Wednesday, October 28, 2015

Breaking out of the consulting wave

There are certain thresholds in the life of a company that must be crossed and, in so doing, fundamentally alter the business. In the world of boutique security consulting companies, one such period of change (and resultant growth) is when the task of managing client relationships and securing the next project or client shifts from being part of a senior consultant’s role and transitions in to the waiting hands of a dedicated sales organization.

Over the years I’ve observed first-hand just how difficult this transition can be for both the senior consultants and the executive management.

A critical driver for this transition is the way consultants are forced to divide their time and attention. When the consultant isn’t on a paid engagement they spend time responding to clients and prospects – writing proposals, responding to RFI’s, and scoping engagements etc. When they’re working on a client project, it’s heads-down on delivery – meaning that there’s far less time to engage with other customers or prospects, and limited attention can be applied to lining up the next consulting job. Visually, the cyclical nature of this business mode resembles a graph of out-of-phase waveforms transposed upon one-another.

If the red line represents the effort the consultant applies to “project delivery” over time, and the blue line in turn represents “business development”, it should be clear that low periods of non-delivery are countered with high periods of hunting for new work, and vice versa.

The problem with this cyclical work pattern is that a company typically only makes money if the consulting is delivering on paid engagements – and ideally you’d want the red-line to be horizontal and as close to 100% delivery utilization as possible.

If that wasn’t already an obvious problem, its effect on the business is then multiplied – as the task of securing business and constructing new proposals typically falls upon the most senior consultants. This in turn means that the most expensive people in the consulting organization, who typically command the highest rates from clients, are the most absorbed in this perpetual sales-delivery cycle.
I’ve heard time and again that “it’s just the way it is” and arguments such as:
  • As a technical consultancy, the client demands that they deal directly with the technical manager doing the delivery.
  • Scoping a job and preparing a technical proposal requires an expert consultant.
  • The onsite consultants know the customer the best. They’re always doing jobs for the client.
  • Our consultants are managing consultants, and that’s what they do.

The list of “why things can’t change” could go on ad infinitum, but the reality is that a consulting company cannot grow and scale beyond its senior consultants until it breaks out of the cyclical pattern – which is why this particular threshold is both so important and difficult for a company to transition.

Some things I’ve learnt over the years in navigating this business transition (and hopefully serve as some useful advice to other businesses seeking to cross the threshold) include:
  • The best security consultants, no matter how much they think of their skills at procuring and securing new business, are at best average farmers of an account (compared to a dedicated sales person). Yes, they typically understand the clients they do regular work for and are proficient at recognizing other opportunities within that client organization – however that pursuit and business development is limited to the client personnel they actually interact with during an engagement. The net result is that the client’s technical on-site folks love and adore the consultant and company, but most engagements are limited to a silo within the overall organization. For this reason the consulting company needs “hunters” – folks with the business development experience to identify other new people and opportunities in other parts of the same business.
  • Dropping in a “sales guy” in to the organization and letting them figure it out because they have a track record selling things is unlikely to succeed. Security consulting (in particular) is a very technical sell, and those tasked with hunting and closing in on new clients and projects need to not only also be technical, but need to be backed by deeper technical expertise. Consider the physical differences between an Olympic high-jumper and an Olympic shot-putter. Both sports require unique attributes, and are unlikely to triumph in the others field of expertise. While an Olympic decathlon medalist may be able to do both, they’re also unlikely to win against someone who specialized in just one of those sports.
  • Consulting managers are not sales people, they’re delivery coordinators and quality evangelists. Their role is often inglorious – as in-between chasing consultants for expenses and report deliverables, they spend much of their time apologizing to the client for things that didn’t go quite to plan and making the client happy again. Yes, they’re often the front line with existing customers and are core to delivering proposals to new clients, but their business development focus is (and should remain) blinkered to delivery.
  • In many cases the role of a consulting manager can morph in to that of a sales engineer (just never call them that!). When a consulting manager has no direct reports, they can serve effectively as the technical backup to the sales team – scoping engagements, constructing technical proposals, and being the technical evangelist is new client and prospect meetings. This “sales engineer” (SE) role is often a critical component to building and supporting a successful consulting sales team. The stronger these technical experts are, and the more years under the belt consulting they have, the more respect they tend to garner from prospective clients, and the easier it is to close deals. In many ways they add the technical credibility to the sale organization for technical clients.
  • Plan on building out a central team of technical authors. The technical author team provides the grease for easing a company through the transition period. By (slowly) removing some of the tedious consulting work – i.e. proposal generation, report proofing, and quality assurance on deliverables – the technical author team ensures a consistent quality of client-facing materials and eases the burden on the consulting and sales teams, and further frees up the time of valuable consultants. For global consulting companies or businesses that have consultants scattered around the world, the technical authorship team also helps overcome second-language frailties. Some caution needs to be maintained as these teams can be quickly overwhelmed with high workloads – which is why they should ideally report in to a senior consulting manager.
  • Senior and managing consultants who have been “managing accounts” often have compensation plans linked to closing client deals. The incorporation of a dedicated sales team means that compensation plans need to be reevaluated for those consultants. Ideally this type of conversation happens prior to the hiring and buildout of a sales team – and that the consultants concerned are party to how the transition will occur and how compensation can be changed. Since the monies associated with managing an account are not often insignificant, it is vital that those consultants are offered alternative means of “making their number”. Luckily the company has several tools at their disposal. First of all, since the purpose of employing a dedicated sales team is to grow revenue and increase the billable hours of senior consultants, there is typically scope to increase the base salaries of those consultants and to create a bonus payment structure based upon utilization and customer satisfaction levels. Alternatively, that important role conversion in to a consulting manager (i.e. SE) can be useful in a hybrid compensation model, where factors such as new clients versus lateral growth in an existing client are bonused differently.

The business transformation from 100% consultants to a mix of consultants and dedicated sales personnel can be perilous if not managed carefully. The senior consultants need to be well informed and actively participate in the transition, and the sales team built gradually from a nucleus of experienced sales professionals that have come from consulting businesses that had already successfully transitioned.

Any transition will take time. The senior consultants in particular must be gradually weaned off their account management responsibilities, and replaced with ones that drive a higher utilization rate for them and any other consultants they may lead. The worst thing a leadership team can do is to expect the transition to happen overnight. Instead, they should anticipate the process being a 3-9 month transition; the end result is worth it though.

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