Regardless of the number of skills, techniques and tools available for management level consultants, most of them tend to revolve around 6 fundamental principles.
The Street Smart Consulting series (subscription at the side of this page) touches on these in some detail, but I thought it would be worthwhile running through them here.
This is a bit of a long post so its okay if you skip over it.
1) Scarcity and Value
No matter which industry you work in you are never going to generate reasonable revenues unless you are delivering something that your clientèle sees as valuable and hard to achieve without you.
Those of you who invest will be aware of the recent troubles at Starbucks. My feeling? Don't look to them to return to their previous levels of strength if their model stays the same.
Why? When they started they were new. Their type of services and atmosphere was scarce, in fact - they invented the whole comfortable coffee thing. Today - well everyone does it.
It is no longer scarce, and therefore no longer as profitable as it once was.
Newspapers were in decline before the internet became truly global. This fact is often forgotten in the hype about classified advertisement slayers like Monster.com, Realestate.com.au and Carsales.com.au.
But even while paid circulation declined, their overall revenues continued their meteoric rise. Today, they are losing about 10% or more each year, in fact even the news websites are not doing the business they should be.
Why? Google has made sure that news is no longer scarce - and neither is published and accessible opinion either.
As soon as a story breaks there are at least 12 different versions of the same story hitting the internet on Google news.
Their only real chance for paid subscriptions is in presenting news that is scarce. Deep research on (say) resource industry stocks or a specific business market.
The same is true for consultants. Clients continually push us into commodity situations. We can't fault them for this, it is the natural to and fro of business. Our objective is to separate ourselves in a veil of scarcity, and deliver outstanding and unmatched value in our area.
This doesn't mean you cannot comtinue to compete in your chosen area. Even commodity marketplaces can have differentiating factors. Australian Iron ore producers have an advantage over competitors merely due to proximity to Asia.
Whether it is through your track record, your specific deep focus, your exceptionally broad general range, the data you have at your fingertips, the relationships you hold, or even the way that you engage with them.
It needs to be something they cannot easily get elsewhere, and it needs to be worth having. Without these two then your revenue is automatically restricted.
2) Leverage your time
You will never get to be wealthy from selling their hours one hour at a time. The great problem with selling hours is that you can only sell one hour on time. And then it is gone forever...
You can try to capture some value from it to help you sell in the future, but you will never have that hour again, and you have already earned the most you could have earned from it under this model.
You have a range of opportunities out there to leverage your time. Some of these are relatively well known, some are not.
a) Stop billing for hours and start billing for outcomes. The value of what you deliver is high, so too should be your fee for doing so.
b) Start subscription business models anywhere you can do. mentoring clubs, SaaS niche programs, memberships and maintenance deals, retainer fees and so on.
c) Develop and license IP.
d) Run internal and public courses, seminars and conferences.
e) Books, eBooks, Audio books and other saleable items. John over at Duct Tape Marketing has done a fantastic job of packaging up his small business marketing tools into a saleable product.
You get the picture right? This is not all of the areas where you could leverage your time. But this should give you a good idea of how and where to start.
3) Infrastructure or Indulgence
Work out what you are and then go for it. Twitter, Wikipedia and Google are infrastructure. They hold the pipelines of communication and relationships that make my world spin around right now.
Facebook for me is an indulgence. Nice way to keep up to date with friends, but... bleh... LinkedIn is somewhere in between... possibly leaning more towards infrastructure as talent settles in as the battle ground of the 21st century.
What do you do? Consultants on SAP style software used to provide infrastructure. The veins through which the blood of the enterprise coursed. Today, with cheaper options on the SaaS field they are appearing more and more like an indulgence. (And a costly one at that.)
Is what you do part of the day to day, or a greater value add? This drives your business model. Are you in there for a reasonable yield over a long period of time, or a greater yield over a smaller period of time?
Accenture does both. They provide a program office in a box for managing truly gigantic projects, as well as the nuts and bolts to outsource most parts of modern industry over a medium to log term.
Labor hire - Infrastructure | Recruitment - Indulgence. (They could do it without you, but your value tells them that they should not.)
Providing Project Management - Infrastructure | determining that there needed to be a project in the first place - Indulgence
What do you do? There are different value statements, sales approaches and yield expectations for both sides. One side requires a really big company. The other side requires a really big ego. (I have one of those)
Both sides are valid, both can be profitable - but it pays to know where you sit.
4) Frictionless Sales
As much as possible you need to remove the friction from the sales process. This is initially hard to get your mind around until you encounter a company that you really want to buy from...but can't!
Their forms are too long and complex. Their email bounces back. There are too many options on their phone answering system. They HAVE a phone answering system instead of a person! They don't send the quote quick enough. They ... put unnecessary friction between them and a sale to you.
I wrote this post a while ago about removing friction from the sale of professional services. Some of the points I think are worth repeating include:
a) Use credit card type of payment options here ever possible. keeping a service or requirement to a credit card level smooths the payment process.
b) Make sure you are not a risk. Your track record, referees, brand, appearance, the "talk" - everything must scream credibility and trustworthiness.
c) Do not pitch over the budget. If they need to go talk to somebody else you have introduced friction through pricing.
d) Do not pitch to somebody who cannot write the check. Similar to c) but more about finding the right decision maker before pitching for the work.
e) Have all papers, certificates, insurances and accreditations to hand easily if required.
f) Reduce the steps for them to speak with you, and for them to get what they want. Answer emails promptly, return calls promptly, no web forms,and no gatekeepers.
Have a read of this post here, I think it clears up these points quite nicely.
5) Momentum
When working in the UK I had a lot of competitors. One in particular has always stuck in my mind because he was absolutely exceptional at getting engaged. If we were going for a project together I would have to be right on top of my game to get in first.
But after a while I worked out that there was far more to earn from following a half step behind, say three months, and helping the clients to get over his work.
Sounds rough doesn't it? But while my competitor was brilliant at getting engaged, he was absolutely useless at staying engaged. He could not generate momentum on any of his engagements.
The result? His work, although fundamentally sound, always appeared unfinished. Unimplemented, and had the look of a "project of the month".
If you cannot develop momentum in your engagements then you are missing a heck of a lot of opportunities in terms of ongoing work, repeat engagements, and leading to larger projects.
6) Develop Trust Based Assets
If you cannot sell you cannot consult. Period. You are never going to make it past the functionary stage of your consulting career so get serious or get out. (Now)
And if you cannot develop relationships based on trust then you will never be able to sell professional service like consulting.
I have written on trust based assets many times here and I am in the process of finishing a book on the exact same subject. The long and the short of it is, you need trust based assets to work in consulting. And if you haven't got them - then start working on it right away.
This is a pretty long post, far longer than I normally write here. I would really appreciate some feedback in the comments section if this was useful to you or not, and if there are any areas where further detail would have been useful.
Thanks...
Related:
The Street Smart Consulting series (subscription at the side of this page) touches on these in some detail, but I thought it would be worthwhile running through them here.
This is a bit of a long post so its okay if you skip over it.
1) Scarcity and Value
No matter which industry you work in you are never going to generate reasonable revenues unless you are delivering something that your clientèle sees as valuable and hard to achieve without you.
Those of you who invest will be aware of the recent troubles at Starbucks. My feeling? Don't look to them to return to their previous levels of strength if their model stays the same.
Why? When they started they were new. Their type of services and atmosphere was scarce, in fact - they invented the whole comfortable coffee thing. Today - well everyone does it.
It is no longer scarce, and therefore no longer as profitable as it once was.
Newspapers were in decline before the internet became truly global. This fact is often forgotten in the hype about classified advertisement slayers like Monster.com, Realestate.com.au and Carsales.com.au.
But even while paid circulation declined, their overall revenues continued their meteoric rise. Today, they are losing about 10% or more each year, in fact even the news websites are not doing the business they should be.
Why? Google has made sure that news is no longer scarce - and neither is published and accessible opinion either.
As soon as a story breaks there are at least 12 different versions of the same story hitting the internet on Google news.
Their only real chance for paid subscriptions is in presenting news that is scarce. Deep research on (say) resource industry stocks or a specific business market.
The same is true for consultants. Clients continually push us into commodity situations. We can't fault them for this, it is the natural to and fro of business. Our objective is to separate ourselves in a veil of scarcity, and deliver outstanding and unmatched value in our area.
This doesn't mean you cannot comtinue to compete in your chosen area. Even commodity marketplaces can have differentiating factors. Australian Iron ore producers have an advantage over competitors merely due to proximity to Asia.
Whether it is through your track record, your specific deep focus, your exceptionally broad general range, the data you have at your fingertips, the relationships you hold, or even the way that you engage with them.
It needs to be something they cannot easily get elsewhere, and it needs to be worth having. Without these two then your revenue is automatically restricted.
2) Leverage your time
You will never get to be wealthy from selling their hours one hour at a time. The great problem with selling hours is that you can only sell one hour on time. And then it is gone forever...
You can try to capture some value from it to help you sell in the future, but you will never have that hour again, and you have already earned the most you could have earned from it under this model.
You have a range of opportunities out there to leverage your time. Some of these are relatively well known, some are not.
a) Stop billing for hours and start billing for outcomes. The value of what you deliver is high, so too should be your fee for doing so.
b) Start subscription business models anywhere you can do. mentoring clubs, SaaS niche programs, memberships and maintenance deals, retainer fees and so on.
c) Develop and license IP.
d) Run internal and public courses, seminars and conferences.
e) Books, eBooks, Audio books and other saleable items. John over at Duct Tape Marketing has done a fantastic job of packaging up his small business marketing tools into a saleable product.
You get the picture right? This is not all of the areas where you could leverage your time. But this should give you a good idea of how and where to start.
3) Infrastructure or Indulgence
Work out what you are and then go for it. Twitter, Wikipedia and Google are infrastructure. They hold the pipelines of communication and relationships that make my world spin around right now.
Facebook for me is an indulgence. Nice way to keep up to date with friends, but... bleh... LinkedIn is somewhere in between... possibly leaning more towards infrastructure as talent settles in as the battle ground of the 21st century.
What do you do? Consultants on SAP style software used to provide infrastructure. The veins through which the blood of the enterprise coursed. Today, with cheaper options on the SaaS field they are appearing more and more like an indulgence. (And a costly one at that.)
Is what you do part of the day to day, or a greater value add? This drives your business model. Are you in there for a reasonable yield over a long period of time, or a greater yield over a smaller period of time?
Accenture does both. They provide a program office in a box for managing truly gigantic projects, as well as the nuts and bolts to outsource most parts of modern industry over a medium to log term.
Labor hire - Infrastructure | Recruitment - Indulgence. (They could do it without you, but your value tells them that they should not.)
Providing Project Management - Infrastructure | determining that there needed to be a project in the first place - Indulgence
What do you do? There are different value statements, sales approaches and yield expectations for both sides. One side requires a really big company. The other side requires a really big ego. (I have one of those)
Both sides are valid, both can be profitable - but it pays to know where you sit.
4) Frictionless Sales
As much as possible you need to remove the friction from the sales process. This is initially hard to get your mind around until you encounter a company that you really want to buy from...but can't!
Their forms are too long and complex. Their email bounces back. There are too many options on their phone answering system. They HAVE a phone answering system instead of a person! They don't send the quote quick enough. They ... put unnecessary friction between them and a sale to you.
I wrote this post a while ago about removing friction from the sale of professional services. Some of the points I think are worth repeating include:
a) Use credit card type of payment options here ever possible. keeping a service or requirement to a credit card level smooths the payment process.
b) Make sure you are not a risk. Your track record, referees, brand, appearance, the "talk" - everything must scream credibility and trustworthiness.
c) Do not pitch over the budget. If they need to go talk to somebody else you have introduced friction through pricing.
d) Do not pitch to somebody who cannot write the check. Similar to c) but more about finding the right decision maker before pitching for the work.
e) Have all papers, certificates, insurances and accreditations to hand easily if required.
f) Reduce the steps for them to speak with you, and for them to get what they want. Answer emails promptly, return calls promptly, no web forms,and no gatekeepers.
Have a read of this post here, I think it clears up these points quite nicely.
5) Momentum
When working in the UK I had a lot of competitors. One in particular has always stuck in my mind because he was absolutely exceptional at getting engaged. If we were going for a project together I would have to be right on top of my game to get in first.
But after a while I worked out that there was far more to earn from following a half step behind, say three months, and helping the clients to get over his work.
Sounds rough doesn't it? But while my competitor was brilliant at getting engaged, he was absolutely useless at staying engaged. He could not generate momentum on any of his engagements.
The result? His work, although fundamentally sound, always appeared unfinished. Unimplemented, and had the look of a "project of the month".
If you cannot develop momentum in your engagements then you are missing a heck of a lot of opportunities in terms of ongoing work, repeat engagements, and leading to larger projects.
6) Develop Trust Based Assets
If you cannot sell you cannot consult. Period. You are never going to make it past the functionary stage of your consulting career so get serious or get out. (Now)
And if you cannot develop relationships based on trust then you will never be able to sell professional service like consulting.
I have written on trust based assets many times here and I am in the process of finishing a book on the exact same subject. The long and the short of it is, you need trust based assets to work in consulting. And if you haven't got them - then start working on it right away.
- A Trust Based Asset
- Trust - A Lever Big Enough to Move the World
- A willingness to trust
- The newest trust based asset - LinkedIn recommendations!
This is a pretty long post, far longer than I normally write here. I would really appreciate some feedback in the comments section if this was useful to you or not, and if there are any areas where further detail would have been useful.
Thanks...
Related:
- Trust and the downfall of print media
- The magic formula and the death of software consulting
- Time Based Billing = Poverty + No time for you
- Taking the friction out of sales of professional services
- Compliance or Momentum?
