Archive for the ‘Professional Services Industry’ Category

The Coming Disruption in Professional Services

Is there a way for advisory service companies, which provide accountants, lawyers, consultants and marketing experts to other businesses, to adapt to changing demands?

Some pundits, such as the Harvard scholar Clayton Christensen, have questioned whether traditional consulting firms will get less work as more innovative business models emerge.

I think challenges bring opportunities and that firms which change with the times will remain relevant and flourish.

Like many other sectors, the advisory service industry has had its ups and downs. Its current slowdown may herald the start of a darker period thanks to three significant trends:

1. Democratization of information

Prior to the Internet, advisory service firms offered clients knowledge and insight, which they couldn’t find elsewhere. Now, a lot of information is available for free, or at low cost on the web, and that includes expertise through freelancer portals like guru.com. To find critical facts and figures on market trends, customer research, or industry costs, organizations no longer need to hire a traditional advisory firm.

2. Fewer intermediaries

It used to be that if you needed top talent to address a business issue, you paid the price and dealt with a blue chip firm or hired a leader in the field. Today, a manager has many more options, often with lower costs and faster turnarounds. The rise of the freelance and sharing economy allows companies to find talent and knowledge as needed on a global basis.

3. The rise of machine learning

Machine learning, also known as artificial intelligence, has the potential to disrupt many facets of the professional services industry. Using machines for rote and even complex tasks can reduce the need to hire firms to do mundane tasks, or for an expert’s analysis, judgment and time. For example, judges and lawyers are increasingly resolving small claims through “e-adjudication” as opposed to using the expensive and time-consuming legal system.

Power of disruption

Despite these disruptive forces, traditional firms aren’t going away any time soon: the fact that they have a wide-range of services and expertise to offer, the changing regulatory and technological environment and fickle customer needs will ensure it. However, they need to evolve if they want to stay relevant to their clients, outflank competitors and maintain juicy margins.

Terry Donnelly, chief marketing officer for Canada of New York-based MDC Partners Inc., an advertising and marketing company, agreed.

“The traditional ad agency model is dying,” Toronto-based Donnelly said. “Marketers want leading edge, unique and practical solutions that drive measurable results and provide a durable and sustaining competitive advantage. MDC Partners recognized the ‘new normal’ early on and built a unique portfolio of agencies that retains the visionary founders as partners, motivated to do great creative work, versus the staid multinational agencies that regularly lose their best people.”

Advisory service leaders who want to better assist their clients and avoid disruption might want to consider these strategies:

1. Become a virtual provider

Companies can leverage their strengths such as client relationships and a trusted brand to create their own, on-demand virtual offerings as a complement to their traditional business. This model could mean acting as an online skills, data or problem-solving hub, and delivering of the best services to suit a client’s needs.

2. Get more involved in execution

While people and expertise may be plentiful, that’s not the case for excellent execution. Advisory service firms can offer follow-through and even take on line responsibilities through a shared service model. This could go beyond being an outsourcer to actually embed adaptable and skilled individuals and tools directly into the client’s workflow process.

3. Focus on capability building, not projects

Advisory services should focus their work on addressing long-term projects and needs instead of short-term contracts that deal with a specific issue. They could help clients build strategic capabilities to ensure competitiveness. One way to do this is to train people to do the work themselves.

As an example, a lawyer would not just draw up a contract based on the client’s needs and then walk away, rather they could give the client tools to become somewhat proficient in their own right.

In addition, companies could provide regular advisory support to make sure long-term goals are met.

Mitchell Osak is managing director, strategic advisory services at Grant Thornton LLP.

Mitchell.Osak@ca.gt.com

Twitter.com/MitchellOsak

Grow by assembling an ecosystem

The software industry is hyper-competitive, with thousands of global firms jostling for “winner-take-all” market share and financial returns. What separates the winners from the also-rans and failures? Increasingly, the differentiator is less about the software itself and more about business practices.

Many CIOs are realizing that high-performance IT is about more than serving customers better, improving product quality and driving higher operational efficiencies. Increasingly, it’s also about accelerating software development cycles, integrating disparate systems and delivering a consistent “omni-channel” customer experience.

To satisfy these needs, an increasing number of firms are adopting an “ecosystem strategy.” In the natural world, an ecosystem is an interdependent community of living and non-living things. In the business world, an ecosystem is an interdependent community of producers, suppliers and stakeholders.

An ecosystem strategy better delivers on customer needs and shareholder value by focusing attention on a single core offering, and then bringing in partners to provide secondary products and services that support, and are supported by, the core offering. Some well-known practitioners of the ecosystem strategy include Apple (third-party developers, accessory suppliers), Facebook (third-party developers), IBM (third-party developers, hardware suppliers) and Amazon (third-party book vendors).

Case study: Perfecto Mobile

Perfecto Mobile provides cloud-based quality assurance testing for mobile apps. The Israeli-based multinational’s strategic pivot in 2013 offers a good example of how a firm with startup-level resources can thrive by constructing a healthy business ecosystem within a staid market.

The traditional approach to software quality assurance is to test new code at the end of each development cycle. This approach, however, can prove too slow, risky and expensive in the faster-paced, higher-risk world of mobile computing, where devices, networks and tools change on a regular basis.

“The rapidly-evolving market is driving organizations to deliver better apps faster, while managing quality and reducing risk,” says Eran Yaniv, chief executive of Perfecto Mobile.

Perfecto concluded that the only way to meet the market’s needs would be to provide customers with an end-to-end, flexible, on-demand solution that embeds quality assurance testing throughout the entire development cycle. The problem: Perfecto did not possess the resources to provide this level of service while still keeping up with technological and market trends.

Going it alone, Perfecto’s choice was: either/or.

So Perfecto opted for an ecosystem strategy to provide what Mr. Yaniv calls “continuous quality.” “Perfecto’s continuous-quality strategy leverages not only our unique technology but also an extensive ecosystem of partners, from global system integrators to regional services providers,” he says. “We empower these partners with the expertise and knowhow of utilizing our Continuous Quality Lab to expand their business as well as ours and provide true value to our customers.”

Perfecto’s Continuous Quality Lab includes everything required to test mobile applications quickly and effectively — specialized testing practices and standards, infrastructure, automation and multiple device support — all delivered through the cloud. It has helped catapult the firm to market leadership, winning Red Herring’s Top 100 Global award for business innovation in 2014.

Takeaways

An ecosystem approach makes great business sense for software vendors for the following reasons:

  1. It fully delivers on customers’ bespoke testing and product needs on a “when needed, as needed” basis.
  2. It enables rapid operational scalability and flexibility.
  3. It deploys best-in-class capabilities that minimize integration concerns that come with working with unrelated vendors.

However, completely reimagining how you structure client-facing and operational IT can be a tall order. Legacy systems, operational complexity and cultural stasis are just a few of the potential roadblocks. To help address these problems, firms must develop certain competencies and cultural norms, including:

  • Ambition: Companies need gumption to tackle big business problems and address persistent customer demands.
  • A medium-term vision: It takes time to identify, attract and integrate the right technologies, practices and partners.
  • Open interfaces: Software companies need powerful APIs (application protocol interfaces) and methodologies to seamlessly connect their technology with complementary applications and protocols.
  • A partnering mindset: Striking partnerships is good. Cultivating them to maximize their benefits is better.
  • The right systems: Deploying and managing an ecosystem strategy requires strong IT and business processes, including: good reporting, trouble-shooting and collaboration mechanisms.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

 

Organizing for global growth

Management guru Alfred Chandler asserted that business excellence comes about when “structure follows strategy.” Unfortunately, many Canadian firms with global ambitions fail to heed this axiom. In their drive to tackle international markets, they often pay insufficient attention to how certain groups, like marketing, end up being organized and perform their functions. This neglect can kibosh even the boldest plans. Fortunately, managers can fall back on a rich trove of best practices.

Companies go global as part of an organic growth strategy or because of an acquisition. The potential returns are great but so are the risks. Given the high stakes, leaders should tread carefully but not too hesitantly.

Managers need to address three key questions up front:

1. Which organizational model — centralized at the home base or decentralized at the local office — can best deliver the growth plan?

2. What are the tradeoffs between a single, global message/program and more tailored, local campaigns?

3. How do you foster integration, collaboration and sharing of best practices between the different offices and teams?

Addressing these questions will expose latent tensions and implementation issues (and new synergies) between various approaches and groups. The story of how two firms addressed the challenge of going global differently illuminates some best practices and key pitfalls. Lets start with a company that has done it right — Manulife Asset Management, the investment arm of insurance giant, Manulife Financial.

Though a global business, it was not leveraging its international marketing and distribution capabilities to market as a local one. The leadership was looking to drive more cross-pollination of best practices and tools, better servicing of local client needs and more efficient processes and practices. A senior Manulife executive, Anthony Ostler, was brought in to reorganize the entire marketing structure. Some of the major changes included: establishing a centralized CMO office; retuning roles and responsibilities, as well as workflows; and promoting richer communication. After 12 months of transformation, the results were impressive. Lead generation and RFP success rates soared and margins widened while overall marketing spend fell.

What they did right:

  • Collaboratively redefined success and the marketing and change strategy that would deliver it, aligning all teams and offices to that single vision
  • Looked at the business holistically but did not shy away from getting the details right, like refining employee career paths, adjusting metrics and optimizing workflows
  • Adopted a “hub and spoke” model that centralized key activities like strategy and RFP creation and decentralized others like product development and local marketing support.

Ostler believes “Focusing on the client experience helped to guide all the decisions and was critical to success. At the same time, efficiencies could be recognized by globalizing certain aspects and we moved aggressively to do this. This client focus coupled with efficiencies helps the business to grow.”

At the other end of the spectrum is a professional services firm that acquired a successful overseas competitor in order to get a foothold in a market it deemed vital for growth, and to ensure retention of its multinational clients. This was not a hostile takeover and the clients viewed it favourably. However, after 18 months the forecasted revenues were not materializing despite significant marketing investment and considerable head office attention.

What they did wrong:

The new firm was managed in a controlling, overly formal fashion that was at odds with the professional services firm’s more entrepreneurial culture and practices. For example, local marketing programs were abruptly cancelled in order to capture early cost savings. Since both offices shared many of the same clients (often on the same project), the acquiring firm assumed the habits and needs of these clients were similar across geographies. In reality, each client subsidiary acted very differently leading to problems and gaps in service and delivery. Finally, the acquiring firm lacked the stamina to fully integrate many of the systems between the two companies. As a result, they were never able to leverage their important knowledge and human capital management systems and achieve the desired productivity and innovation gains.

Going forward:

Since every situation differs, a “one size fits all” approach in areas like organizational design and sales & marketing planning rarely works. Organizational, channel and program integration is not easy but must be relentlessly pursued in order to maximize program efficiency & effectiveness, minimize internal strife and drive collaboration. Using proven change management tools is critical. At its core, excelling as a global company is about dissimilar people working together. Ignoring the needs and aspirations of your teams will compromise organizational performance and business results.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Reducing cheating in self-reporting documents

When considering self-reporting forms, the assumption is that individuals are generally ethical in their reporting behaviour. Yet even when people care about morality and want to be seen as ethical by others, they sometimes (or often) are dishonest in their statements when it is beneficial to their own self-interest.  The accuracy of millions of these written assertions has a major financial impact on a variety of industries including insurance, professional services and health care.  New research out of the Harvard Business School looked at how organization can reduce unethical behaviours.  The conclusion was that signing a form up front – versus at the end – can appreciably reduced cheating. Simply put, improving ethical behaviour will significantly reduce costs and increase revenues.

In accordance with legal requirements, individuals are typically asked to sign at the end of a self-reporting document to certify the truthfulness of their statements.   Most organizations rely solely on a person’s honesty, using the possibility of punishment to deter dishonesty. Not surprisingly, considerable amounts of cheating occur given the potential payoffs, the high cost of compliance and the low probability of getting caught within an honour-based system. 

The objective of the study was to develop and test an efficient and simple measure to reduce or eliminate unethical actions — particularly behaviours that rely on self-monitoring in lieu of societal restraints. Examples of self reported, unethical deeds includes over-claiming expenses, inflating business results, over-stating billable hours and under-reporting taxes.

Cheating is really costly…

In one of the study’s field experiments with insurance firms, asking customers to sign at the start of the form led to a 10.25% increase or an additional 2,428 reported miles driven per car (i.e. they cheated less) versus the current practice of asking for a signature at the end of the form.  After assuming a per-mile-cost of automobile insurance of between 4-10 cents, the study estimated that annual insurance premium per car would have been $97 higher with the more truthful reporting.  One key consequence of false reporting is that the costs extend beyond the insurer to its entire customer base, including the honest policy-holders.   In the case of tax avoidance, the economic cost of tax cheating is estimated to be a staggering $150B every year in the United States alone.  

…but it can be reduced

The research found that signing at the beginning of a report – before having the opportunity to cheat – rather than at the end of the document leads to significant reductions in the likelihood and magnitude of cheating.

Why do people become more honest?

According to the research, simply moving the signature line to the beginning of a form can bring a person’s moral and ethical standards into focus, right before it is most needed – the reporting. The amplified importance of moral standards may trigger increased truthfulness in the subsequent statements. Conversely, when signing at the end of a form, the unethical behaviour has already taken place.  In turn, the individual maintains their positive self-image by engaging in various justifications and delusions.

In the real world…

Every organization can easily take advantage of these insights by redesigning their standard forms to move the signing position to the beginning of the document. Specific sectors like insurance, government, health care and professional services that depend on self-reporting will benefit from more truthful assertions, reduced performance inflation, less over-claiming of credits, and fewer deduction claims.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Manager influence goes up when they are less certain

This counter-intuitive notion is the key conclusion of new research coming out of the Stanford Business School.  This research has important implications for senior managers as well as industries that sell expertise such as professional services, advertising agencies and recruiting firms.  

The researcher, Zakary Tormala, had subjects evaluate the appeal of a restaurant based on the assessment of two different reviewers.  Half the participants read the review by an expert (a professional food critic) while the other half read a review by an amateur.  Half of each group saw a review that was highly certain; the rest saw a review that was tentative.

Overall, while the confident amateur inspired subjects to give better ratings than the uncertain one, the less assured expert prompted higher ratings than the certain expert. The findings suggest people do not necessarily mistrust confident experts, but sometimes people are more persuaded by experts who are not confident.

What is behind this phenomenon?  Chock it up to a concept known as expectancy violations. People expect experts to be confident. Violations of that expectation surprises them, resulting in the individual taking greater notice and giving the opinion more credence. In the research, subjects reported being more surprised by the uncertain experts and the confident amateurs.

These findings do not suggest that CEOs should project uncertainly about their company’s prospect to become more influential. Having your audience take notice is not a substitute for ignoring a relevant message.  To be persuasive, managers must balance surprise with credibility. Being credible means a delivering message that is relevant to the core argument or issue.

Complementary research by Tormala also looked at how people view potential. Interestingly, the initial findings seem to show that people value high potential more than high achievement.  In one basketball study, people read the scouting report on a player and were asked to predict their salary level. Some subjects read the actual stats for the player’s first five years in the league while others read predictions for the first five years’ performance. The numbers were identical. On average, people gave the rookie over 20% more in salary in year six than the veteran.

These findings were similar to those found in the restaurant review study.   Proven achievement is very certain and predictable. At the same time, potential is uncertain and exciting.  The potential for multiple outcomes could lead to higher than expected results, and as a result, greater expectations for performance.

For managers and external experts, there are some key takeaways to build influence and trust:

  1. Foster a communication approach that emphasizes honesty, empathy and integrity;
  2. Adopt a more humble tone and style in place of the standard confidence-based rhetoric;
  3. Demonstrate analytical and process transparency underlying the opinion.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Merging Professional Services Firms: Mixing Oil and Water

The recent failure of two leading management consultancies – A.T. Kearney and Booz & Co. – to merge highlights a common challenge facing these types of transactions.   Namely, why do so many mergers and acquisitions among service firms fail to create meaningful value?  This question is of particular interest to professional services firms – consultants, lawyers and accountants – who look to M&A as a good way to grow revenues, increases capabilities and undertake succession planning. 

A considerable body of research shows that most mergers fail to generate incremental shareholder value.  With PSFs, M&A deals may be even tougher to pull off and harder to make work.  Why?  Talent and cultural considerations, important in any transaction, are even more challenging in an industry where so many talented individuals are central to the delivery model, client relationship and brand image.  In particular, the impressions and actions of the partners is often the difference between transaction success and failure. These factors play out in many ways:

Culture mismatch

Each firm goes into a deal with its own unique culture that influences and guides its activities day-to-day and over the long run. In many cases, each firm pays insufficient attention to how different cultures would meld especially as it impacts partner compensation, core values and employee roles.  If cultural considerations are not addressed before the deal is consummated, there is a greater likelihood that norms, beliefs and work practices will never meld in the new entity.  The result will be disastrous for the new company in terms of falling employee morale, lower productivity and higher client attrition. 

Clashes over control

By their nature, PSFs are populated with successful and aggressive ‘Type A’ individuals, who possess healthy egos and an emotional need for control.  Post transaction, which individuals exert control and maintains a public face becomes a fundamental question. For example, if the top management of one firm is under-represented in key operational roles and committees (e.g., the income/compensation committee), the deal could come undone. 

Different retirement schemes

Problems can arise when Firm A has more retired (or soon to be retired) partners who are paid more generously (e.g., 50% of current partner income) than Firm B’s partners. The partners who never got this benefit will want it (raising the transaction price and future financial obligations) or they’ll want to remove it from the other firm’s partners and retired partners compensation plan(unlikely once granted).

Bloated headcount

It is common for the new entity to have too many employees and partners even after staff rationalization schemes.  Retaining too many people occurs for many reasons including the need to protect client relationships or to maintain skills depth.  However, problems will inevitably arise due to skills & role overlap, a lengthening of the partner track and the probability of a higher than expected cost structure.

Client risk

Unless clients believe they will gain tangible benefits from the merger, they will – at best – view it as neutral.  In many cases, their impression will quickly turn negative as they perceive integration activities as distracting, risky (e.g, they lose their relationship and delivery teams) and potentially more expensive (e.g., higher costs needed to support the transaction).

Merging professional service firms doesn’t have to end in divorce.  Once the parties start the courtship, they would be prudent to closely review cultural, people and compensation issues in order to minimize business risks and maximize the potential of attaining the desired synergies.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Analytics: Data x Math x Computing = Profit

The holy grail of CRM, the ability to leverage and monetize internal data, is now within reach of most medium to large enterprises. Low cost computing power, new software tools and sophisticated math skills have converged to enable high-level data analytics, a powerful capability that can drive incremental revenue, improve workflow efficiency and enhance customer satisfaction.  Basically, advanced analytics uses special algorithms to comb through large databases of transactions looking for important causal relationships between variables that can be leveraged to improve the efficiency and effectiveness of a program or process. For example, Internet Services and Retail companies are mining millions of their transactions to uncover critical (and hitherto unseen) insights about consumer and supplier behavior.  In other cases, some firms in the Consulting and Software industries are using observations from their own mountain’s of data (as well as the clients they serve) to launch new practices focusing on data management and consulting. 

The business of helping firms make sense out of proliferating data is growing quickly. This industry, which includes leading IT players such as IBM, SAP, Microsoft and Oracle, has estimated revenues in excess of $100B.  The markets is growing at almost 10% a year, roughly twice as fast as the software market as a whole.

I found 3 ‘best practices’ firms, in MIT’s Technology Review and The Economist magazine, who are using data analytics with great success:

IBM

IBM is a pioneer in the use of mathematical models to analyze huge data sets.  IBM’s analytics business began as an internal project undertaken by in-house mathematicians, who wanted to learn how to maximize revenue per client by analyzing years of sales data.  The insights discovered in their work prompted them to retool their sales teams by account size & industry and to tweak their service offering.   The result was $1B in new revenues and better sales coverage.  Not surprisingly, IBM concluded that others could benefit from these capabilities and they built an entirely new business analytics and optimization group within IBM Global Business Services to support it.  To date, this group has already trained 4,000 consultants

And they are busy.  IBM mathematicians are using high-quantile modeling in its workforce analytics practice to help clients make decisions about human resources issues such as how best to deploy their sales people.  In other cases, their mathematicians are using stochastic optimization algorithms in their human resources and marketing practice areas to help clients find new customers and determine the right mix of experienced and junior programmers to staff large software projects.

Walmart

Walmart generates reams of data through their Retail Link inventory management system.  The Company is using sophisticated analytics to crunch this data in a myriad of ways, turning information into a powerful profit accelerator.  In one impressive example, Walmart’s analysis showed that they should offload inventory management to their suppliers and not to take ownership of the products until the point of sale.  This new strategy allowed the firm to decrease inventory risk, conserve cash flow and reduce its costs.

Cablecom

Like many telecoms providers, Cablecom has grappled with churn.  Using advanced data analytics, Cablecom discovered that although customer defections peaked in the 13th month, the decision to leave was typically around the 9th month (as indicated by things like the number of calls to customer support services).  To reduce defections, Cablecom offered at-risk customers special deals 7 months into their subscription.  The results were impressive:  customer defections fell from 20% of subscribers a year to under 5%, enabling the firm to save significant marketing acquisition costs while boosting customer satisfaction.  

Regardless of your data management objectives and strategy, there is gold in those terabytes of data.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Will Social Networking Disrupt the Recruiting Industry?

It may just happen if companies begin to fully exploit the power of Social Networking (SN) and gain the confidence to make important hiring decisions without middlemen.  SN sites like LinkedIn and Facebook now lay bare the key information asymmetry traditionally enjoyed by recruiters, namely access to a large and hard to access talent pool. Given the open and global nature of SN, any HR manager with a browser can now scan large, social & specialized networks for talent.  For example, Facebook has over 350M members worldwide. LinkedIn, more of a business networking site, boasts over 43M members.  These social networkers don’t just join, they also loiter and interact. According to Nielsen, a market research company, American SN users spend an average of 6 hrs per month socializing and networking, in fact more time than they spend on e-mail.  As a result, millions of  users can easily connect with employers and job opening through active and passive job searchs (via automated notifications). 

Moreover, many firms are beginning to realize that embracing SN could result in significant cost savings through the elimination or reduction of recruiter fees.  Recruiters typically charge between 20% and 30% of base salary for each placement, which for a Fortune 500 company could add up to a large amount of money per year.  According to The Economist magazine, some companies are already using SN to reap substantial savings and get superior results. For example, Intel claims to have saved millions of dollars in recruiting fees by using LinkedIn versus headhunters.  US Cellular reckons it saved over $1M in 2009 and got good candidates faster by using LinkedIn.  Even if firms continue to use recruiters, SN provides HR managers with a powerful weapon to reduce headhunter fees especially if they feel that the recruiter is accessing the same SN sites as they are – which in fact they do. 

Ubiquitous talent, easy access and lower cost are not the only advantages of SN.  Most users make available to corporate recruiters a rich trove of personal information, much of it regularly updated, templated for quick review and enabled by powerful search engines that makes it easy to find very specialized individuals. Finally, SN sites utilize sophisticated “add a contact” functionality to easily leverage a visible referral network and access prospects.  Clearly, SN represents a major opportunity for organizations to get more recruiting value at less cost.  

Of course, HR departments will have some issues with this new model.  For one thing, not every prospect, particularly of the mature vintage, is an active user or even a social networker.  Among those that are active in SN, many users (often the senior people one searches for) utilize strict privacy settings to prevent strangers from accessing their personal information.  Finally, there is always the concern that personal profiles are inaccurate, necessitating a certain amount of due diligence by the corporate recruiter.

For the reasons mentioned above, SN sites will never completely replace good recruiters.  Challenging hires (due to profile or risk) and over-burdened HR departments will still benefit from another layer of objective human screening.  And, humans being creatures of habit, will continue to employ recruiters who they perceive to be the best hiring resource.  However, given SN’s early success and medium-term potential, the recruiting industry will need to quickly adjust their strategies if they are to sustain market share and margin.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Teaching Strategy to Managers

Strategy education is big business.  A cottage industry of training programs and thought leadership is devoted to improving management’s strategic thinking, and for good reason.  A lack of strategic talent within management has become a significant organizational issue that negatively impacts competitiveness, increases employee turnover and hampers morale. This deficit has many causes including extensive downsizing and restructuring, a reduced emphasis on training & mentoring and the accelerated pace of business which limits strategic deliberations. 

My assertion is not that firms don’t have talented strategists or the right tools.  The typical Fortune 500 firm has a number of them.  However, many of these individuals are often in non-strategic roles, are under resourced or are too busy to undertake proper strategy development. As well, available strategic competencies are regularly underutilized due to a shortage of relevant data and tools as well as the lack of a regular strategic planning framework.  Going forward, many factors such as organizational flux, headcount limitations and recruiting challenges will bedevil efforts of cultivating and unleashing strategic talent. Organizations will not prosper unless they have enough managers who can think and act strategically. 

The presence of a strategy skills gap impacts my consulting work directly.  My clients will often require strategy knowledge transfer to their managers in the statement of work. Why?    The executive sponsors will acknowledge that their teams are hampered by strategy skill gaps that prevent them from identifying, analyzing and exploiting business opportunities.

Much of my thinking has been influenced by how the Military teaches strategy to its officers.  Corporations in dynamic, high risk and complex environments can learn much from the way the Military cultivates strategic competencies including continuous learning, situational adaptation and breakthrough innovation.  One monograph in particular, Professor Colin Gray’s Schools for Strategy: Teaching Strategy for 21st Century Conflict (published in the U.S. Army’s Strategic Studies Institute), could be helpful for those looking for a first class overview on strategy education in the Military. 

As such, I regularly facilitate and coach senior & middle managers in ‘applied strategy learning’ that encompass areas such as analysis, strategy development and planning. My general approach is to deliver strategy education that is one part proven strategy theory (business, sports and military) and one part “best in class” tools, simulations and sector knowledge, all customized for their real life business challenges.  

My applied strategy learning methodology follows 8 key maxims, which I summarize below-

1.  Education is not a one-off event.   Managers must be encouraged and incentivized to use their new skills and knowledge within their day-to-day jobs;  

2.  The use of time-tested business theory is essential to thinking ‘strategically;’

3.  Although theory is important, strategy development is ultimately a practical exercise and should be tailored to the realities of the organization and market;

4.  To be considered relevant and credible by the student, strategy education should not be left to over-intellectualized educators or those separated from the “trenches;” 

5.  Strategy education that does not emphasize the centrality of the customer and the impact of competition will probably be inadequate;

6.  Strategy education that ignores the importance of internal considerations such as culture and resource limitations will be ineffectual;

7.  A skeptical, though not cynical, mindset of the participants is crucial to imparting wisdom and understanding the value and usage of tools;

8.  Strategy is vital but not the sine non qua of leadership.  Other management responsibilities such as execution and leadership are just as important. 

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Management Consulting is Dead…Long Live Management Consulting

Times are tough in the guru business.  Management consultancies are facing falling revenues, fading differentiation and more challenging service delivery.  True, the advice business is cyclical and we are witnessing the worst downturn since The Great Depression. However, though reliable data is difficult to source, anecdotal evidence suggests that the market is losing confidence in the traditional management consultancy model, and for good reason. 

Management consulting is now a mature industry.  Given a plethora of suppliers with ‘me-too’ offerings, Clients are demanding more value at lower cost.  Furthermore, companies want a clearer view of what consultants do and how their recommendations link to value and action. Finally, Clients continue to have nagging concerns that many consulting firms are much more motivated to sell services than to act in the Client’s best interest.  Many factors are driving the change in Client needs, including:

The “product” is maturing – The days of Clients blindly following the latest management fads are long gone.  Management consulting has entered the stage in the life cycle when it’s no longer a hot item that everyone wants to buy at historically inflated prices. 

Consulting inputs are plentiful – Consultancies are facing competitive blowback from laid off consultants who now compete with their former employers for business at a fraction of the fee.  As well, thanks to the Internet and globalization, Clients have access to a greater wealth of information about their customers, competitors etc. than what was available even 10 years ago.  

Clients are getting wiser – Savvy Clients are increasingly bidding out projects and demanding knowledge transfer to ensure they maximize value.  Many firms now realize they don’t need large consulting teams to get results quickly.  Often 1-2 consultants, supported by internal resources, is more than sufficient to address most business problems.  Finally, Clients are demanding actionable recommendations that are grounded in the reality of the organization and available capital & resources.

Clients are in-sourcing – Many Fortune 500 Clients, tired of expensive fees, have created internal consulting groups to deal with major strategic issues, change management initiatives etc. In many cases, the companies hire talent directly from the consultancies, who bring with them the same models, skill sets, and processes that were prevalent at their prior firms.

In many consultancies, service and operating models are being recalibrated to address Client demands.  For example, Quanta Consulting Inc. is enhancing value, accountability and transparency in a number of impactful ways, including:

  1. Assisting with project implementation – Clients are very concerned about consultants leaving them with projects the organization can’t integrate or assimilate. Helping the Client with implementation increases the consultant’s accountability, improves their understanding of key business issues and enables strategic or tactical course correction if required.
  2. Delivering projects through Clients not beside them – Leveraging and leading Client teams on project delivery (as opposed to bringing in a squad of external consultants) helps reduces consulting fees, promotes knowledge transfer and minimizes consultant-employee friction.
  3. Move to a stakeholder-based service model – Many consultancies focus and organize around delivering projects not cultivating relationships.  We see projects as part of a longer term “stakeholder” relationship, similar to an ‘Agency of Record” model.  With this type of relationship, the consultant becomes a trusted and embedded “coach,” supporting and counseling the organization on a regular basis, often at no charge.

For more information on our services and work, please visit http://www.quantaconsulting.com