CHAPTER 9

Design for a Successful Consulting Practice

The previous chapters have focused on the elements of developing a ­successful consulting project. As a consultant delivers successful projects and her/his reputation grows, there will be a need to find support to deliver a larger number of projects simultaneously and to increase the number of clients and breadth of services offered. Growing a successful practice requires that attention be paid to organizational design, type of workforce, and growth strategies.

Focus Organizational Design on Goals

A successful consulting practice will rely on project managers and partners working together to achieve overarching goals to achieve financial and organizational success.

Structuring a consulting practice that will succeed over time requires attention to be paid to some fundamental organizational design elements that include:

• Focus Design on Organizational Goals. This is more easily accomplished when starting a new business and more difficult for older and more established businesses. It is helpful to envision an organization successfully meeting its goals and think about the structure and employees driving that organization. Those goals can be making a certain level of profit, reaching a certain market segment, being a market leader, providing a certain level of service, and so on. Many businesses may have all of the aforementioned and more as stated goals. With these goals in mind it is important then to look at the ­consulting practice’s functional components (finance, sales and marketing, research and development, etc.) to make ­certain their goals are aligned with the organizations goals. For example, having an organizational goal of meeting customers ­specialized needs will have difficulty if the financial arm of the organization is focused on cost control. Here, the financial goal might be restated to find the most efficient method of fulfilling customer’s needs.

  This would allow sales and marketing and the financial arm to have a common goal of efficiently meeting the customer’s needs. Designing an organization around its goals will almost always require open communication channels between the organization’s functional components.

• Clearly Articulate Goals. Beginning with the hiring process, keep the consulting practice’s goals in mind. If the practice is structured properly, then the workforce positions in each of the functional components will support the overall organizational goals. In the previous example, marketing secretaries will understand the kinds of services being offered and know how to direct traffic to the right marketing individual. Accountants will focus on tracking costs and providing information to improve the organization’s ability to provide the best service competitively while generating acceptable profit levels.
• Design Training Around Organizational Goals. Training new managers, partners, and employees has to be focused on meeting organizational goals. Here customer focus is very important. If everyone can see how they fit into a process that successfully addresses a customer’s needs, employees are more likely to be engaged in reaching organizational goals.
• Design Pay and Bonus Structures Around Organizational Goals. Pay and incentive programs should be designed to achieve organizational goals. Using the previous example, if finance personnel were rewarded on low cost per item produced and sales and marketing were rewarded for market share improvement and the overall organizational goals were to meet customer’s specialized needs, there would likely be friction between departments and dissatisfied customers. On the other hand, if both departments were rewarded for achieving market share growth and improved ­profitability, the organization and the customer are more likely to be ­successful.
• Be Careful About Adding New Jobs and New Functions. Every new job or organizational function should be ­evaluated on its ability to help the organization achieve its goals. ­Executives and department managers can be very persuasive when requesting additional resources. It is important to use ­organizational goals as the metric to determine the need for the additional resources.
• Develop Extracurricular Activities to Support Organizational Goals. When developing programs to engage personnel and build relationships with customers, it is important to keep organizational goals in mind. It will be hard for employees or customers to see how lavish parties promote efficiency. On the other hand well-thought-out social events can build relationships that foster good customer relations and employee morale and focus.

The process described earlier is fairly simple but requires daily focus. Orchestrated properly, it results in an organization that routinely exceeds expectations, customers who are satisfied and a workforce that is self-­directed and motivated.

Consider Using Alliances to Grow the Consulting Practice

Growing a practice can be challenging if resources are scarce. Forming business alliances is an approach that is being used today to meet these challenges. Here are a few examples of how alliances were used to increase market share and effectiveness.

A well-established accounting firm wanted to expand its consulting business without increasing the costs associated with attracting high-­powered consultants from a wide range of industries. The accounting firm created teaming agreements that allowed small consulting firms to work with the larger firm.

The small consulting firms would have the ability to offer a full line of consulting services and would be supported by the larger accounting firm’s staff. The larger accounting firm would have the benefit of the smaller consulting firm’s contacts, relationships, and new business opportunities.

As a result the smaller consultants were able to call on major clients and offer services without taking on additional cost for expanded support staff. The larger accounting firm generated more sales and had the expertise of consultants from a myriad of industries without the associated employment costs.

In another example, a technology company that provides ground-breaking teleconferencing display hardware uses relationships with technology sales organizations to market their products. The technology company was able to reach new markets and customers by tapping into a sales organization’s contacts and established relationships.

The sales organization’s ability to offer its clients the latest in teleconferencing hardware enhanced its ability to create new revenue streams. As a result the technology company had its equipment exposed to new industries and it experienced strong sales growth.

Steps to Creating Successful Business Alliances—To create a successful business alliance all partners must benefit. Here is a checklist to follow when considering forming a business alliance.

1. Make certain the partner has the skill sets and ability to deliver agreed upon goods or services. A test project may help determine each party’s capabilities prior to forming a long-term relationship.
2. Be sure to clearly define each party’s responsibilities and obligations at the outset of the relationship. This should be a written document that covers normal operating procedures, revenue, and expense allocations and how out of the normal situations will be handled. The ability for each party to end the relationship should be agreed upon in writing.
3. Develop a business strategy. A plan should be designed that shows how each member of the alliance will benefit and outlines their role in creating business opportunities that benefit all alliance members.
4. Set regular meetings with alliance partners. Meetings should be held regularly to review the progress toward achieving desired results and to discuss new programs and opportunities.
5. Terminate the alliance if it is not working. Everyone hopes for success in a newly formed alliance but there will be some alliances that will not be productive. It is better to terminate a program that isn’t working rather than continue putting effort and resources in an unworkable program.

As the global economy expands, building business alliances will become an important tool to create and develop new business opportunities. Choosing the right partners and alliance operating procedures can improve the chances the alliances will have a successful outcome.

Develop a Strong Workforce

Working with alliances is not always an option and almost always a consulting practice will need its own workforce. Having a capable workforce is critical to building a successful organization. Here are five steps that can improve the workforce building process. In a consulting practice, ­employees are likely to be added to assist with ongoing projects or as administrative support. Junior consulting positions will likely be elevated to senior consultants and administrative support employees may be ­elevated to key managerial slots.

Screening—Assembling the “right” group of individuals for your workforce is important. A consultant can test for competency but being part of a team means that individuals must have personalities that can work together. Assuredly this means that some subjectivity will enter into the screening process. It may also mean that wrong choices will be made and will need correction. The subjectivity and chance for errors can be reduced if organizational goals are at the core of the interview process.

Defining job responsibilities—Even with the “right” personnel, the workforce can be dysfunctional if each member’s responsibilities are not clearly defined. It is important to understand how each job contributes to the organization’s success and to clearly articulate the requirements of each job.

Defining job success—After each member of the workforce understands the requirements of his/her job it is important that he/she understands what success looks like. This can be presented in terms of meeting specific deadlines, producing specific results in production, sales increases or levels of customer satisfaction. It is important for individual members of the organization to understand how success in their job relates to the overall success of the organization.

Establishing metrics—Favoritism and improperly set work rules can destroy the morale and ultimately the effectiveness of a good workforce. Setting specific metrics for job performance lets individuals know how their performance will be graded. If developed properly it will eliminate favoritism and improper work rules. The University of California suggests using the following SMART test to determine the quality of performance metrics.

S=Specific: clear and focused to avoid misinterpretation. Should include measurement assumptions and definitions and be easily interpreted.

M=Measurable: can be quantified and compared to other data. It should allow for meaningful statistical analysis. Avoid “yes/no” ­measures except in limited cases, such as start-up or systems-in-place situations.

A=Attainable: achievable, reasonable, and credible under conditions expected.

R=Realistic: fits into the organization’s constraints and is cost-effective.

T=Timely: doable within the time frame given.

Workforce participation in job design—Most individuals spend the majority of their time in the workplace. For the highest level of ­productivity, members of a workforce should feel that they are part of the organization and can have real input into how jobs are designed. The workplace can be a site for individual growth and learning as well as a place to produce goods and services. If individuals understand what is needed for the organization to succeed, participation in job design can lead to higher productivity for the organization and higher morale with lower turnover for the workforce.

Financial Considerations for Consultants

Starting a new consulting practice doesn’t necessarily mean that large amounts of money need to be raised. Even businesses with the potential of capturing a new market of substantial size may not require a substantial investment. This may be good news for individuals with a great idea coupled with expertise and know-how.

There are some approaches that allow an individual to start their consulting practice using low cost methods. Here are some of the steps to building a low cost practice.

• Identify potential prospects who would benefit from the product or service to be offered. These prospects can be ­interviewed to see if your offering is going to fill a market need. They may be enlisted to further refine the offering.
• Once the product or service is validated, find a strategic ally who is willing to work with you by adding your product to their offerings or by allowing you to include their products in your offerings. This automatically creates market credibility. The more successful your ally the better your credibility.
• Maintain control of your business. This can be difficult and dangerous especially if working with a very aggressive business ally. One way of providing control is making sure that business transactions and cash flows are conducted through your company. That is, customers pay you and you pay your business ally.
• Avoid large administrative and workforce ­expenditures. To process payments, payroll, business expenses, ­insurance and billing, use an accounting service. There will be a fee for these services but there is no ­organizational expense and the cost of the service is directly related to the level of activity.
• Find a university business school that is looking for internships for their students. These students can provide a workforce at a low cost and can be the beginning of permanent staffing and a future management team.
• Plan an investment strategy that allows you to seek out ­investors when you have the best negotiating position.

Conclusion

Building a successful consulting practice requires the founders to pay attention to the design of the organization, the design and development of the work force, and the control of all financial aspects of the business.

Paying attention to these elements increases the chances that each consulting project will be in keeping with the consulting practice’s goals and that each consulting project will add to the practice’s chances of overall success.

As was discussed in the introduction of the book, a consulting practice is built one consulting project at a time. As the consultant adds more projects and becomes more successful it becomes more important to be in control of how the practice grows.