When and Why Clients Hire Consultants (UPDATED)

Timothy Corcoran - Corcoran Consulting Group

Timothy Corcoran - Corcoran Consulting Group

A number of good friends, respected professionals in different fields, 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 buy consulting services.

There are four common scenarios in which clients, irrespective of industry or business size or geography, tend to hire consultants to obtain outside support.

  1. Speaking truth to power. Most organizations have an unwritten caste system, and there’s often a gulf between what staff wants to say to management, or, in law firms, what partners want to say to firm leaders, 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 to say to the leaders what members of the team have wanted to say, perhaps even tried to say, but have failed. This can also operate in the other direction. Law firm leaders may see a need to adapt but they’re having a hard time selling this to partner-owners who are complacent, risk-averse, myopic, or self-interested.

    There’s a world of difference between speaking truth to power and recommending a necessary change, which can be a high-value activity, and mindlessly parroting one stakeholder group’s pet initiative to another stakeholder group. 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 endorse their views, I tread carefully. I will never compromise my principles, so first I ask them to walk me through their analysis and conclusions. If I agree, and in most cases I can’t possibly agree until I’ve conducted my own research and analysis, I have no problem issuing a finding that reinforces their aspirations. Many clients who come to me are quite capable of diagnosing their challenges. Some are simply not very effective at advocating change on their own.

    There are times when I can't agree with some pre-ordained script. In these cases, my report will contain my observations and recommendations, but I won’t bury or ignore something controversial, nor will I agree to any substantive edits to my report. For the most part, my clients have been open to learning that their preferred solution isn’t as desirable as they had assumed, so long as the message is delivered in a way that protects delicate egos. Occasionally a client will refuse to acknowledge any weakness in their pet solution, so they characterize my findings as flawed and threaten to withhold payment until I “fix it.” My reputation is worth far more to me than earning a few dollars serving as a parrot, spouting recommendations I don't believe or understand.

    I’ve worked with numerous consultants in my business career, including some of the most elite brands. On more than one occasion they’ve been helpful in reshaping or improving a recommendation that my team had already developed, but that hadn’t gained sufficient traction. We never asked a consultant to compromise his or her principles and we never offered half-baked analysis.

  2. 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 securing an offer of full-time employment. Nothing wrong with that, I suppose, but competing with your project teammates for attention from the boss is not my preferred formula for long-term success.

  3. Domain expertise. Consultants can add significant value when they bring specific expertise to the table, or perhaps a list of relevant market 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, lessons learned from past similar engagements, and offer strategic counsel at the highest level of the client organization.  This type of consulting is valuable to both parties, because deep knowledge that can be quickly deployed to help a client reach market faster, or to make a build vs. buy decision, or to kill a terrible idea, is worth a lot to the client and even premium consulting fees are 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 operations 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 will happily suggest other consultants who might be better suited to help tackle all the details over a longer implementation period (see "extra set of hands" above). Often being so open generates respect and credibility because the client knows the consultant isn't trying to linger.

    One of the hardest realities for consultants to face is that over time their specialized expertise becomes commoditized. What was once an exclusive and elusive specialty may now be 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. If opportunities dry up, many can shift focus more to the implementation side. Poor consultants will cling to outdated ideas until the ruthless market shows them the door.

    A few years ago, a consultant friend asked for my assistance with one of her long-time clients. The client sought to automate a business function that the consultant had been performing for the client, more or less manually, for quite a while. I’m an expert in this area of automation, so I was invited to a call where the client described the issue and asked how we could reduce costs and improve throughput in the business process. I’m not sure what my friend was hoping I’d say, but I described a couple of approaches that would accomplish these objectives. Before I could provide much detail, my friend interrupted to say, to a roomful of client stakeholders including the CEO, ”While there appears to be a solution, 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."  The clients were speechless for an extended pause. Eventually, the call ended, my friend thanked me for my input, rolled her eyes at the audacity of the client, and said I wouldn’t be needed any longer since she had preserved the status quo. She was wrong. The client terminated the long-standing engagement a week later. (No, the client didn’t hire me instead.)

  4. Complex issue analysis.  This is often the highest value contribution that a consultant can make. 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, testing potential solutions, discarding poor ones, until a solution to the thorny issue has been identified. It's both the process and the objective third-party analytical mindset that has value, more so than specific domain expertise in the issue at hand.  The brand-named global consultancies earn their fees by 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 reason I hired the most consultants. I grew up as an executive in old-school companies at the dawn of the commercial Internet. There were no Internet experts to help us understand e-commerce, or website usability, or search engine optimization, or web privacy and security, or how to optimize selling digital products alongside traditional products, let alone how to price to maximize profit and avoid cannibalization. We paid premium rates for consultants to apply their rigorous process to these challenges. More often than not their assistance was invaluable and helped us lead the market. We didn't mind that we were funding their own education on these issues so they could then re-sell that expertise to others, so long as we obtained our value.

    These engagements are often highly strategic in focus but don't last long: Help analyze the situation, conduct internal and external research to develop hypotheses, test each hypothesis and provide guidance on the relative merits of each option, and then present a recommendation to the executive team. This type of work can be fulfilling because each engagement is unique and intellectually stimulating even though the analytical process is the same. They can also be disappointing because too often risk-averse clients will avoid making bold moves even in the face of daunting competitive threats, so some clever ideas end up on the cutting room floor.

My advice to new consultants isn't to just learn selling techniques, but to clearly understand when and why your preferred clients might need to hire a consultant. Align yourself to one or more of the business challenges they face. Find your niche, find that specialty that allows you to add significant strategic value. Maybe you have elusive subject matter expertise. Maybe you have a framework to think through complex issues efficiently. Or focus your efforts on implementation, using your experience and bandwidth to augment a team’s efforts. If you’re asked to validate a client’s pet idea, never compromise your credibility.

The best way to sell is to start and end each day by focusing on your client’s needs.

 *A version of this article was first published here in January 2014.

Written by:

Timothy Corcoran - Corcoran Consulting Group


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