When and Why Clients Hire Consultants

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Explore:  Consultants

A number of respected professionals have recently joined the ranks of consultants and each has asked in their own way for my advice on how to sell their services.  There are as many opinions about this as there are consultants. So rather than tell them how to sell, I’ll offer feedback on when and why clients need consulting services.  There are four common scenarios in which clients, irrespective of industry or size or geography, tend to hire consultants to obtain outside advice.

Speaking truth to power. Most organizations have an unwritten caste system, and whether the leaders like to acknowledge it or not, and whether it’s purposeful or not, there is a gulf between what staff wants to say to management and what is actually said. There are many reasons why this is so, including leaders who surround themselves with “yes men,” and blindness induced by being too close to a situation. Sometimes the role of a consultant is merely to say to the leaders what the team has wanted to say, perhaps even tried to say, but has failed. This is not a high value activity, and too often consultants try to over-engineer the engagement to make it seem more challenging and complex than it is.

When I sniff out that the team hiring me already has a script and what they’re paying me to do is use my objective third party credibility to say the things that they can’t or won’t say to their senior leadership or board, I adjust my expectations quickly. I will never compromise my principles, so first I ask them to walk me through their analysis and conclusions. If I agree, I will issue a report to leadership reflecting my views, supported by the analysis. In some cases, it will require additional research and analysis for me to be comfortable adopting their views, and usually the client will agree to this. If I can’t find agreement with the script, I walk away. My reputation is worth far more to me than earning a few dollars serving as a parrot.

I have significant experience on the other side of the table working with, or hiring, consultants from the solo to the biggest in the world. On more than one occasion my team and I were stymied in our efforts to secure funding for an initiative that we knew was a winner, but we couldn’t get the right audience. As a result, we periodically enlisted the help of consultants to take the lead and it usually worked out well for all parties. We never asked the consultant to compromise his or her principles and we never offered half-baked analysis. But still, this is not the most fulfilling of consulting engagements.

Extra set of hands. Slightly higher up the value chain is joining a project team to implement some new initiative. Think of it as joining a sports team for the playoff run, knowing you’re hired for a specific, short-term skill and when the season is over, you will move on, win or lose.  The vast majority of consultants who are resident at a client site for extended periods fit this description. We fly to the client’s site every Sunday night or Monday morning and return home every Thursday evening or Friday afternoon, and during the engagement we have an assigned desk, a phone extension and an email account, and we’re part of the internal team for as long as the project lasts, or for as long as funding lasts.

The most common assignment is one that’s close to the consultant’s background so they can hit the ground running. In other words, few clients will hire a consultant in this role and then take the time to train the consultant in the tasks needed. If they had the time and funding to train someone, they’d train an existing employee and save the consulting fees.  This type of assignment gives many consultants the most comfort, because even a part-time steady gig can pay the bills while hunting for other engagements. Some consultants seek these assignments to display their skills in the hopes of getting a full-time offer. Nothing wrong with that, I suppose, but competing with your project teammates for attention from the boss is not usually a formula for long-term success.

Domain expertise. Consultants can add significant value when they bring specific expertise to the table, or perhaps a list of relevant contacts. The client has identified a challenge, but they know little about the challenge or how to solve it, so they recruit an expert to show them the way. These engagements can be very fulfilling, because the consultant has the opportunity to draw on years of experience and lessons learned from past similar engagements and offer strategic counsel at the highest level of the client organization.  This type of consulting can also be lucrative, as deep knowledge that can be quickly deployed to help a client reach market faster, or make a build vs. buy decision, is worth a lot to the client but still far less expensive than acquiring the expertise through trial and error.

It should come as no surprise, but these engagements also end eventually. Some consultants thrive on these opportunities, lodging their grappling hooks into the client’s operation and trading on their expertise for as long as possible. I have a personal distaste for engagements that linger well beyond their expiration date, as it puts the consultant in a position of desperately seeking any issue to tackle in an effort to remain relevant. By contrast, I advise my clients up front that my job is to be a catalyst, or a muse, to get them started down the right path, then to help them internalize the expertise so I can fade away and move on to the next engagement. I suggest other consultants who might be better suited to assist with longer-term implementation (see “extra set of hands” above). Often being so bold generates respect and credibility — the client knows the consultant doesn’t want to stay forever so their focus remains on adding strategic value.

One of the hardest realities for consultants to face is that over time their specialized expertise becomes commoditized. What was once my exclusive and elusive specialty is now routinely taught in schools and there are numerous consultants and in-house experts — including past clients and former colleagues — who can offer similar services, often at lower rates.  Good consultants are always seeking new opportunities to apply their specialized skills, but should these opportunities dry up they can focus more on the implementation side.

One consultant friend of mine asked for my assistance with one of her long-time clients. The client had asked for help to automate a business function that she had been performing on the client’s behalf more or less manually for quite a while, and I am an expert in the applicable technology. I joined a conference call where the client laid out the issue and asked if we could reduce their costs and improve the throughput of the business process.  I then described a couple approaches that would accomplish their objectives. Before I could provide much detail, however, my consultant friend interrupted the call and advised the client, out loud, on a conference call with his primary contact’s CEO present, that “While there appears to be a solution to the problem, I can’t in good faith recommend it because I generate a lot of fees helping you in this matter and it wouldn’t be in my best interest to lose that business.”  Everyone on the client side of the call was struck speechless for an extended pause. Eventually the call ended and my friend looked at me, rolled her eyes, thanked me for my input, but having saved the work (or so she thought) she said she wouldn’t need me any longer. Not surprisingly, she lost the engagement a week later.

Complex issue analysis.  This is often the highest value engagement that consultants are involved in. The client has a complex issue that internal resources can’t solve, there’s a lack of research on the topic, perhaps it’s completely new ground and there aren’t industry or subject matter experts to call on. An experienced consultant can often add significant value by engaging in a rigorous process to analyze a situation, identifying and discarding possible paths for resolution, until a solution, or a reasonable set of solution options to the thorny issue have been presented. It’s both the process and the objective third-party analytical mindset that has value, moreso than specific expertise in the issue at hand.  The brand-named global consultancies have earned fortunes applying a relatively simple formula to complex issues in a wide variety of fields, and their reputations are well-deserved.

In my corporate career this was the area where I hired the most consultants. I grew up as an executive in old-line publishing and technology companies at the dawn of the commercial Internet. There were no Internet experts to help us understand e-commerce, or web site usability, or search engine optimization, or web privacy and security, or to help traditional publishers begin selling digital products alongside print products, let alone how to price them to maximize profit and avoid cannibalization. We paid premium rates for consultants to apply their rigorous process to our challenges and more often than not their assistance was invaluable and helped us lead the market. We didn’t mind that we were literally paying them to learn the ins and outs of these issues so they could then re-sell that expertise to others, so long as we obtained our value.

But these engagements are often strategic in focus and don’t last long. Help analyze the situation, conduct internal and external research to inform a hypothesis or two, test each hypothesis and provide guidance on the relative merits of each option, and then present to the executive team who will ultimately decide if and when and how to act, often long after you’ve moved on.  This type of work can be both fulfilling – because each engagement can be unique even though the analytical process is the same – and un-fulfilling – because time and again risk-averse clients will avoid making bold market moves even in the face of daunting competitive threats and withhold investment while they hope their fortunes improve.

So my response isn’t to learn how to sell consulting services, but to understand when and why a client might need to hire a consultant. Find your niche, find that specialty that allows you to add significant strategic value, either because you have elusive subject matter expertise or because you have a framework to think through complex issues efficiently. Or focus your efforts on helping clients implement projects, relying on your long experience having done so before. And if you must, help validate an internal team’s existing ideas so it can gain a proper audience with the powers that be. Sure, there are consultative selling techniques that will help you identify challenges, help you listen actively, manage objections and move an opportunity along a pipeline from “Nice to meet you” to “Sign here.” But that’s for a different day. Start each day by focusing on the client.

For my loyal legal market readers: Replace consultant with lawyer in the above advice, and you’ll see in stark relief why legal clients are so weary of law firm pitches. We spend so much energy and time focusing on our law firms’ capabilities and experience in an effort to sell the legal services that benefit the lawyers, and we spend so little time understanding the client’s issues. This one change in orientation will reap significant rewards.