Years ago, as a senior consultant in a blue chip consultancy, I witnessed one of the most revealing conversations between my firm’s senior partner and our client, the SVP of HR for a high profile aerospace manufacturer. My firm was billing the client roughly $11M a year. The client was in complete disarray, with a failing management team and directionless leadership. Consultants were running management meetings, sorting senior managers’ inboxes, and making decisions on behalf of the company that they had no right or competence to make.
The Danger of “You Really Understand Us”
But at this meeting I learned one of the biggest insights of my consulting career. The SVP was glowing in his praise of my firm . “We love you guys. You really understand us. We so much appreciate what you do.” The partner responded in kind. It was a lovefest.
The truth was that the companies were so similar in culture that my firm was incapable of adding value to the client. Both were slow-moving bureaucracies with old fashioned traditional management; both had very low employee turnover (and lack of fresh ideas); both were highly risk averse; both were willingly co-dependent.
Within two years of my firm’s “intervention” to save the company, it was bought by a competitor and closed down. The historic site was plowed under and replaced by apartment buildings.
The learning: many clients will engage consultancies and pay huge sums to stay the same — to their ultimate demise.
How to Select Your Added Value Partner
There are thousands of consultancies out there offering a range of attractive products and services that could be potentially useful for your company. If you know exactly what you need and exactly how to implement it, then take your pick. However if you are facing significant threats or growth opportunities and need a true thinking partner to transform your organization then you must think more deeply about the type of relationship you need (not want) to be successful — and the ways in which your company and consultancy are similar and different. Too similar, and there is little added value. Too different and you will never connect. So here are some thoughts.
What Should Be Similar: Values
Values — the beliefs that guide the behavior of the employees, especially at the top of the company. These are the values as shown in real decisions and actions, not values as espoused in an annual report or flashy conference presentation. For example, if your company has publicly-stated values such as high ethics and social responsibility, but operationally values expediency and working at the margin, select a consultancy that understands this and can work accordingly. Unless, of course, you have hired them to change the values — in which case you have a long road ahead.
What Should Be Different: Culture, Thinking Style, Competencies
Culture — the way in which people work in the organization is heavily influenced by where they are in the business lifecycle. If your business is mature and bureaucratic, it will soon head into decline and need rejuvenation. Look for a consultancy that has a culture of reinvention, challenge, growth, and regeneration. Your consultancy should be a phase ahead of you in the cycle.
Thinking Style — Organizations whose DNA is vested in highly detailed design, procedures, application of rules etc., can be very slow to change. What adds value here is a consultant who can recognize what employees value, and makes it safe and possibly even an adventure for employees to change — communicating what’s in it for them. The opposite is true — every entrepreneur needs those employees who can nail down an idea and implement it. The right consultancy can help — the wrong one can simply help proliferate ideas without results.
Professional Competencies — It almost goes without saying that you should not duplicate what you already have. But when buying a professional resource, make sure there is a plan to transfer this capability to your organization.
What Probably Doesn’t Matter: Size, Sector Experience, Age
- Size — unless the project is outside the capacity of the consultancy to deliver even with company assistance.
- Sector experience per se — unless this has led them to a one-approach-fits-all mentality.
- Age — unless this negatively impacts perceived credibility.
The most successful engagements happen when clients and consultancies share the same values but live, think and add competence in different ways.
Don’t let the natural tendency to partner with a consultancy that really “gets” your company blind you to what’s most important. You are paying them to add value by being different — challenging your thinking, innovating, and transforming your company.