Bigger is not better

Common business wisdom used to be that nobody gets fired for buying IBM. Implicit in this statement is that it’s best not to rock the boat if you want to keep your job. The same culture permeates most large organizations. There is a belief that large companies have to buy products and services from other large companies. Bigger is better.

I have worked on both sides of the RFP/Proposal & purchasing/selling continuum. In the military, we developed our technical specifications and then some “professional” from Public Works & Government Services would wrap those specs into a Request for Proposals. The additional caveats ensured that only a few bidders could ever meet the mandatory criteria. Often, it excluded the product or services that we, the operational users, really wanted. In the end, everybody’s job was protected, a large company got the contract and the taxpayer was fleeced.

As an officer, I hired a consulting firm, through the proper channels, and they spent several months taking my own analysis and then selling it back to the military in fancy packaging. Money changed hands but the only value exchange was the consulting company learning something about the client.

Four years ago I wrote that free-agents offer better value, especially in consulting:

Many free-agents are also natural enterprises, not encumbered by the need for constant growth. I’ve worked as a sub-contractor on bids from large corporations who need my skills for a specific project. It’s usually good work for me, but in many cases I could have put together a team of free agents for a much lower cost and a more effective (in my opinion) project. However, most large corporations and government agencies write their requestes for proposals (RFP) in such a way as to exclude small operators, thinking that they are mitigating their risks.

Three years ago I saw the big consulting companies were jumping on bandwagon 2.0. “It looks like social media (wikis, blogs & social networking) are going the way of e-learning and knowledge management (KM). That means big companies charging big fees for cookie-cutter solutions.

Clients may think they are hiring an expert team with much experience, but in many cases they are getting a bunch of recently graduated MBA’s. This story about a high-priced consultant with the Boston Consulting Group motivated me to write this post:

Despite having no work or research experience outside of MIT, I was regularly advertised to clients as an expert with seemingly years of topical experience relevant to the case. We were so good at rephrasing our credentials that even I was surprised to find in each of my cases, even my very first case, that I was the most senior consultant on the team.

The culture of “nobody gets fired for buying …” was obvious here:

I got the feeling that our clients were simply trying to mimic successful businesses, and that as consultants, our earnings came from having the luck of being included in an elaborate cargo-cult ritual. In any case it fell to us to decide for ourselves what question we had been hired to answer, and as a matter of convenience, we elected to answer questions that we had already answered in the course of previous cases — no sense in doing new work when old work will do.

When marketing is disconnected from sales and neither are integrated with client services you get cases like BCG above. Too often, sales & marketing are putting lipstick on a pig.

There’s more than one type of consultant and some of these folks are giving us a bad name. One key advantage of hiring independents or small companies is that those who write the proposals actually do the work. Marketing, sales and consulting are one integrated unit, a real advantage for clients.

To make the relationship with clients as clear as possible, I’ve used these guidelines since I launched my practice seven years ago:

  1. Base recommendations and actions on an objective needs assessment conducted in partnership with the client.
  2. Define and achieve useful results that can be aligned with both the client organization’s mission, objectives and positive contributions to society.
  3. Focus on results and consequences of the results. Measure performance based on results, not on procedures performed for the client.
  4. Set clear expectations about the process to be followed and about the expected outcomes.
  5. Serve the client organization with integrity, competence, and objectivity.
  6. Respect and contribute to the legitimate and ethical objectives of the client organization.
  7. Prevent problems from occurring rather than solve problems that could have been predicted and avoided.

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