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Consultants: Who Needs 'Em?

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I've been in technology management consulting for over 20 years, starting off in the Blue Ridge Mountains and ending up in places like San Francisco, Detroit, and Washington, DC. My clients have included Charles Schwab, the INS, Ford Motor Company, Pitney Bowes, the Federal Reserve Bank, and the Department of Defense. I've consulted for the big guys, and I've hired and managed consultants. Along the way, I've constantly been amazed at why and how people employ consultants. What is a consultant? Why would you need them? How do you go about finding one? How do you know they're doing a good job? How much should you pay for one? You've got questions, and I've got answers.

What's a consultant?
A consultant is a paid smart friend. They are not the person who does your hair, the person who talked you into a 401K, the person who fixes your computers, or the person who comes to work every day at 9:00. Those guys are called a hairstylist, a financial advisor, a repairman, and a staff replacement person, respectively.

Consultants know something that's important to you, and they're there to put your interests first. Keep thinking of them as a paid smart friend, and you'll stay on the right track. Some consultants you might run into everyday are your lawyer, your accountant, and your bookkeeper. Good consultants should not have a 'dog in the fight' for the rest of your money. If they're selling you something, they're not a consultant.

This is my article. I make the rules.

Why would I need a consultant?
Why would you need a paid smart friend? Because you don't know something you need to know and/or you need some outsider to help you decide on or do something you can't by yourself.

If you and your business partner can't decide on a new marketing plan, you need a consultant. If you want to file for a patent, you need a consultant. If you are thinking about buying your first million-dollar computer program, you'd better have some independent person you trust looking at the details for you – you need a consultant. If you already know exactly what you want and there are no questions about how you want to do it, you don't want a consultant – you wan a temporary employee.

Don't think that consultants are the smartest people in the room; they're not. They ought to be the guys that have been in this exact situation a dozen times, the guys that can argue a point so many ways that it would make your head spin (although they would never do that), and the guys who can facilitate a group to a consensus.

Look. Lots of times I've been brought in to companies like Ford Motor Company or Charles Schwab. What makes me so special they would pay my rates to help them out? Why would I go speak to IBM on how to use the IBM tools? How can a guy with two years of college manage PhDs in computer science in a software development effort?

One of the reasons is that a good consultant is not just an expert in one thing. That's a specialist. Consultants should know a lot of stuff and should have good horse sense. If you have hired somebody specialized in rocket science, underwater nuclear weapons, or particle physics, they'd better come with a minder. That is, by the way, why you may need a consulting team. Remember – my article, I make the rules here. It's not just being smart in one area, and it's not just being friendly. It means having a lot of contextual knowledge about who you are and what you're doing, and how it all fits together. They then use that contextual knowledge to put your interests first.

They're not only knowledgeable in several areas, they're also a trusted outside voice. Organizations are like families. Sometimes they can agree on things, and sometimes they can't. Sometimes, they get 'stuck' in the decision-making process. One bunch of people want to go one direction, and another bunch want to go another. It makes sense to bring in an outside set of ears to hear it all and make a decision when things are hot. Many times they can agree that they want to go do X, but everybody has a different idea of how to do it. After all, I don't have to worry about going to the office Christmas party or which enemies I just made for life – everybody else at your organization does.

Yes. It is like therapy. But isn't that what you use your friends for anyway? A sounding board for new ideas, valued input on how to reach your goals, a voice of sanity about intense emotional matters?

Can't I do it Cheaper?
Absolutely. Perhaps cousin Bob knows all about bookkeeping, or computers. Hey, he's smart, he's your friend – what could go wrong? How about that person you met at the library? Or the friend of the brother of the lady who works in shipping? They seemed to know all about your problem.

I've got news for you. Here's the way it works, whether you like it or not. Yes, you can go downtown and drag in somebody from the street who can probably give you advice on topics important to you. Or you could bring in your old roommate from college. Maybe they will tell you exactly what is wrong and what you need to do to fix it. But it won't work. It'll be a disaster.

Why?

You pay a consultant for three reasons: they're your smart friend, they need to eat, and because you need to place a high value on their advice. You have to do all three. If paying for a consultant doesn't hurt, you're getting ripped off.

What? Did I just say if paying for a consultant doesn't hurt, you're getting ripped off?

Let me explain.

For five bucks I can give you advice that will save your company a million dollars. But will you actually follow it? Would you change the directions of millions of dollars based on something you paid five bucks for? Not a chance. Why? Because it only costs five bucks! Chalk it up to human nature, but that's the rules of the game, like them or not. It's not that consultants are ripping you off, they just learned a long time ago that if it doesn't hurt, you're not going to make big changes. Yes – you may whine and complain, and you may have been whining and complaining for many years, but at the end of the day? You really just don't think it's that big of a problem to actually do something about fixing it.

If you have a five-dollar problem, go buy a paperback self-help book. If you have a $500 problem, go take a seminar. If you have a $5000 problem, take some classes. If you continue down this road, at some point you are going to ask yourself: why are you spending so much time and money on something that is not part of your core business? Do you go take three semesters of auto mechanics just because you got a busted water pump on your car? No. You pay somebody you trust who already knows all of that stuff. That's when you're ready to ask for help – when it means something to you. When it hurts. If there's no pain, there's no solution. That's just the facts of life.

At the end of the day, you're not buying consultants by the pound like you would meatloaf, you're buying solutions to your problems. Solutions you can't figure out by yourself. So why can't you solve your problems; because you're stupid? Nope. Most times it is because you're inside the problem. If you've got a busted water pump, you can see right away you need help. But if sales are flat for the last year, it might not be so obvious. Maybe you have your list of reasons. Maybe the Sales Manager has his list. Maybe the sales staff has a different list. Is it productive to dictate answers in all cases? Is it productive to not reach a solution? Should you keep going around in circles? How much can you afford NOT to solve a problem that has been vexing you for a while? It's simple -- if you don't really, honestly see the value in getting a consultant, don't get one. I understand that there are people in the world who think they should be able to do everything on their own. If you don't see the value in any kind of consulting at all, you'll self-select out of the competitive business world anyway.

We'll miss you.

Why don't I just hire somebody full-time?
If you've got a lot of work to do in one of your core business competencies and you know enough about it to supervise, hire someone. If you have a few goals in something that's troubling you and you're not exactly sure how to supervise it, use consultants. And if you've got a bunch of work to do that's not in your core business competency, outsource.

After all, you're not getting paid to know everything, you're getting paid to know when to learn, when to hire consultants, when to staff up, and when to outsource. In fact, aside from your basic business value proposition and growth strategies, that's the main thing you ARE getting paid for.

If you're the average small or medium business owner reading this, then 97 times out of 100 when you have a business problem, you won't need a consultant. But you got to be smart enough to spot the other 3 times. Those other 3 times are what is going to pull you away from the pack.

Isn't hiring a consultant just another way of not fixing the problem?
It can be. I read all the time about various government agencies hiring consulting teams to do this or that study. Sometimes, it's because they need the expertise. Sometimes, they just want to appear like they are doing something without really doing anything. Unfortunately, being a smart friend means you have go pick your friend up at the police station, or drive around town with them without anywhere to go, or sit in on rambling chat sessions that don't seem to be going anywhere. People do stupid things, and friends put up with it. Don't blame the consultants – blame the politicians.

It's not just politicians. We see this same behavior in big organizations too. The heat is on to fix some problem and the manager really just wants to buy time so they can think things through and so their original plan can work. So she hires a consulting team for a study and a recommendation. It's a good way to kill six months and a lot of money. Strange as it may seem, many times the manager rationalizes this as the best way forward for the company. Go figure.

Having a smart friend can be useful or not. That's your decision – it's not the friend's.

How do I go about finding a consultant?
So you've decided that you've got to teach your telemarketing staff how to negotiate, or your programmers how to program better, or you need a trusted set of eyes for that new marketing plan. Where do you find somebody who is worth paying?

Use the internet and check references.

You can find anything on the internet. Some consultants, like me, have started blogs where every day we talk about what we're doing, where we've been, and what we've learned. Google some topics around what your needs are. With any luck, you can find a dozen folks very easily. If they have blogs, you can even get to know them before you ever pick up the phone. The tables have turned radically in favor of the customer if you know what you are doing.

Check personal references, not company references. Yes. I know that Big Company XYZ is the best in the world and their consultants all were surgically implanted with computers the minute they were born, but like I already said, buying consultants ain't buying meatloaf. You'd better not be buying the packaging you'd better be buying the stuff inside. Be careful about going with the big guys, especially if you are a little company. Let's face it, if you're a big company and you don't like your consultants you have a lot of leverage, but if you're a regional bit player in their market your squeaky wheel just isn't that loud to them. If you're little, use the little guys. You'll get better service and they'll be a lot more responsive to you too.

Personality matters. If you have an issue that is going to take diplomacy, your consultant had better have had a history of handling tough groups. When you talk to a consultant, remember that he/she probably already knows a lot about your general situation from that first conversation. Since they should have seen this type of situation a dozen times, they probably know more than you do. Many times as a consultant I've been asked to do something like 'show us how to use this new software tool' when the real need was 'We can't agree on how to do things and we think the tool will fix everything. Will you buy into this fantasy with us?' Your consultant should be able to point things out to you that you don't want to hear, but in a nice way. If your consultant can tell you something you don't want to hear and you're still friends, you got a good one. If they only tell you happy talk, they're useless. When I start a new relationship, I start with happy talk and start mixing in little doses of hard reality. On my side, I'm looking to see if you can handle reality. If you can't, it's not working for me either. This has nothing to do with the quality of the consultant or the client, it's just a personality thing.

What won't they do?
They won't make big decisions for you. Their job is to handle the little questions as if they were you and to educate and frame the high level questions for you to answer.

Usually in a six month engagement, consultants come up with several questions that they can't (or shouldn't) answer. They will present these questions and make recommendations, but the clients have to make the decisions. Their job is to make sure you make informed decisions. Yes – when I'm doing the work, I push for one solution or another, just like a friend would. But consultants aren't managers, they're there to facilitate, not take responsibility away from you or your people.

How do I know if they did a good job?
Because they did what you asked. Period.

When you start a consulting relationship, tell them what you want. Then tell them how you know they finished the job. Tell them how you'll know it's a good job. That should be part of the paperwork getting started. When the objective is reached, they're done.

Sometimes doing a good job means that you are faced with much more difficult issues and choices than when you started. Remember: consultants don't make up problems, but we will show you problems that you can't see yourself. Make sure you get well-rounded consultants with common sense. Specialists are notorious for taking an assignment and then leaving you with tons of unsolvable problems from their field.

If you decide to hire a consultant, remember this:

Don't manage.
If you need to manage a consultant a lot, fire him. Consultants should work independently and know what they are doing. Let them do their work and get out of their way.

Don't bean count.
If you trust your consultant, keep her around. If you don't, fire her. If you're checking every minute they work, counting the miles they've driven, or dividing the number of phone calls by the extra hours on your bill, you don't trust them. So fire them and get over it.

If your consultant is doing a good job, it's worth the money. If not, it's not. Simple as that. If you want to know if your project is off the rails, ask for monthly or weekly goals to be met. That's the right way to bean count. There's no quicker way to shoot yourself in the foot than to send the message to your consultant that you don't trust them. Then – what the heck are you paying them for?

Yes. Some consulting teams will run away with your wallet if you let them. Sometimes this is by design and sometimes it just happens. So set up a budget and intermediate measurable goals. That is how you solve the measurement problem. Not by ad-hoc bean counting and sowing mistrust with the people who are supposed to be helping you.

Don't play consultant games.
Some folks think it's cute to hire more than one consulting team and then pit them against each other. Or it happens by accident. Some consulting teams get quite intimidated by having other consulting companies around. A lot of this, in my opinion, is just human nature – insecurity, competitive nature, vying for attention, etc. If you have a bunch of consultants, somebody should make sure everybody is singing from the same hymnbook and they're all playing nice with each other. You want solutions, not hidden conflict. Competition is good, and I'm all for it, but playing politics on your time is not. Watch out for it.

Keep the objectives understood.
Every time I have seen a consulting engagement go off the rails it was because the objectives were a) poorly understood, or b) changed from the time it started to the time it finished. You don't have to be the smartest guy in the room – there are lots of those people – but you have to give your folks clear, demonstrable objectives.

Get weekly status reports. Take your consultants out to lunch. The more honest, trusting relationships you have with those guys, the better they can help you. Go out for a beer. Whatever it takes, you've got a new expensive friend; let them get to know you and your organization. That way, you'll get the solutions you need.

And that's the whole point, right?

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This page contains a single entry by DanielBMarkham published on June 26, 2006 11:25 PM.

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