Brian's Rules of Consulting

This is the first in a series of posts describing my perspective on behaviors and attitudes critical to achieving success as a consultant. Although some of this material is presented somewhat tongue-in-cheek, the substance is real and the advice has been validated time and again over the past 20+ years. So here I present Brian's first 3 rules of consulting:

On project management: If you think everything is going well, you're out of touch.

• Projects don't run themselves;
• Most of your direct reports don't share your vision of the answer;
• If you don't have a vision of the answer, you're in deep trouble.

On having the right answer: Arrogance will always come back to bite you. And yes, publishing your own rules of consulting does constitute arrogance.

On participating in meetings:

• Don't interrupt other people while they are speaking, particularly the president of the organization;
• Don't monopolize the conversation;
• Learn how to listen;
• Understand, completely, the question before you answer it;
• If you're doing more than your share of the talking, then shut up and listen to what others have to say;
• You don't have to answer every question. There are other people in the room;
• You don't have to be the first person to answer the question, even if you know the answer;
• Focus on the purpose of the meeting. Don't dwell on things that aren't on the critical path to achieving the objective.

On the importance of strong writing skills:

• Always, always, always take the trouble to spell names correctly. A misspelled name is almost as bad as pronouncing it wrong;
• The impression our documents give is the impression people form of us as qualified professionals;
• The purpose of our documents is to communicate! Documents that don't communicate clearly and concisely call into question our abilities and the reason for our participation. Every piece of paper we give someone has an impact;
• USE SPELL CHECK!

Up next: Brian's view on client relations.

Caring for your most precious assets

It is especially true in the professional services business that emphasis be placed on the care and feeding of your "golden geese" - your people. They are your only true assets and need to be valued and treated accordingly. For your organization to experience consistent and meaningful growth, it is critical that your managers "get people"; that they really understand the need for sincere interpersonal communications and recognition. Disingenuous pats on the back won't cut it. As I mentioned in a previous posting, consultants are not widgets. You are not managing an inventory of parts and machines. The soft stuff counts.


This touches on the topic of incentives. It is a universal truth that incentives drive behavior. Conversely, the application and administration of an ineffective incentives program will most certainly be demotivating. Clearly, bonuses and other monetary forms of recognition can be quite effective if well-designed and applied properly, but management needs to consider other creative forms of gratitude that will allow those employees that exceed expectations to feel that they have contributed in an impactful and positive way. Whatever form the incentives take, the employees have to believe that their objectives are achievable, and they need to be able to empirically measure their progress against those objectives. I would recommend taking a look at www.compensationarchitect.com for a great perspective on the power of incentives and some dos and don'ts on how best to use them to drive desirable behavior in your organization.

Prepare for Battle

For the young software company, the internal services organization is often the only game in town. As such, it is far too easy to become complacent, and this can lead to a precarious situation when the competitive landscape changes.

Invariably, particularly for those companies that have some success in the marketplace, third party services firms will identify and attempt to exploit the business opportunity through training and recruiting experienced talent. Ironically, if the company has developed a robust and effective partner program, it is often these very same "partners" that become the primary sources of competition.

So what can be done? The key, as in all mitigation strategies, is to stay ahead of the competition curve. How clearly and meaningfully you can differentiate your offerings will determine how long you will continue to be perceived as the market leader in your domain. Identify which skill-sets are more likely to be viewed by the market as commodities and leave that lower-margin business for the competition. Focus on continuously building and strengthening expertise specific to your domain and product line. Do not wait until the competition has arrived. This is a core strategy for the long term health of the services business. Not only will it allow you to establish yourselves as the true experts and thought leaders, it will also allow you to minimize margin erosion due to competitive rate pressures. You will not win a rate bidding war if your services are considered largely similar to your competitors'. Again, differentiation is critical.

You will never prevent new players from entering what appears to be a burgeoning market. Be proactive in preparing for the inevitable and show the market that you are still the only game in town.

At the precipice of change in the recruiting world

This is not a topic necessarily specific to the professional services arena, but I think it's incredibly relevant in today's economic environment and I would like to share my thoughts. I am of course even more interested in your perspective.

I think times are changing in the recruiting profession, and I have to say it's about time. Already, technology and the increased use of social media are pushing the traditional recruiting envelope. The habits and behaviors being exhibited in the recruitment community in this market - lack of response, poor communication, posting of jobs that may or may not exist, general rudeness - will only serve to hasten their own demise. I search for and apply for jobs via LinkedIn and Execunet. I receive a daily Twitter update called TweetMyJobs. Just as the advent of web services like Expedia and Travelocity put into question the value of the traditional brick-and-mortar travel agency, social media and online networking are having a similar impact in the recruiting arena. And just as in the travel industry, those recruiters who survive will be those that innovate and work in partnership with technology. Those that fight against it will very quickly go the way of the 14.4 modem.

All revenue is not created equal

Yes, a dollar is a dollar and yes, it's all green. But how does it look at the bottom line of your income statement?

There are essentially 2 sources of services revenue:

• Revenue from new business
• Revenue from existing customers
  

While long term growth requires the acquisition of the former, successful execution will likely lead to the higher margins of the latter.

Acquiring new business is expensive. Participation in the sales cycle can require months of non-billable time and expenses. And closing the deal often requires significant concessions on rates.

Add-on business from existing customers, however, typically requires far less investment. A formal sales effort is usually substantially compressed to a week or less, if required at all. And, perhaps more significant, as a result of the trust and relationships that have been built during the course of the initial engagement, billing rates can usually be brought up to market levels. The result is revenue that will produce far more attractive margins than that of new business, and often over longer periods of time.

The lesson: Execute up front and reap the rewards over the long haul. Leverage the relationships you've worked hard to build and mine your existing customer base for new, higher margin opportunities.

Leverage and growth

Arthur Andersen/Andersen Consulting/Accenture got it right a long time ago. The key to rational, sustained services organizational growth is leverage: the practice of consistently hiring at the lower experience levels and growing your consulting staff from the bottom up. Over time, this will allow you to leverage the experience of your existing consulting staff to help develop and mentor those being brought in at the entry level.

Formal training has its own place in the professional development process, but as a consultant in my early years (and even today), I learned the most and achieved my greatest professional growth simply by working alongside those who had more more experience than I. This is not to say that hiring senior, experienced consultants has no merit. Within the startup world, it is especially important to seed the organization with experience and professional maturity before bringing in consultants whose greatest achievements occurred in the classroom. But once the machine is up and running and seems to be well-oiled, moving to a model that includes a prominent component of organic growth will help build a well balanced consulting organization.

There is a financial impact associated with this model that should be mentioned as well. I hate to use the term "cheap labor", but the fact is that resources with little to no professional experience are far less costly and represent a real opportunity, if managed right, to achieve growth while maintaining strong margins. Of course, to be successful in effectively bringing junior resources into the fold will require some up front investment - college recruiting, new hire "boot camp", extensive training programs specifically designed for inexperienced hires - the payoff in the longer term can be substantial.

Consultants are not widgets

You can't build them to order and deploy them "just in time". You can't manage your services business quarter by quarter. Running an effective and financially stable services business requires investment in resources in the near term so that staff levels can be optimized over time, thus delivering predictable, stable and desirable profit margins. My rule of thumb is that with the exception of very specific needs for very specific technical expertise, you can count on a new consultant to be billable 3 months after hire. There is time for general on-boarding, training, "mentoring" and then, of course, finding the right project with the right available role for a customer who is willing to take on a "newbie". The stars must align just so. The good news is that if organizational growth is managed effectively, with results measured over a 6-12 month period and the right training mechanisms are in place, utilization rates can be kept at healthy levels and ad-hoc customer requests can be addressed in a timely manner. If executive management doesn't get this concept, pressure on maximizing utilization will prevent effective longer term growth. The result will be consultant burn-out and an inability to provide profitable services when unforecasted demand rears its head.