consultant may work as a coach or mentor to individual
managers, but there are also professional coaches and mentors, who
rightly do not consider themselves consultants.
I
Facilitator: A facilitator is someone who uses facilitation skills to help
a group or team resolve some issue or problem. Facilitation is one of
the most misused words in business and is explored further in
Chapter 7. Facilitation is often closely associated with workshops, but
it is possible to use facilitation in other situations. Facilitators do not
advise directly, but help clients to solve their own problems. I regard
facilitation skills both as an expert profession in its own right, but to
a certain degree also a core skill of all consultants.
It is worth understanding the differences in these roles, which can be
real, but the boundaries are often exaggerated for commercial or personal
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Understanding consultants and consultancy
reasons. Professional interim managers, facilitators and coaches have
valid reasons related to the nature of the roles to differentiate themselves
from management consultants, but it also makes commercial sense to do
so as well. Many consultants have the necessary skills and often work in
one or more of these roles, but you should not assume that all consultants can or even need to be able to perform such roles effectively. Put
another way, you can be a successful consultant without, for example,
having the capability to coach or be an interim manager.
Varieties of consulting organisations
There are many different organisational structures you can work in as a
consultant, and the choice is important as it will affect the type of projects you do, the nature of the day-to-day work, and the level of risk and
uncertainty you expose yourself to. There are essentially four ways you
can work as a consultant:
1 as a solo or independent consultant working for yourself or your own
company
2 as an employee of a major consulting company
3 as part of an organisation offering a portfolio of services of which
consulting is only one – the most common is the consulting, IT
development and outsourcing company, but there are other variants
4 as part of a small consultancy company.
To some extent the choice depends on personal preferences, and what
opportunities are open to you. I have worked in organisations in all these
models.
The independent consultant is usually either someone who has worked
in a larger consultancy but wants a more self-sufficient lifestyle, or an exsenior manager who now wants to advise rather than manage. There are
many reasons for choosing to become independent. I now prefer to work
for my own company as it enables me to maximise my personal flexibility. The cost is that I am
organisations
completely dependent on my own ability to find
always need help
projects and generate an income. However, once
you have an established reputation this is not that hard. Organisations
always need help. Additionally, as my business costs are comparatively
low, and I have other revenues, should I choose not to work for a few
months I do not need to generate significant revenues to cover my
“
”
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Consultants and consultancy
business costs. I have access to a wide variety of work. I even undertake
some very large engagements as I have a network of trusted colleagues,
and we work together often to deliver larger engagements than a single
consultant can manage.
At the other extreme are the major consulting companies. If you have
little experience, are a recent graduate or like to combine consulting with
a corporate culture these are the organisations for you. The big consultancies can be attractive places to work. For example, they tend to give
great opportunities for professional development, international working
and arguably reduce your personal risk as you have teams of people
around you also helping to win and deliver engagements. Additionally,
the larger firms often win massive projects which may require leadingedge thinking and techniques, although on the largest projects you can
feel like a cog in the machine rather than a real consultant. If you
become a senior manager (or partner) in such organisations the rewards
can be high. But it does mean all the baggage that comes with corporate
life such as annual appraisals, fitting in with company culture and worrying about things like brand risk. Big consultancies are also notoriously
political environments. Some are focused on people who fit their specific
organisational culture, which can give the consultancy a very defined
feeling that will not suit everyone.
Companies offering a portfolio of services beyond consultancy provide a
large variety of career options. However, if your firm is not purely a consultancy, there is always the tension over how independent the consulting
advice is and whether it is really just a sales channel for other services.
Some outsourcing firms have very successful consulting divisions, but
there is always a doubt in some clients’ minds as to whether the consulting is impartial advice or a funnel to win outsourcing contracts.
Whilst I am happy not to work for a large firm any more it is fair to say
that I probably could not do what I do now had I not learnt what I did
working for the major consultancies I was employed by. It is by no means
a bad place to start.
There are many smaller consultancies, which offer a compromise
between the complete self-sufficiency of the sole trader and the corporate
hierarchies of the larger firms. Some of the smaller consultancies are
industry leaders in specific consulting niches. For instance you can find
consulting firms who specialise solely in financial regulation, telecommunications, customer services or cost control in manufacturing. If you
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Understanding consultants and consultancy
have a particularly focused specialisation there may be a firm for whom
you are a perfect fit.
Why do you want to be a consultant?
If you roughly understand what a consultant is, then it is time to reflect
on whether and why you want to be one, and if your reasons have a realistic chance of being fulfilled.
The best reason for wanting to become a management consultant is simply
because you enjoy the process of consulting with clients. Of course, if you
have never worked as a consultant what ‘consulting with a client’ means
will be unclear. If you do know, and this is the reason for becoming a consultant, then you are well set for a successful career. However, most people
have more pragmatic grounds for becoming a consultant.
A common reason to join the profession is the potential variety of the
work. Although as a consultant you may work in a specialist area, you
will work in many organisations. The context and culture of the organisations and details of the problems will vary significantly. I find
consulting work highly varied. I have worked all around the world, for
companies in a wide variety of sectors, with clients of differing levels of
seniority, to help resolve a divergent range of problems. However, if the
service you will provide to organisations is very specialised – for example,
helping them to be compliant with a specific piece of industrial regulation – what variety you gain from different clients you may also lose in
essentially doing the same piece of work again and again.
Some people join consulting for skills development. This typically arises
from one of two sources. Development may happen because of the wide
variety of challenging work you are involved in. And there is no quicker way
of improving your skills than doing a wide variety of challenging work.
Alternatively, and this is most true for graduates coming into consulting, it is
because you join a company who understands that its key asset is people
and hence is willing to invest significantly in their development. Consulting
does provide a great way to develop a powerful set of useful skills, such as
problem analysis, communication skills and influencing skills. One important exception to this is that if you want to learn how to manage people
then you will be better off seeking an operational line management role.
However, this brings me to another potential advantage of consulting. If
you want to, you can avoid much of the burden of line management that
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goes with a corporate role. Some individuals love managing people, some
hate it. If you work for a large consultancy you may still have staff whom
you have to performance manage and motivate, but the teams tend to be
small. As an independent consultant staff management is not something
you have to worry about.
Graduates often want to join consultancies for the lifestyle and travel.
There are a few professions which enable you to travel even more and to
wilder places, such as mining and oil exploration, but generally there is a
fantastic opportunity to travel as a consultant if you want to – especially
if you are multi-lingual. Such travel can be exciting and rewarding.
Working in foreign countries gives you a perspective that other travellers
never gain, but it is a double-edged sword.
working in foreign
Travelling all the time can be dull. You have to be
countries is a doublea little shallow to be really interested in having
edged sword
gold frequent flyer cards with several airlines.
Often the locations sound exotic, but an office is
an office wherever it is in the world. Continuous travel will also play
havoc with your social life.
“
”
Some people want to enter consulting for the money. The money earned as
a consultant can be good, but of course it depends what you are used to.
Few consultants achieve the rewards of the chief executive of a major company, unless they happen to become a senior partner in a big firm. On the
other hand, most reasonably successful consultants earn more than senior
middle managers and junior executives in most other industries.
There are much more down-to-earth explanations for becoming a consultant. Some people just fall into it. I was recruited by Coopers &
Lybrand out of industry, and frankly I had no idea what consulting was
but it was better money, which for a young man with a family seemed
an attractive proposition. I was lucky in that it is a career that has suited
me immensely. Other people come into consulting because they feel
they have no other choice. Perhaps they have been senior managers
who find themselves late in their careers having been made redundant
and, irrespective of age discrimination laws, cannot find a suitable alternative role. These are not necessarily bad reasons for entering the
consulting profession. We are all, at times, hard-nosed about our careers,
and just because you entered the profession as way of overcoming
redundancy does not mean it will not be a huge success. On the other
hand, simply because you have some business skills does not mean you
will thrive as a consultant.
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Understanding consultants and consultancy
A phrase that has become common recently is the ‘portfolio career’. This
is a career in which you mix various different types of work together. This
is definitely possible as a consultant, especially if you are self-employed.
Some types of work can complement consulting very well. I know many
people who manage to control this mix very successfully. I have several
professions: as well as running my consulting business I write, deliver
training courses and seminars and take regular time out to study.
Whatever your reasons for considering consulting, don’t fool yourself
that it is always an easy ride, or that it will give you a completely flexible
lifestyle. For example, as a self-employed consultant you may well be able
to take more holiday, you may well be able to work part time – but, and
it is a big but, within the constraints of your clients’ needs. You may
decide to work only nine months a year, but that does not mean you can
definitely choose the three months you don’t work to be 1 November to
31 January every year whilst you are in the South Pacific, and expect at
the same time to be 100 per cent fee earning until 31 October, and have
an immediate start again on 1 February of the following year. Clients
won’t usually wait for a particular consultant: if they have a problem
they want someone to fix it, and if you are not available they can usually
find someone else to do the work just as well. Consulting opportunities
cannot simply be turned on and off. They have to be searched out and
won. Clients and engagements do not easily fit a predictable pattern. If
you want flexibility you do need to have some flexibility yourself.
Whatever flexibility you want from consulting is effectively a constraint
on your ability to service clients. If you are clever and pragmatic there is
no reason why the constraints cannot be overcome and you can manage
to balance your own and your client’s desires very well. But you cannot
both maximise your income and maximise your personal flexibility
(unless, perhaps, you really are a world renowned industry guru).
I know many people who love working as a consultant. But consulting
does not suit everyone’s personalities. If you are constantly working in
different organisations, it changes the relationship with the place you are
working. To some extent you will always be an outsider, which does not
suit everyone’s personality. Consulting can leave many people with an
ongoing feeling of uncertainty and risk. As one project ends, where is the
next and when will it start? If you are an independent consultant there is
no career path as such – you may want to vary your work, and may over
time increase your rates, but there is no management hierarchy to be
promoted through. If you work in one of the large consultancies,
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Consultants and consultancy
promotion is possible, but for most firms seniority beyond a certain level
does not just depend on your consulting skills and expertise, but on your
ability to sell.
Consulting offers great opportunity, but it is different from other types of
employment. It offers potentially high rewards and significant flexibility.
If unmanaged, it can intrude into your personal life, but arguably so does
any senior role. If you are pragmatic and flexible, then you can get a
good level of rewards and flexibility in return.
The economics of consulting
The past few decades have brought an increasing stress on the work–life
balance and less on the financial factors of employment. However, a key
aspect in deciding whether to be a consultant is whether you will make
the income you desire. Whether a career in conthis is not a
sulting can provide you with the money you want
business plan for a
depends on your expectations (or income needs),
consulting
your degree of success, but also the inherent economics of consulting. Before entering this
business
profession you should understand your potential
income. I am going to look at this only very, very simply. This is not a
business plan for a consulting business, but it does explain the basics.
“
”
Let’s start by considering the case of a single independent consultant as this
is the simplest to understand. I will only look at revenues. Costs for independent consultants are generally low, and most of those that are incurred
are attributable to clients and can be recharged as expenses. So, I am going
to ignore them for now. This is of course a gross generalisation, but it is fine
to begin with as it will not change the overall outcome. There are two factors that determine how much money you generate as a consultant:
1 the number of chargeable days a year you achieve
2 your daily charge-out rate.
(Not all consulting projects are charged on a daily basis, but this basis is
accurate enough to understand the general economics of the business.)
It is really as simple as that. So how do you know how many days a year
you will work for and what daily charge-out rate you will achieve? There
are huge variations between different consultants. Taking account of fee
rates and number of chargeable days it is quite easy to find two apparently
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Understanding consultants and consultancy
similar consultants, one of whom has an income three or four times
higher than the other. At the extremes, comparing the lowest to highest
revenue-generating consultant then the multiples are much greater.
Some estimates
To estimate the daily rate you will achieve it is best to do a little research,
but it is not straightforward finding accurate information. There is no
easily available database of rates as there is no transparent market in consultancy, and it is generally not in consultants’ interests to make it
transparent. A good place to start is the internet. There are websites dedicated to sourcing consultants and other temporary staff that will give you
a rough idea of potential daily rates, but they do tend to focus on the
lower end of the market. There are studies of the industry, but they are
not always freely available. Even if you get hold of one, their categorisations of consultants may give you some ideas, but generally are too broad
to base your own fees on. A good source of information is your personal
network. Ask a few friends who hire consultants regularly, and you may
be able to get a feel for the sort of rates the big firms charge. These tend
to be higher than independents achieve, although this is not always true.
The best way to get a feel for rates is to find someone with some experience of the industry and ask them what they think you will be able to
charge. Never forget, whatever fee rate you expect or want, it actually
depends on a client being willing to pay it.
Next you need to estimate how many days a year you will work. If you
are new to consulting, do not be overly optimistic. Can you really work
5 days a week for 52 weeks a year? That gives you 260 chargeable days a
year, but you should never assume that what you make is 260 times your
daily rate. You will rarely be 100 per cent utilised – and even if you can
be, do you really want to be? As a rule of thumb, assume you will be busy
100 days a year. You may well be a lot busier, but if you cannot afford to
be a consultant working only this many days you are taking a significant
risk. Many consultants make a very comfortable living on this, and many
more are busy for considerably more than 100 days a year. But it is best
to be conservative at the start of your career.
Other factors
There are several other factors you must consider. There are possible tax
efficiencies of being self-employed or running your own business. You
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need professional advice to understand these fully, and tax legislation
can change at any time. Remember, if you are becoming a self-employed
consultant after a career in industry there are none of the benefits that
you may have received in your previous job. There are no extra pension
contributions, no bonus, no paid holiday, no health care or sick pay, no
car allowance, etc. Additionally, you should not confuse income with
cash flow. Consulting tends to pay big bills in dribs and drabs, and some
clients can be very slow in delivering cash into your bank account. I am
usually paid reasonably promptly, but some invoices have languished for
six months before finally being paid. You need to have a float of money
to cover for these periods.
For a consulting firm with multiple employees the economics are much
more complex. Costs cannot be ignored. Business costs for premium
office space and facilities may be high. Staff you employ will naturally
expect many benefits on top of salaries. There will be the costs of nonfee-earning staff and senior staff: although they may be able to charge
some fees, these may not cover the full cost of their salary and expenses.
Bad debt has to be considered – that is clients who will not or cannot
pay. I have never (yet!) experienced this and it does seem to be rare.
However, in the largest firms, simply because of the volume of work they
undertake, occasionally a client may not pay. Whatever the size of firm,
slow payment remains a far bigger issue.
Profitability of consultancy companies can be very high when chargeable
utilisation is above a certain level, but drop below this level and all those
large salaries and fancy offices can soon lead to big losses. Hence the tendency of some firms to recruit heavily in the boom times, but also to be
quick to make staff redundant when the economy is struggling. In the
end, although an accountant could find a million flaws in my simple
views, the profit of a consulting company can be approximated by a very
simple piece of arithmetic:
Profit = (days charged × average charge-out rate) – cost of business
The rate you charge and the number of days you work are dependent on
clients, but your costs are largely under your own control. With modern
technology and services you can run a consultancy on a shoestring, and
still look completely professional. Therefore the most important considerations will always be making sure you charge enough days at a high
enough fee rate to generate the income you require. If you are committing yourself to significant costs before you have started to generate
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revenue, think again. You can always make those commitments once you
are sure of your income.
Finally, what about the situation in which you take a job within a consultancy, as an employed consultant, rather than someone who runs
their own business? Here your salary is to some extent divorced from the
economics of the consulting business, and is down to what you can
negotiate. The big firms tend to have a standard package for graduates.
For more senior staff the salary and package will
big firms tend to
depend on how valuable you are to the consulhave a standard
tancy and what you can negotiate. At a more
package for
senior level your value to a consultancy is more
graduates
related to your relationships and personal network than your pure consulting skills. Generally,
the large consultancies pay well and provide a good set of other benefits.
There are professions paying higher, but consulting has to be considered
as towards the top end of the market in terms of salaries. As an internal
consultant it is different, and your salary will depend on the market rates
associated with your specialisation and the remuneration policies of the
specific firm you are being employed by. Generally, salaries are lower
than in the consultancy companies.
“
”
What is a good consultant?
By this point you know what a consultant is, why you might want to
consider it as a profession and whether you will make any money. In this
final section I want to consider what makes a good consultant. Much of
this book is taken up with giving advice on how to be a good consultant;
this short section is concerned with what would be assessed as a good
consultant.
When I told a friend of mine, who is a successful and experienced consultant, about this book he responded with the comment that there is
little to write. He said the book would only be about 10 pages long, but
then went on to advise that I should not write a book, but a haiku! The
truth behind this jibe is that it is quite simple to define what a good consultant is – but most of this book is about how to achieve this rather than
defining it. My poetry skills are limited, so I will stick to prose rather
than the haiku. A good consultant: continuously adds value to clients commensurate with his or her fees.
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We will explore what adding value means in later chapters.
There is a significant difference between being good at something and
being a good consultant. There is an old joke, aimed rather unfairly at
teachers, saying: those who can, do; those who can’t, teach. This joke can be
extended to become: those who can, do; those who can’t, teach; and those who
can’t teach, consult. The joke for teachers is unfair, but it hides an important
truth – there is a difference between being good at something and being a
good teacher. As many students will attest, being a good university lecturer
is quite a different skill from being a brilliant academic. I am sure we have
all experienced the giant brain who cannot explain anything, and the
person with a nominally lesser grasp who explains it very well. While most
teachers are perfectly capable of doing, that is not what they are employed
for – they are employed to impart and embed knowledge and skills in their
students. Whether or not they can actually ‘do’ is to some extent irrelevant. It is similar for consultants. There are many advantages in having
management experience, but consulting is not about managing. Equally,
having been a great manager is an advantage for consulting, but it does
not guarantee that you will be a successful consultant.
From your perspective you are a good consultant if you achieve your personal objectives through consulting. I cannot tell you what your personal
goals should be, and the rest of this book is about how you can continuously add value for your clients. However, you may wonder whether you
have the right type of personality to succeed as a consultant. There is no
single personality type who makes the best consultant, but I will pick on
a few factors which I think are important.
Firstly, as a consultant you should be a people person. It is not necessary
to be a natural extrovert, but you must be happy engaging with others.
You will constantly be working and interacting with people, and if this
does not excite you then consulting is not for you. Next, you should be
flexible and adaptable. Client needs and expectations vary enormously,
and you need to flex to the situation. It may surprise some people, but it
also helps if you are not status conscious. Although you may end up as a
hugely successful consultant earning much more than most of your
clients, when you are on a client’s site you are just a consultant doing a
job for them. Consultants must be orientated to resolving problems. A
client has engaged you to help; there are many forms this help can take,
but all of them must result in resolving a client’s problems. Next, whilst a
consultant is there to help, they must not be over hasty in determining
solutions. You must have the personality that wants to solve problems
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properly, rather than resolve the most apparent symptoms. You want to
be like the doctor who finds out why a patient has spots rather than the
one who just gives a cream to make them less itchy. Finally, you must be
someone who listens. To be objective and to provide a diagnosis that is
most helpful to the client requires listening and assessing the situation.
Solutions must be tailored to the specific context.
There are many other factors which influence your ability to be a great
consultant, but the above are critical.
Summary
If you are new to consulting there are some essential concepts you must
understand. You should now be familiar with the main concepts covered in
this chapter. They are:
I
The role of a consultant and the difference between it and other roles,
especially that of a line manager.
I
The skills of a consultant in relation to those of other professions such as
contractor or interim manager.
I
The core consulting jargon.
I
The variety of consulting organisations.
I
Why you want to be a consultant and whether it is a profession that can
fulfil those needs.
I
The economics of consulting.
I
What a good consultant is.
The rest of this book explains how to be a good and successful consultant.
chapter
2
Why does anyone buy consultancy?
C
onsultants regularly present the consulting profession as highly
intellectual and just a little bit special. Yet underneath the hype,
management consulting is merely an industry providing a service
in response to a customer’s need. All the normal lessons from sales and
marketing apply. The customer may be called the client, but it is only on
this client’s willingness to provide money in exchange for the consultant’s service that the industry is built. Selling consulting is not especially
difficult, but it is essential for anyone who wants to succeed as a consultant. If you never make a sale then even the best consulting skills in the
world are only of theoretical value.
In this chapter I explore the basis for selling consultancy – a client who
buys. Later in this book we will discuss interesting and powerful ideas
about consulting, but I want to start relatively simply and prosaically, as
success as a consultant must start with your feet firmly on the ground!
Although the chapter is aimed at external consultants, the lessons are
applicable to internal consultants. Whilst the challenge of ‘selling’ services internally within an organisation is different in some respects, for
instance the lack of a formal contract, the essential need to identify
opportunities and encourage a client to ‘buy’ is still there.
No matter how wonderful, unique or valuable your skills are, no one buys
consultancy simply because of your abilities. Clients buy consultancy
because they have a need or desire which consultancy is perceived to be
capable of fulfilling. This chapter explores what these needs are. One of the
fundamental mistakes new consultants make is to misunderstand that it is
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Understanding consultants and consultancy
not skills that create the opportunity for consulting services, but client
needs. Skills are required to market and deliver consulting, but if you do
not understand your client needs, then you will struggle to sell an engagement. Before you spend time perfecting skills, gaining qualifications or
acquiring accreditation you should heed the most basic marketing lesson:
to understand what your customers desire.
Having a need is an essential part of a client buying consultancy, but there
are additional prerequisites which determine whether a client can and will
buy the service you offer, even if it fulfils their
it is useful to look
needs perfectly. Before considering what makes a
at the prerequisites for client buy, it is useful to look at the prerequisites
for purchase. I explain these in the first two secpurchase
tions of this chapter.
“
”
Much of this chapter considers the client as if there is an obvious individual client. The final section of this chapter looks at one of the possible
minefields of consultancy, in answering an often surprisingly complex
question: who is your client?
The prerequisites for selling consultancy
What are the prerequisite conditions which must be met for it to be possible to sell consultancy? I have identified eight basic prerequisites which
must be present in order to sell a consulting engagement:
1 There is a client.
2 The client has a currently unfulfilled need.
3 The client believes that they require help to resolve this need.
4 The client knows about you and your services.
5 The client perceives that you are capable of fulfilling this need.
6 You (or someone else acceptable to the client) are available to fulfil
the engagement.
7 The client has a budget/finances to pay for your services.
8 The client has authority to spend the budget/finances.
Without over analysing these prerequisites let’s quickly review them.
The first prerequisite is the most obvious, so obvious it can seem like it
need not be stated. Hidden in the obviousness is an unchallenged
assumption. The assumption is: if I have business knowledge and skills I can
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Why does anyone buy consultancy?
be a successful consultant. Documenting prerequisite 1 may appear unnecessary, but I know of consultants with all sorts of esoteric and interesting
skills, for which there is no client. So, unsurprisingly, they do not find
work. They moan and ponder about how to increase their skills further,
thinking ‘surely then I will gain work’, without noticing that there are
many more poorly qualified, but highly successful consultants. Before
you spend time analysing and perfecting your service line, check that
there is likely to be some form of client. Whatever skills or service line
you have – no client, no income!
When there is a potential client, to sell a service, they must have a currently unfulfilled need, and a belief that this need can be fulfilled by
consulting. Unfulfilled needs exist aplenty in business. Ask most managers if there is anything they would like help with or problems to be rid
of, and you will soon get a very long list. This list radically shortens
when you ask them which of these problems is a candidate for resolution
by a consultant.
Let us suppose we have met the first three prerequisites. There is a client
with an unfulfilled need that they accept they need help fulfilling. We
are getting closer to the possibility of selling an engagement.
Prerequisites 4 and 5 relate to you personally. The client must know
about you. A client cannot buy goods and services they know nothing
about. This is a common problem in consulting. If you happen to be
working for a major international consultancy most potential clients will
have heard of you – although even then, they may well not know your
full range of services. On the other hand, if you are a small consultancy
or an independent consultant most of your potential clients have no
knowledge of your existence. Clients not only need to know about you,
but to even get a sniff of real work you need to be perceived as potentially capable of fulfilling their needs. Simply put: are you a known and
credible supplier? Unlike the first three prerequisites, prerequisites 4 and
5 are largely in your control and depend on your marketing and networking skills. If you are in a situation in which the answer to this
question is no, the follow up is obvious: what will you do to become a
known and credible supplier? (See chapters 3, 5 and 9.)
Of course, to perform an engagement you, or someone else you can put
forward who meets prerequisites 1 to 5, need to be available to do the
work. Consultants use the term availability to refer to time when they
are available to work on a live engagement – i.e. time when the consultant is not working on another engagement, busy with business
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Understanding consultants and consultancy
development, sick or on holiday, etc. Availability is difficult to predict.
Engagements don’t just end on a fixed date, and the time it takes to sell a
consulting engagement does not usually neatly align with the time it
takes to complete whatever else you are working on. Get your timing
wrong and you may win some work when you are still busy with another
client. You do not actually need to be available to perform the engagement to sell the engagement to a client. It is possible to sell work without
being available to deliver it, but unless you can make yourself available
quickly, the sales activity is a waste of your and your client’s time.
Prerequisites 7 and 8 relate to money. You are a commercial business, and
therefore are only going to work if there is access to finance to pay your
fees. There are obvious situations in which this is not going to be true;
for instance, companies going bankrupt or organisations with very
restricted budgets. Commercially, these are to be avoided. As an exception, you may choose to take on some pro bono work for a good cause. I
say as an exception not because I want to put you off undertaking pro
bono work, but for the simple reason that unless you are privately
wealthy it can only be a small proportion of your work or you will not
stay in business long. A more common problem is not that an organisation has no money to pay your fees, but that the individual manager
who is your potential client has no direct access to a budget or no ability
to influence someone else to spend. It is always useful to ascertain early
in your client negotiations if a client has sufficient money which they are
authorised to spend.
In this section I have summarised the core prerequisites for a client to
buy consultancy. Without these prerequisites being in place, no matter
how hard you try, there will be no sale. But there is another side to the
equation. Not the client perspective, but yours. Although it is not a prerequisite for buying, it should be a prerequisite for selling – that the
client can provide you with whatever you need to do your work. Few
consulting engagements can be undertaken without any client support.
For instance, you may need access to human resources, almost always
require some data and information, and will always need time to complete your work. Clients may not want or be able to fulfil all your
prerequisites. As a consultant you must be flexible
as a consultant
and often ingenious in finding ways to complete
you must be flexible
engagements without all the ideal things you
and often
think you need to do your work. However, whilst
ingenious
you may be able to compromise there are some
“
”
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Why does anyone buy consultancy?
minimal prerequisites that must be met. If the client cannot fulfil these
prerequisites for the work, the engagement should not progress (see
Chapters 5 and 12).
Obstacles to selling consultancy
The existence of an opportunity, which meets the prerequisites outlined
above, is the starting point for a sale. We are going to look at identifying
opportunities and selling consultancy in detail later in the book (Chapter
5), but just because there are opportunities does not mean you will necessarily gain work. Clients have choices. There are many consulting
companies, and there are thousands of individual consultants. For every
opportunity there are also many possible obstacles to sales
What are the main impediments to selling consultancy? Here are some
key obstacles to sales:
I
You may not convince your client that you are the right choice.
Clients will not just select you – you have to overcome the obstacles
of their natural scepticism and doubt. Doubt may arise if you do not
have a sufficiently established reputation, or if you write a poor
proposal. Scepticism of your skills will be reinforced if there is bad
chemistry between you and the client. The latter is one of the most
difficult issues to deal with. Each of these problems can be overcome,
but each reduces the likelihood of a sale.
I
You are often in competition, and each credible competitor is an
obstacle to your sale. You not only have to be able to meet the
prerequisites of a sale, but you must be the best from a competitive
position. What the client regards as the best will vary from situation
to situation. A key activity in a competitive situation is to extract the
client’s decision-making criteria for selecting a consultant. Typical
criteria are your fee rates, experience and skills, availability, and your
demonstration of your understanding of the situation. But there will
be less tangible factors as well, such as how much the client likes you.
I
Your needs and the client’s may not match. This is explored in more
detail in Chapter 5, but is summarised here. A client does not just
have a need to buy, but you must have a desire to sell. An
opportunity not meeting your needs can be an insurmountable
obstacle. A client may not be offering a high enough fee rate to
interest you. There may be some physical or geographic prerequisites
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Understanding consultants and consultancy
you are not willing to commit to – working at nights or thousands of
miles from home.
I
There is another more complicated reason why an opportunity may
never become a sale. Imagine your client meets all the prerequisites to
sell to. Further than this, you have had a series of productive
conversations during which you have reached a mutual conclusion
that you can help the client and they will meet your prerequisites of
engagement. What can go wrong now? Client needs can change.
During the process of engaging and selling to a client it is not unusual
for needs to change. This is particularly frequent if the sales process is
protracted. The reasons are many and varied. Common reasons
include a change in the client’s business circumstances, an evolution
in understanding of needs as your discussions become more detailed,
or the involvement of another stakeholder with different ideas from
the original client.
In the first two sections of this chapter I have explored the various prerequisites that must be met and obstacles that must be overcome in order
to make a consultancy sale possible. It may be that after reading this list
you think it is never going to happen. Don’t despair – these prerequisites
are regularly met, which is proven by the vast volume of consulting sales
that are made all the time. I have listed them not to put you off, but to
enable you to align all your ducks in a row, painlessly.
On numerous occasions, I have seen consultants (including, on reflection, myself) making epic efforts to gain a sale, only to end up wasting
time as one or more of these prerequisites was not met. This cannot
always be prevented, but frequently the wasted effort is avoidable. It is
often determinable early in the sales process that some crucial prerequisite cannot be met. Frequently, getting a client to answer a simple
question like ‘what budget is available for this work?’ is enough to determine there is no real opportunity. Unless you have some power to
change the situation, then you are much better off moving on to the
next opportunity than working hard where no engagement will be available. I have never heard of a client deliberately wasting a consultant’s
time – as it is their time too – but sometimes it can feel as if they are! A
client may simply have not thought through all the implications of
engaging you, or sometimes they value just talking to a consultant without committing.
2
I
Why does anyone buy consultancy?
The client’s explicit needs for buying consultancy
Let’s explore prerequisite 2 from the list earlier in this chapter in more
detail: the client has a currently unfulfilled need. This is the most complex
and important item on that list, and the one that consultants spend a
significant proportion of their time identifying and exploring. What sort
of needs do clients have? Clients have a huge variety of needs and
desires. I cannot write a list of all the possible client needs that exist, but
I can place them into a short set of categories. These are not mutually
exclusive, but the core needs clients typically fall into one of more of the
following categories:
I
The client thinks something along the lines of: ‘I have a problem
which I want solved – and I think a consultant would be able to solve
it for me.’ This is the traditional reason for buying consultancy.
Variations on this theme include:
– I want a bit of fresh creativity, innovation or new ideas which I
cannot find in my existing employees.
– I need some facilitation or workshops to solve a problem.
– I want access to some specific IP (intellectual property), tools or
techniques that a consultant has.
I
A client has a new or ongoing initiative/project but does not have all
the required resources. They think: ‘I will ask a consultant to fill a role
on the project.’ Depending on the precise type of work this may be
truly consulting, but more often it is really contracting. However, if
the work is interesting and the fee rate is right there is no reason not
to pursue it.
I
A client has some operational work and the normal manager is
away, unavailable or still needs to be recruited. Alternatively, there
is a temporary operational role to fill. This is the realms of interim
management, but the boundaries between interim management
and consultancy are fluid and many consultants make excellent
interim managers.
I
A client has too much to do, juggling too many tasks at once and needs a
little bit of relief or else risks dropping one of the balls. The client wants a
consultant to come in and seamlessly take control of one or more of the
juggling balls so they can give a bit more time and attention to the
remaining ones. This is a factor in many consultancy sales.
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I
Occasionally, a client may be told to get some assistance from a
consultant. This instruction may come from a supportive or frustrated
senior manager telling a subordinate how to fix something that
should have been resolved long ago. Alternatively, it may be a
demand from an external source, such as an industry regulator telling
a company to quickly become compliant with an area of regulation.
I
Finally, a need can be created. Consultants with time to spare and a
bit of creative insight can come up with all sorts of appealing and
exciting service lines. Occasionally, a client will listen to a cold sales
pitch and be interested enough to buy your service. The client may
not have known they had a need, but after listening to the
consultant’s pitch finds that they do. It’s like advertising: you did not
know you wanted chocolate until you saw the advert! However,
unless you have a strong relationship with your client, this is a hard
act to pull off. It is possible, and successful consultancies do regularly
achieve this. One of the reasons for fads in consulting services is to
establish competitive differentiation and to create demand. Chapter 9
explores the situations in which this is possible.
Hidden grounds for buying consultancy
What a client tells you, when discussing their needs for consultancy, may
provide a clear and complete picture of why they are considering your
services. However, this is unusual. Most people have other grounds that
they do not divulge. Sometimes they are embarrassed to tell you everything or maybe they feel it is better if some things remain confidential.
They may think if they tell you the truth you will not do the work.
Sometimes they do not tell you because they do not realise the information is relevant or important to you. Often they do not tell you because
they have not analysed all the reasons they want to use a consultant and
are not consciously aware of the grounds themselves.
Irrespective of the situation, you will usually start a consulting engagement with an incomplete and sometimes incorrect understanding of why
the client is engaging you. In practice, this is neither always avoidable
nor necessarily an intractable problem. But, generally, you are in a better
position to fulfil the client’s needs if you understand what the hidden
grounds are.
You may not understand all aspects of the client’s grounds for buying
consulting because the problem is complex and cannot be easily fully
2
I
Why does anyone buy consultancy?
involvement can
only happen when the
engagement
starts
“
explained without some time involved in the
organisation. This involvement can only happen
when the engagement starts. It is not unusual for
understanding of needs and selection of
approaches to fulfilling these needs to change as
the consultant fulfils the engagement. This is one reason why it is often
effective to start a large engagement with a smaller scoping exercise,
when both the specific problem and nature of the client’s organisation
are explored.
”
There are many other motivations for employing consultants which will
not be immediately apparent when you are first engaged. Typical examples of hidden grounds for buying consulting include:
I
Risk reduction: a client does not know how to overcome a problem,
does not have confidence to so, or thinks there’s too much risk in
doing it themselves. These are perfectly valid grounds for engaging
consultants. As a consultant, if you do not reduce a client’s business
risk as part of your work – for example the risk of taking the wrong
decisions or performing a poor implementation of change – then you
have not really added value. If you have a very strong relationship
with your client they may admit this, but reducing business risk is
rarely explicitly stated as a rationale for engaging you.
I
The client has tried already, but has failed or is struggling to overcome a
problem. Rarely will a client admit this directly to you, but it is
important to try and ascertain if this is the case. If a client has
previously failed to resolve a problem then their need for help
increases, but their emotions towards the work and the consultant are
easily prejudiced. Although this situation is common it does need to be
treated with care. If mishandled, you can be perceived as positioning
yourself as ‘better’ than your client. This is never popular with clients!
I
The client wants to gain buy-in to an idea or project. A client can
simply want something confirmed that they already know. They may
ask for advice, when what they are really asking for is your agreement
to their existing position. A client is unlikely to say directly to you: ‘I
am engaging you to confirm my opinions.’ This can be tricky, as of
course you may not agree with their standpoint, and can easily stray
into an ethical dilemma (see Chapter 10).
I
Clients sometimes engage a consultant because they need to be seen
to be doing something, not because they actually want anything
done. Clients have many stakeholders they need or want to keep
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Understanding consultants and consultancy
happy. These include more senior managers and external stakeholders
like regulators. By explicitly employing a consultant, to perform an
engagement which the client has no interest in, they can sometimes
artificially satisfy such stakeholders. The risk to the consultant is
limited, other than that findings and advice may never be
implemented by the client.
This is by no means an exhaustive list. The central point is to be alert for
the true, covert motivations clients have for engaging you. The only way
to understand the hidden grounds is by observation and entering into
exploratory dialogue with the client. If you meet all their explicit needs,
but never fulfil their hidden needs, you will not satisfy your clients – and
often the hidden needs are more important than those explicitly stated.
As all good marketers know, client satisfaction is a crucial element in a
successful business. In Chapter 5 we will explore this further.
Having sold an engagement to a client, the subsequent challenge for a
consultant is to continue to remain involved. There are many reasons
why a client may retain a consultant, the most obvious being the need to
follow on from a completed engagement. A less overt reason is that the
client values the ongoing advice and support of the consultant. Much of
the value of consultants can come in peripheral activities: extra value
that the client gains simply by the consultant being around. This can be
small tips, advice, problem solving, tools and so on.
Who is your client?
New consultants often talk about their client as if it is always absolutely
clear who the client is, and also use the term client and the name of an
organisation interchangeably. As in ‘my client is XYZ Corporation’. Your
fees will be paid by XYZ Corporation. XYZ is the client organisation, but
you cannot interact, advise or have a relationship with an organisation.
Your client is one or more human beings. There are many situations in
which there is clearly one client, and you can be sure that the interests of
the client and the client organisation are aligned, but often this is not
clear cut. This can result in two related problems: firstly, the difficulty of
identifying the true client, and secondly, conflict in the views of different
stakeholders and clients.
You need to know who your client is because the client is the person (or
group) who your consultancy is aimed at. The client is the person who
will judge whether the consultancy has been successful or not. If you do
2
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Why does anyone buy consultancy?
not clarify who the client is you may never be judged to have completed
your work successfully. A different problem is that without a clear-cut
client different people in an organisation can legitimately ask you to do
all sorts of work. Not having an unambiguous and single client can be
compared to the situation in which as an employee you do not know
who amongst a group of managers is your boss.
One reason for this lack of clarity is that there are often multiple stakeholders in a client organisation who have different views and interests in
a particular engagement. Although it is theoretically meaningful to differentiate specifically between a client and other stakeholders, in reality
the boundaries are not always clear cut. There can be a wide variety of
interested parties in any consulting engagement.
there are often
On some engagements this is a minor issue. On
multiple stakeholders
others, different clients/stakeholders can be in
direct and explicit conflict over the needs and
in a client
direction of a consulting engagement, with the
organisation
consultant left like some UN arbitrator in the
middle trying to resolve the dispute with limited resources. The conflict
may be explicit, but sometimes it is hidden, which is worse, as the consultant can progress the engagement with one understanding and only in
the latter stages when feeding back to one client comes against another
stakeholder who denigrates the work.
“
”
Another situation arises when the person who engages you, who you
take to be the client, is actually hiring you under the direction of a more
senior manager. The senior manager is really the client. The person who
engages you may not accurately represent the true client’s needs. This
can lead to all sorts of misunderstandings and problems.
Different stakeholders are quite likely to have different views on what is
required from an engagement, and even how the work should be
approached. Some stakeholders may think you are the ideal candidate to
perform an engagement, others may doubt your suitability to do the
work. Various stakeholders will have all sorts of different decisionmaking criteria. Ideally, you need to clarify all of this.
Another source of confusion is the difference between a client and an
organisation. A client is a tangible person. You can speak to them and
through dialogue get an understanding of their wants and desires, needs
and wishes, interests and foibles. An organisation is an abstract entity,
and if such an entity can be said to have interests you can only determine them indirectly – by speaking to the staff and managers of the
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Understanding consultants and consultancy
organisation. Problems arise because the interests of the individuals in
the organisation probably never align with those of the organisation.
Even if a member of an organisation’s staff is trying to be objective and
ignore their own interests, they will be constrained in achieving this by
their biases, inherent assumptions and lack of full understanding of what
the interests of an organisation are. One reason for clear and simple
vision and mission statements in organisations is that all staff can then
determine what the interests of the organisation are and are not.
We are therefore in a situation of imperfect information and limited consensus. One of the tasks a consultant initially has in any engagement is
not only to understand the client’s wants and needs, but to clarify who
the client is. Ideally there is one clear client who has the remit and
authority to describe exactly what you should do. In practice, this is not
always achieved. Power in organisations does not always fit the organisational hierarchy, and you will not always be so lucky as to have one main
stakeholder in your work.
Why is this a problem? Because a lack of clarity over who the client is,
and no real understanding of the client’s need and desires, leads to all
sorts of other difficulties. Your engagement may be perceived as a failure
if you please one person you perceived as a client, only to find someone
else – who is really the client – is displeased. You cannot complete an
engagement successfully without understanding client needs, which you
won’t do if you have not identified the client correctly. You may have
difficulty finishing your work as you try to satisfy more and more client
stakeholders. If you are working to a fixed fee, trying to satisfy everyone
causes you to lose money. There are many variations of these sorts of difficulties.
How can you solve this issue? There is no foolproof way to resolve it in
every situation. Your role as a consultant may be explicitly to help reach
consensus between all stakeholders. But it will not always be, and even if
you are there to drive consensus your role can never be to sort out all the
differences of opinion in an organisation. However, you do have to
achieve at least a sufficient consensus to be able to complete your
engagement effectively. There are five main steps to achieving this:
1 Openly discuss the issue with whoever first engages you, and try to
get them to support you in identifying and resolving any differences
of opinion. If this is not possible, you should strive for the manager
who engages you at least to accept the implications of an imprecise
understanding of needs.
2
I
Why does anyone buy consultancy?
2 Understand who might be clients and stakeholders in the work, and
then explore and analyse the specific situation, identifying true
clients and exploring their needs.
3 Ideally, identify one primary (or ‘real’) client who will resolve any
conflicts and arbitrate in any disputes with other stakeholders.
4 Take a commonsense check. When you do have an understanding of
the different client and stakeholder needs, do they form a coherent
and consistent set? Can you fulfil this set of needs in a sensible and
achievable engagement that feels right for the organisation?
5 Write down your understanding of the situation in your proposal.
Then if things are not as they appeared to be, you at least have a
document you can point to with your understanding as agreed with
the client. However, for some sensitive needs this is not possible.
We will look at the points in this list again in Chapters 5, 9 and 10. For
now, I want to focus on step 2. Who might your client be? This will vary
from situation to situation, but the choice of the person who is your
client starts by considering the person who first engages you. Typically
you will be approached by an individual about the work the client organisation wants performed. This person may or may not be the ‘real’ client.
I call this person the client interface.
Another possible client is the manager who has instructed the client
interface (usually a more junior manager) to engage you. In some situations, it was a personal decision of the client interface to engage you, but
it is quite common for a more senior manager to direct the client interface to hire a consultant. This senior manager is the real client. Ideally,
you want to develop a direct relationship with this person, as they are
the one who really wants the work done and are likely to be the judge of
its success.
There will often be senior managers or executives with no direct involvement or interest in the work you do, but who influence the work
indirectly by being concerned or even assessing the performance of the
manager who engages you. This is the underlying client. The underlying
client is important, as in the end this is the person or group your real
client mostly responds to.
There are budgetholders and approvers who need to be convinced before
you invoices are paid. You are a commercial business and need to be paid
for your work and therefore must be comfortable that such people will
authorise your invoices. Usually the person you work with as a client is
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Understanding consultants and consultancy
whoever
authorises your bill is
the financial client
“
”
also the person who authorises your bills for payment, but not always. Whoever authorises your
bill is the financial client. The financial client is
important as of course you want to get paid!
Finally there is a whole host of other client staff who review, approve or
may simply be asked an opinion about your work. They may also work
for you on the engagement. Such staff are not really clients, but you
cannot ignore them as they have the ability to influence the judgement
of your client both positively and negatively.
Behind these various people lies another group, who will be more or less
important depending on the nature of the engagement. These are the
client organisation’s stakeholders. These include external groups who
may have an interest in the work, for example shareholders and owners,
and for some industries, regulators. Many consultants never interact with
these groups, but for some consultants they are a major influence on the
success of the consulting engagement.
A typical set of clients is shown in Figure 2.1. The solid lines represent
typical direct relationships relevant to the engagement. The dashed lines
represent other possible relationships relevant to the engagement.
When considering this set of clients and stakeholders the following
points should be taken into account:
I
The client is always a person. You may be paid from a large corporation’s
bank account, but you are engaged by, interact with and take instructions
from an individual or group. An individual or group responds to your
advice and accepts your invoices. For many reasons we may say ‘my
client is XYZ Corporation’, but in reality it is always a person.
I
Ideally there is one client, which is sometime achievable, but there
will always be more than one stakeholder.
I
The bes...
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