The Consulting Growth Podcast
Joe O'Mahoney is Professor of Consulting at Cardiff University and a growth & exit advisor to boutique consultancies. Joe researches, teaches, publishes and consults about the consulting industry.
In the CONSULTING GROWTH PODCAST he interviews founders that have successfully grown or sold their firms, acquirers who have bought firms, and a host of growth experts to help you avoid the mistakes, and learn the insights of others who have been there and done that.
Find out more at www.joeomahoney.com
The Consulting Growth Podcast
Episode 26: Culture, AI and Growth with David Fields
Welcome to a captivating conversation with David Fields. David is does similar work to me, but on the other side of the Atlantic.
Ever wondered how small consulting firms manage to compete in an oversaturated market? David offers his perspective on the role of marketing and the power of referrals, inviting us to question our own strategies. Finding effective differentiation in the sea of sameness, they say, comes down more to reliability and credibility than standing out.
We chat about Artificial Intelligence and its potential impact on the industry. AI's ability to enhance solutions, streamline operations, revolutionize communication, and even manage information storage and dissemination might just be the game-changer we're all waiting for. But what if AI could also create custom bots for clients (it can now!) and play devil’s advocate?
Finally, we dive deep into the art of building a consulting firm for not just short-term wins but long-term success. The secret lies in creating a culture that's satisfying and profitable for everyone, from the owners to the partners. David illuminates the nuanced difference between a firm built to last and one polished for sale, sparking a thought-provoking conversation about the balancing act of competing in two markets - clients and employees. This is a critical examination of the consulting industry that you won't want to miss. Tune in to gain valuable insights from two seasoned professionals.
Prof. Joe O'Mahoney helps boutique consultancies scale and exit. Joe's research, writing, speaking and insights can be found at www.joeomahoney.com
Welcome to the Consulting Growth podcast. I'm Professor Joe Omani, a professor of consulting at Cardiff University and an advisor to consultancies that want to grow. If you'd like to find more out about me and access some free resources to help your consultancy grow, do please visit joomanicom. That's J-O-E-O-M-A-H-O-N-E-Ycom. Okay, welcome back to the Consulting Growth podcast. It's really kind of you to join us again. I have the absolute and genuine pleasure of introducing David Fields, and I'm sure all of you that are listening to this will have heard of David, but if you haven't, I recommend you pick up his books, visit his website and engage as quickly as you can, because I think he is the with the possible, perhaps a joint with David Meister, one of the most influential people in the consulting industry. He works with consulting firms across the globe, especially on growth, and he's widely considered to be at the forefront of thought leadership for consulting firms.
Speaker 1:I have read everything, well, everything you've published, at least I don't have access to your emails, you'll be pleased to know. Welcome to the podcast, david.
Speaker 2:Thank you. That was extremely kind and flattering and certainly being though I know David Meister being talkative in the same circles as him is very flattering, and he and I don't always I don't always agree, by the way, though he's very, very. We don't talk now, but we had some real knockdown dragged out discussions over some aspects of consulting.
Speaker 1:Okay, Well, tell you what that's a good question. Well, let's start, If you can share what was the count. I mean, I'm guessing everyone a lot. Most people listening to this will know you and David Meister, and so it would be interesting just to get an insight into some of those divergences, I guess.
Speaker 2:Yeah, okay, we can talk about that. It's been a while, but sure, there's a couple of things where we probably diverged a little bit and, by the way, his work is phenomenal, right, yeah yeah, he is just incredible. One place that we differed a little bit is David would say that if you do good work, you do not need to market.
Speaker 1:Okay, yeah.
Speaker 2:You do not need to market your firm because you're doing good enough work.
Speaker 2:Your clients will tell other folks and you will get referrals, and that's the right way to get business.
Speaker 2:Yeah, and my response was David, you have Harvard Professor on your forehead here and wrote the bestselling book you know at the time in the business so easy for you to say, but it's not true for most people.
Speaker 2:Yeah, Most small consulting firms do outstanding work and their clients love them, and yet they still need to engage in marketing in order to succeed. So that was one place we disagreed a little bit and then, as you and I have had some conversation that you know, not outside the public, I am not as fond of metrics like utilization and very, very these metrics that are focused on inputs, how much time is being used, and his very time based approach to consulting, which is kind of old school. Now again, to be fair to David, most of his clients were big, big, big firm and if you're running a firm that has 20,000 consultants or even 1500 consultants, you need to use the metrics that are most easily available and that kind of work tends to be very, very root-nised. But those are a couple of places, don't know if that was as exciting as you were hoping for them.
Speaker 1:Yeah, I think that's a great insight. I think some of that must be a function of the size, because once you get 1000, let alone 100,000 employees, I guess processes everything.
Speaker 1:And on the first point around marketing, funnily enough, I was looking at managing the professional service firm the other day and I came across the chapter on faxing and I think there was two lines on emails and I think that book was obviously, you know, it's nearly 30 years old now and it doesn't seem like a long time ago at my age. But times have changed a lot and the cost of marketing has collapsed but competition has intensified.
Speaker 2:Absolutely, and the ability to find anyone is completely different now than it was before. 30 years ago, if you wanted to find a consulting firm, you either had the big names or you asked someone you knew. Let's say 30 years, so we're talking 92, that would have been. I mean, was there even AltaVista? I guess there would have been right around there, Something like that, right, but there were no search engines. You couldn't. There was no Google. I don't remember when Google started Exactly 1993.
Speaker 1:There we go. So you're right. Yeah, Google wasn't there.
Speaker 2:Right, See, you know how would you find it? So the way we access information is completely different now. The way clients can look for if you're a listener and you have a firm, look for your firm or a competitive firm is completely different than it was 30 years ago, and it does absolutely have positive and negative. It has a large barrier in how you operate, though.
Speaker 1:Yeah, and also that one of your key points around differentiation becomes so much more important. When everyone's shouting, you need to say, you need to answer the question who are you and why are you different?
Speaker 2:I guess, I think that most consulting firms overindex on trying to differentiate Sure, okay. Or in trying to be different yeah, because clients don't want different. Clients want a reliable, credible solution to their problem.
Speaker 1:But what happens if you get third? I mean, we've probably both been in buyer situations where you've had 30 proposals through the door and, to be honest, telling the difference between them is very often difficult.
Speaker 2:Yeah, I mean certainly, as I was, especially back when I was running the consortium and bringing in, so I was hiring consultants, basically on behalf of my clients. Again, you're looking for who is most likely to deliver success and that's the first cut, and that's the same. That's what clients are always doing, because the cost of failure is so much higher than the some small difference in a proposal A hundred thousand dollar project versus a hundred and fifty thousand for the same project, two different firms that fifty thousand is meaningless.
Speaker 1:Yeah.
Speaker 2:Compared to. Are we going to get the ten million dollar return or not?
Speaker 1:Yeah.
Speaker 2:So it's all about which firm looks most credible, looks most reliable, and so for the most part, clients who are sophisticated anyway, doing everything they can to assess that, and then if there's like, yeah, four, they all look the same. Sure, maybe fees come into it somewhat, or who do you like most?
Speaker 1:So what I mean. This kind of leads quite nicely into one thing I wanted to talk about, which is the changes in the market, and we've looked at how things have got much more competitive, that there's a lot more boutiques around these days. That's marketing has changed. A lot of questions that I'm getting now are around AI, and some of that is sort of the panicked version Will I replace management consultants? And I think we can probably agree the answer is to, generally speaking, no, but then there's the question of how it can supplement, improve or make more efficient the work that they're doing. I'm seeing at the moment, a lot of juniors using AI to save them time with PowerPoints and writing, but not telling anyone about it, and then a few consultants, which is yeah, which is quite. I did this piece of research. That said, I'm going to say research. It was a few surveys, it was, and roughly I think two thirds of consultants were using AI, two thirds of them were using it just to save them time and two thirds weren't telling anyone.
Speaker 2:It's right, my term paper.
Speaker 1:Yeah, have you seen anything more strategic when it comes to AI, automation and consulting industry?
Speaker 2:Yes, in some cases, though, I think you're right. Everybody's talking about AI, and it's funny. We were talking about 1992, right, 1993. If you were in 1992 and someone said, how is the web going to change the world? Yep, and the answer you would give would be wrong. So you know, to be able to foresight on this is not impossible, and we're in a similar position, right. So it's fundamentally going to change a lot of things in the world and about consulting, and our ability to predict accurately is very weak. So everything we're about to say, oh, I hope it's valuable to listeners and I hope you recognize it's not a nonsense. You know, that's it We've seen.
Speaker 2:So some of our clients are doing some pretty interesting things, and I think you've actually differentiated this nicely from the standpoint of does AI help with the solution? Does it allow us to deliver better solution or does it allow us to improve our operations? And smart firms are looking at both of those questions, right. How can it help us improve everything inside, how we communicate, how we store information, which, if we can figure that out, would be a huge one? Yeah, right, because this is, we are the information business, and when you've done 100 projects, 1000 projects, 10,000 projects, being able to collect that information and effectively use it and disseminate it. No one has figured out that I've seen, but AI might help with that challenge. That would be a massive win and, I think, something that's probably coming.
Speaker 2:We have seen some clients use AI transparently to improve their outputs and behind the scenes to improve their outputs. So a transparent way is, for instance, a client comes to you and says, professor, I need some expertise or I need some help in this kind of in this area, in consulting, and you're like, okay, great, here's what I'm going to do. I'm going to give you my opinion based on all the research and being a professor of business, but also I'm going to create a custom bot for you based on the books of David Meister, david Fields, peter Block. We're going to choose five or 10 resources that we think are we trust and create a you know all license, so it's legal and you ask a question. I'm going to give you my answer. But also I'm going to give you the benefit of what's the consensus view of these 10 experts. It's kind of an interesting little solution.
Speaker 1:What happens, david, if their answer is better than my answer? That's where it starts to change the model a bit, I guess.
Speaker 2:Well, it does, but you're still the one to put it together.
Speaker 1:If I charge enough for it, I can put my feet up and just watch the cash roll.
Speaker 2:Well, that's a pretty good question, isn't it? At what point do we go away? And I think that goes back to why people hire consultants to begin with. It's just worth examining, because most of the knowledge is out there already. I mean, we're all coming up with. You know new stuff, but it's fine tuning you can. If you're a client, you can Google and get the answer to whatever you want. So why do you need a consultant? And the answer to that isn't going to change how it's answered. Why they need a consultant won't change, but what they actually use in the consulting process might, and I think that will be fascinating to look at. Another, I think very, very good use of AI right now, in its early stages, in its infancy, is devil's advocate.
Speaker 2:Because AI is a horrible linear thinker, it's a hysterical linear thinker. I mean nonlinear thinker. Have you given these puzzles, these nonlinear thinking puzzles?
Speaker 2:No no, right, where it's the classic thing there's someone is dead or hanging and there's a puddle on the floor. What caused it? And you know you're supposed to think. Well, they were standing on a block of ice, and right, it's this kind of outside the box thinking. Well, if you give AI a chatbot, these kinds of puzzles, they come up with absolutely hysterical solutions that could make sense, you know. Often, though, they're so farfetched, and so, because it will be more farfetched than you, it plays devil's advocate extremely well, okay, and you say here's the client situation. You know what I would encourage you to do, because you create case studies for your students. Yes, feed your case studies into AI.
Speaker 1:Oh, that's interesting. I'm sure my students are already doing that. To be honest with you, I'll just be behind them on it.
Speaker 2:You're absolutely right. But then say give me alternative solutions that are outlandish but still possible. Okay, Yep, and see what it comes up, I'm going to try this. Okay. Now the devil's advocate side is you say here's the case, here's my solution. Poke holes in it. In what ways could this be wrong? Yeah, okay, because it comes up with all these wild, wacky things that you wouldn't think of, because it's just looking for associations and it's got more ability to find associations than you can. Quickly it says well, actually, did you think of this?
Speaker 1:You're like oh, I hadn't thought of that.
Speaker 2:Let me address that because maybe my client will think of it or maybe it was great. That, I think, is a really good use. It's just like a bigger, more varied brain in some ways.
Speaker 1:Yeah, I have found. I mean, I use it to double check my thinking, but it's rare, to be honest, I find a situation where it doesn't add value in terms of something quite left field I haven't thought of.
Speaker 2:Yeah, exactly, A lot of people use it for writing. I do not, but I think it can be very helpful.
Speaker 1:Yes, yeah, I mean. What I've seen, which is quite interesting, is a lot of consultancies on the service side are thinking, oh, we could use AI for about within two or three months. Open AI or Bard or Hansi or whoever have already done it. I've never quite seen a tech cycle like it, but so many startups are being usurped so quickly and a lot of investors are going to be burnt. But that's a tech question.
Speaker 2:I guess, what other?
Speaker 1:we've both been in this, in this game, for a while. What other big changes have you seen over the last 20 years, especially in the boutique space In the boutique space?
Speaker 2:I'll answer that question, but let me also push back slightly on the question. I have been somewhat dismayed and somewhat rewarded by how little consulting has changed over the past 20 years, 30 years, 50 years. As a matter of fact, the big consulting companies and the predominant models for consulting are based in industrial revolution companies.
Speaker 1:True, yes.
Speaker 2:Yes, the leverage model? Yeah, absolutely. Time and materials how many hours? The basic unit of consulting being an hour, which we started on earlier. That is still the predominant model. It's all in. The original, consulting companies were actually efficiency firm. Right, how do you drive efficiency and how long does this process take? And we can make it take less time. Like I said, somewhat dismaying is how little things have changed. Yeah, sure, yes, even innovation consultancies are remarkably non-innovative. Yeah, right, the way they approach things and the way you've done business and the way they help you innovate your business is the same as they were doing 50 years ago.
Speaker 1:Yeah, those innovation consultancies need innovation consultancies to help with their innovation processes.
Speaker 2:Yeah. And then this is where I think AI will be interesting. And again, when we go back to that question of why do people choose consultants to begin with, why does any firm turn to consulting? And if the answer to that doesn't change which I'm not sure that that will change then how you serve those needs or interests does that change? And for 30 years, for the most part it has not. There have been changes in the industry, but the fundamentals of consulting I haven't seen change much at all. I think that we've obviously seen huge shifts that were accelerated by the pandemic, in terms of onsite delivery versus remote delivery Sure, yeah, massive change. And similarly, onsite, just core work versus remote. My firm has always been virtual since 2005. My folks are scattered, but that's not true of most consulting firms. It is more so now. Yeah.
Speaker 1:It is definitely a big change and also I feel that a lot of the in-demand workforce has been filled. They're more empowered to say no, I'm not going to return to the office five days a week, and if you don't like it, I'll find someone who is happy with it, even in consulting.
Speaker 2:Yeah, that's absolutely the case. You and I would not have been able to have this conversation 10 years ago. True, yeah, and so it's a huge benefit to me that we get to have this conversation and I get to chat with you at any time.
Speaker 1:Likewise. But I want to pick up on something that you, that we had a chat about a while back and it really kind of made me step out of my box, which was very useful and I was talking about growing and selling firms, and you said and excuse me for paraphrasing you, but you said something along the lines of Joe, when I'm talking to someone, my first instinct isn't, in effect, to how do you sell this firm, it's how do we make this firm into somewhere where you're happy working or happy leading, and that's a relatively. It shouldn't be, it shouldn't be a rare thing to hear these days, but it is and I'd love to know a little bit more about how people respond to that and how you go about that, almost strategically, achieving those types of outcomes, because in some ways, that's more complicated than maximizing revenue and growth in order to sell a firm.
Speaker 2:Yeah, exactly right. So one of the things we tell folks who come to us is we're not here to help you build a firm you want to sell. We're here to help you build a firm you want to keep and now, along the way it becomes more sellable and more valuable. But they are a little bit divergent. If someone just wants to polish their firm to sell, we will typically not take them on.
Speaker 2:They have a one year time horizon, just because, you're going to make short term decisions that make the firm look more valuable, but may not be great three years or five years down the road, yeah, okay, but to create a firm you want to keep, of course, the first question is what makes you happy? We spend the first half day usually with the firm's owners or partners just saying what makes you tick and have some sort of interesting and perhaps surprising conversations around that. What's your perfect day? Just describe it from the moment you get up to and listening intently and getting a feel for that person, so that we can start to say I get it, I know why you're doing what you're doing, understanding what motivates you and what you're trying to build here and what kind of firm would serve you, because ultimately, the firm has to serve the owners and partners. If they're happy, that will then triple back down right, because culture comes from the top.
Speaker 2:Yeah sure, denyably, culture comes from the top. So if we can create a culture that's pleasing, that's happy to those folks, that will go down and the firm will reflect what they're trying to build. It might be a culture that not everybody likes I mean some people. What makes them tick is just working like crazy, right, running as hard as possible. Yeah, don't want to stop, no matter what. All right got it. Let's create a firm that is pretty hardcore. Not everybody's going to want to work there, yeah, but it's going to reflect who you are and that's the most important value. Yeah.
Speaker 1:Yes, go ahead, push back, tell me, I'm out of my mind. In fact, we had a conversation I mean we had a conversation before this about firms with both experienced where there's very dominant typically a dominant founder, very often a male, typically with a background in aggressive sports. Talking from my own experience here and I can think of a few like that and I think we both agree on this it can get you to a certain size the command and control model of consulting. But once you get past that and where you need process and procedure, a highly dominant founder can be more of a problem than a solution.
Speaker 2:Yes, and so I agree with you 100% and the longevity of the firm is at risk. Yeah, With such a dominant founder that has a sort of authoritarian approach, that has created a layers of followers, not layers of leaders If all the leadership falls in one level, because I think you can have a very strong personality at the top and yet build a culture, build a firm and we've done this. A number of clients build a firm where it's so welcoming, it's so engaging and the leader is open to change, is open to discussion, Still very strong. It's again, it's his culture or her culture. This culture of inclusiveness and that next layer of leadership is much easier to develop because they're in it. They're in it for the culture and the motivation and they're part of something bigger and all those things that allow you to sustain a firm.
Speaker 1:Yeah.
Speaker 2:Past 100 people, 125, 200 people, 500 people.
Speaker 1:I like your message is a firm that you want to keep, because it's something that I say to a lot of my clients that you're competing in two markets. You're competing for clients, but you're also competing with employees and you get to a stage where friends of friends won't cut it anymore. You get to a stage where you need a consistent intake of high quality people and, especially in a day where there are websites like Glassdoor or LinkedIn or even Google reviews, it's very visible when you've got a poisonous, toxic culture. And I don't know whether it's true that Generation Z or the Millennials look for work-life balance, more, nice cultures more, but it wouldn't surprise me, but it does seem, because my initial reaction was to say, well, there's probably going to be a balancing act that you need to do between a nice place to work and profit.
Speaker 1:But actually, if you're not having to constantly recruit new people and the people you have got are performing better and happier and fewer days off sick and all the rest of it then that's a major driver of profit, I guess.
Speaker 2:Absolutely. I mean certainly. You and I were talking about a specific situation earlier, and that's certainly the case in the couple of firms that I'm dealing with that are connected, where one is overperforming and they're overperforming in part because the people love to work there and they just believe in it and they've been included. The one that's underperforming is underperforming in part, not fully, because the people have to work there and it's all numbers driven and if you can't hit your number it spirals downward right Because there's nothing else to sustain it in someone, they're making their number happier.
Speaker 2:They're not making their number, they're miserable and like to hell with it because there's nothing else, so it can be a little self-feeding. I wonder a little bit though, joe and this will connect us back to sort of digital world and what's changing where echo chambers are becoming so prominent, meaning folks just talk to themselves, talk to people like them. They only listen to data that support their point of view. It's becoming very, very common and we're all subject to it. We all fall for that at some point because we're all human, and so confirmation, bias and all those kinds of things come into play. I wonder how that's going to affect consulting firms and the way they're built, and whether you will get these firms that are actually they do manage to survive more in these what we might think of as toxic, because it's toxic people talking to toxic people and they're just and it's easier to do that now and people are used to doing that now.
Speaker 1:It's not interesting. My gut instinct I can only go on anecdotes here I'm thinking of two or three firms in the last year or two that I have dealt with have done very well getting to as I said in our earlier conversation 120 people on the basis of shouting and aggression and competition, but have really struggled to get beyond that. And then I think you've almost got a whole partner set who have imitated the behaviors of the leader, who's quite dominant, and then you get this firm that nobody wants to join Other than perhaps from those people. But are those people the best people to be working with clients? Possibly not.
Speaker 2:I don't know, except the kind of clients who choose folks like that. I mean there are people who and clients who want a bully for lack of better words, and we're going off into stuff that I have certainly not researched. I'm curious about it. As I'm seeing social dynamics in the world, I'm always curious about how they play out in consulting. And it's a dynamic. I'm finding interesting these sort of echo chambers and polarization and I'm curious about how that will play out in consulting.
Speaker 1:Because I see the MBA students, because I engage with MBA students, I do know that if I recommend the company, the first thing they'll do is look at Glassdoor. Then they'll go on a couple of up. I think indeed also there's ratings of firms and some of them might see, even if they're of that culture. They might see the three rating and think, well, I'm not going to touch them with a barred file even if I'm suited.
Speaker 2:You're absolutely right. It will be interesting to see. I don't know whether this next generation is more work-life balance folks or not, it appears. So I don't have as much exposure to youngsters. I don't talk to anybody under 75. So present company excluded.
Speaker 1:I'm not multiple.
Speaker 2:Yeah, but on the one hand, I see groups of folks who are much, much more tolerant and much more accepting of difference and expecting of difference than our generation, and on the other again, I'm still also seeing in this huge amounts of polarization, even in the younger generations, and that's where I don't know what it will play out and how it will affect. Consulting is not clear to me, but it will have an impact. Watch this space, I guess.
Speaker 1:I want to move on to your own firm, because you've even managed. Although I enjoy my work and I love, I think, everything I do, I don't think I've created that space where I'm balanced. I think I'm very often sprinting too much, which is something which you know. I tell my clients not to do and advise them not to do, but we're very often the worst at taking our own medicine. But I think you have achieved this. So, chatting to you sort of informally, I'd love to know about how you've managed to turn your firm into something that you want to keep and something where you've managed to create work-life balance and focus on the things you enjoy.
Speaker 2:There's always room to do better. There are times that I'm hiring. Right now we are. Our demand is over capacity and that means I'm working a little harder than I would like to. At the same time, as you said, I don't think there's that many folks who have a firm producing what we produce and as lucrative as my firm is, where I take off two to three months a year. I take off a month at a time, which for an American is very unusual. Sure yeah, and you're like okay, that sounds normal.
Speaker 1:That's a weekend, exactly.
Speaker 2:But this side of the pond, you know, people take two weeks for three weeks, whereas in just over a month we're heading down to Argentina for a month, and we've already done another four-week trip this year and a couple of smaller ones. And we get our clients to do that because that's the benefit of having a firm. And this is going to sound perhaps ridiculously simple. The way you do that is you decide to do it Really. You say you know what I'm going to take some of our clients. We say look, let's just, you've never taken a vacation. We're going to go crazy.
Speaker 2:Schedule three weeks. I'm like okay, well, I need three weeks of the internet so I can do my work. Three weeks no laptop, no communication, because when I take four weeks off, it's off. There is nothing. No work, no check-in, no little calls, no email, nothing. But I have a team to do that. When you make the decision, you know what I'm going to take three weeks off, I'm going to take four weeks off, or, if I'm European, I'm going to take six months off. It's a forcing function. You're now forced to say okay, how do I take four weeks off without ever checking email, answering the phone, checking in on clients, and how do I do that yet retain happy clients? That's a question worth answering and that's a question we often answer with our clients. All right, what do we need to do? Put in place?
Speaker 1:What's the minimum size of consulting firm standard consulting firm Because I'm guessing you need enough people in the firm so that you can achieve that kind of lifestyle.
Speaker 2:You know, I don't think so actually, but you have to make different choices. You could be a solo consultant, matter of fact. In some ways it's easier. Many solo consultants are freelancers, right. They take a project at a time, they work it for three months or four months and then they take off some period of time. Now, what's harder for them is controlling that True Right, whereas I can block out a year in advance and say I'm taking next May off, by the way, I'm taking next May off and that makes it easier because I can tell clients. But so, beyond that sort of solo level, again, almost there's not a minimum size, because even a solo consultant is not a solo or should not be. Even a solo consultant has an assistant. You have to have an assistant and if you have an assistant you can take time off and still service clients and still have someone there to say hey, joe's actually out of town, which hopefully you've told your clients this, yeah.
Speaker 1:Yeah, sure, maybe it's a prospect.
Speaker 2:Yeah, joe's out of town until the middle of next month. Can we put something on the calendar? Yeah, now will you lose something that was burning? Yes, is it worth it? Yeah, you bet. Will your clients want to work with you more? That's been my experience. Sure, scannis city is a great marketing tool.
Speaker 2:Well, yeah, and also you're like, hey, I just got back from Argentina, or I just got back from wherever it was, and they're interested. Remember, we're all human, sure, and there's a little aspirational piece Wow, I want to get down to Argentina. Yeah, and rarely is something that we're working on so urgent that you can't take some sort of break. We work on longer term stuff, though, and if something is urgent, needs to be done in that period of time, then you take care of it. You may hear you say, look, I'm bringing in so-and-so who's got extraordinary talent. I'm bringing them in ahead of time so that they're used to it and they're up to speed, and while I'm out, they're going to make sure things run. Is that an expense? Of course it's an expense.
Speaker 1:Sure, and so tell me a little bit about your firm. In terms of the structure, I'm presuming, given the expertise that is needed, you don't have a cohort of junior consultants that you send in straight off their MBAs. I'm presuming you've got more experienced people that can offer the types of insights. Do you employ the type of people who have been there and done that? In terms of consulting firms? You do, okay.
Speaker 2:Yeah, I don't remember what they call it Gray-haired firm. I mean it's got advantages and disadvantages. I'm interviewing someone this week, Boy, I hope he works out. He built a firm. He actually joined a firm a little bit unusual profile for us, but joined a firm 28 years ago as a junior floor sweeper, worked his way up to be CEO and then ran the firm through sale. Okay, and now, one year past sale, it's like I'm not needing anymore. Sure, that's a good profile for us, because now we'll have to do a little bit of training because you didn't have the breadth of experience. But yeah, been there, done that, been in consulting, was in the Air Force, and now it's been in consulting for 30 years. That's a good profile.
Speaker 1:Right, yes, I know a lot of these type of people because that's you know, obviously, as we help firms through the exit phase a lot, and it's interesting because a lot of them have this vision of they want to sit on the beach with their feet up drinking pina coladas, but actually that personality type that puts their feet up isn't the type of personality that grows and sells a consulting firm. So it's interesting, isn't it?
Speaker 1:That's I'm guessing you can benefit from that, because these people are looking for things to do, but not necessarily starting up another firm Right.
Speaker 2:However, it's actually a very small subset of them have two other qualities. One is a desire and willingness to coach, right to, which involves a lot of listening, a lot of reflecting deeply and trying to understand someone. And though we're not coaches, we're advisors even so there's a lot of that kind of coaching approach, so not all of them want to do that. And the other attribute which many of them lack is the willingness and desire to learn beyond what they know already.
Speaker 2:Because most of them have built one firm, maybe they've worked in three firms. We've helped build hundreds of firms, and so they have to be willing to accept their experience for what it is One instance it's very valuable, it's very useful, but it's one and be willing to lay on top of that our IP, which is built over hundreds and hundreds of firms like just like yours, is this person we're talking to this week. I know he's very, very he's a learner by his nature. So he goes in and says, yeah, I've got great experience, and no, I accept that I'm coming in at the ground floor again and happy about it yes.
Speaker 1:Yeah, I think that last point especially is so important. I see, very often I'm asked to join a board, an advisory board, and I'll join the advisory board and the person that's calling the shots will often be someone who grew and sold their own company 20 years ago when Google didn't exist or was fledgling, and perhaps doesn't believe in marketing and doesn't really get the whole dive there. I'm caricaturing here. But the fact that you've grown and sold one firm and sometimes, as we said before, luck can play a role in that doesn't necessarily mean that your best place to advise on that in the 21st century.
Speaker 2:That is absolutely the case. That is absolutely the case, but hard to recognize, because we're all great believers in our own success and our paths to success.
Speaker 1:Yeah, david, you asked this question of CEOs and owners, so I'm going to ask it of you Out of all the things you do, from advisory to coaching, to drawing, to writing what's the thing that excites you most? What do you enjoy most doing?
Speaker 2:Wow, look at that. I wasn't expecting this Turn the tables yeah look at that so.
Speaker 2:I am motivated by learning. When you do the little personality test things, I am never happier than sitting down with a textbook. I mean, fundamentally, I'm a quaint geek. It's surprising that I'm in front of a camera here at all I'm. I want to hide and learn things and be more like you, joe, be a professor and anytime I get a chance to learn something new and sort of sort through, how could this work? How could this affect that? That's why I'm looking at wow, look at this social thing going on around polarization right now. How would that affect consulting? I mean, that's my happy place right there, reading your books, happy place Reading anything that stretches me, and consulting is great for that, because every day you're running into this new client, this problem, and I'm like whoa that didn't see that one coming A lot of them we've seen before, right, but then there's something you're like whoa, that's really different.
Speaker 1:Yes, yes, the social world is that. It's not this. There is, you know. Obviously there's social science. It's not as simple as you pull this lever. You don't pull even X and Y happens. And that's where the fun is, isn't it? It's the art and understanding and learning.
Speaker 2:If the field had been around that I knew of back when I was a young stir, I would have gone into that whole branch of economics called behavioral economics. Okay, which is just fascinating. It's just crazy interesting to me how people behave, how they actually make decisions, and find it fascinating. It's useful, obviously, for someone who helps build consulting firms to have that interest, because consulting is based around making decisions your own firm you make, helping your clients make decisions, helping prospects decide to work with you.
Speaker 1:Yeah, and of course it's very off the moment as well. It does seem that well, I guess. Ai is more popular, but behavioral economics, nudge thinking sort of the application of psychology to decision making, is a very popular area at the moment.
Speaker 2:Well, it's fine and we all get to be armchair psychologists. Yeah sure.
Speaker 1:It's a bit like strategy consulting by the time they realize it doesn't work, you're well out of there and complain. There you go. Something like that, david. Okay. So another tricky question You've done a lot, you continue to do a lot, and our fields overlap. What excites you most in terms of the consulting side of what you do, in terms of do you have a preferred sector or size of consultancy that you like working with, or even a favorite type of client you like working with?
Speaker 2:I don't want to offend anybody here. So, honestly, what I find just enormously gratifying and fun is the folks we work with are so smart.
Speaker 2:And they're so interesting. We have a new client. That's their mission. Their consulting firm is all about changing education in America On a state by state level. They're working with governments to change the education systems. It's like whoa, that is just some. That's big thinking, big, big big thinking. And as long as folks are willing to play with us, to partner with us, that's great. We don't work with folks who aren't interested in partnering, so anyone like that. We work less often with IT-based consultancies implementers, integrators because it's a little less idea-based and it's a little more implementation. It's less advisory often and more base-run implementation and that's kind of less where we play. Not that it's not interesting, it's very interesting, but we do tend to gravitate towards these firms that are thinking in new ways.
Speaker 1:Okay, what's happening? I mean you'll have seen this as much as I have. What I've seen a lot of is consulting firms who are looking at the multiples of SaaS and IT firms and thinking, oh, maybe I should create a little app or a platform or something. And I believe I possibly speak for both of us where I've seen that fail more than it succeeded.
Speaker 2:I've seen it fail about 95 times out of 100.
Speaker 1:Okay, it can work and I think we both accept that. What advice do you give to your boutique founder when they come to you and say, david, I've had this great idea. I ran it past the client. They're interested in buying it. It's only going to cost a quarter of a million, but it's going to improve our multiple 10 times. What do you think?
Speaker 2:Well, I mean, if you're doing it for the multiple, that part is a little bit silly, but yeah, so I will steer firms away from building a software or one of these product offerings until they have a consulting engine that is self-sustaining, reliable and no longer all that interesting to them. Okay, so I actually think one of the greatest models of all time business models of all time is to build a consulting practice that's sustainable. That's self-sustaining, because consulting is cash generating right, low capital investment and high cash output but it's freaking hard to scale. So you build yourself a sustainable cash engine and then use that cash to fund the building of your toy, recognizing that the failure rates on toys is very high and the capital intensity is high and that I have seen work a couple of times. But you have to be willing to say, all right, I built this, now I'm going to leave my baby and do something else and just recognize it for what it is. The huge mistake is trying to combine them.
Speaker 2:Yeah, agree, yeah, yes it really couldn't get much, much more opposite in firm structure and what's required and talent needed and sales approach, and all that between consulting and SaaS.
Speaker 1:Yes, I agree completely with your sentiments there. I encourage founders to treat it as you would treat an investment in someone who came up to you maybe a friend and said, hey, I've got this great idea for a product. Separate it from the firm. Think about it differently, see it as an investment part and be very clear about what you need to see before you pull any remaining cash out.
Speaker 2:Yeah, it's really easy to tank both sides of the business. When you start up a software division, which is hugely expensive, much harder, requires different skill sets, different leadership styles, everything we've been talking about is non applicable. Yes, the software and firm especially. And then it sucks the resources away from the consulting side. The software does not take off how you were hoping or runs into bugs or competitors or whatever. You realize wow, this takes a lot more money than I thought because I've got to put a support whole support team 24-7 around and bug all of that and a development team, even an overseas development team, and then you're stripping away all the resources from your consulting firm and both of them tank. I have seen that it's not ideal.
Speaker 1:Yes, I agree with all that. I think your point about expense. I think people very often, especially if they don't have a tech background, they think well, we've got the data, we'll hire a coder in Poland and we'll have a product in six months. And yeah, sure you're going to get something, but that's something that's probably going to be pretty awful and it's going to have no CX or UX or let alone anyone buying it, marketing it.
Speaker 2:Yeah, but every so you've seen this also. So everybody there's real grass is greener phenomenon. Consultants sell these big projects and look over the fence at the folks who are selling 10,000 seats, some product or you know they've got and it's recurring revenue, and it's monthly recurring revenue and they're like man, I want that.
Speaker 1:Yes, yeah.
Speaker 2:And if you talk to the folks in those firms, they look at a consulting firm that's selling a $100,000 engagement or a $500,000 engagement and there's not that many folks selling seven figure engagements anymore and they're going. I'm selling this stuff for $29 a month. You're selling, you find one customer and I've got to fight. I've got to get thousands and thousands and thousands of customers for this to make any money. It's really freaking hard and there's churn. You got like one customer. God, that's got to be really easy. You get all this money Right. So there's grass agree.
Speaker 1:Yeah, yeah, definitely, and they are. They, despite low code and no code. They're very different worlds and just because you're great at one doesn't mean you're going to be great at the other. Absolutely right, david. It's been an absolute pleasure. Thank you so much for your time and again, I encourage anyone who's out there who hasn't heard of you to rush out and start reading some of your wonderful books and looking at some of your wonderful diagrams, which I think, for the busy exec, are our godsend.
Speaker 2:Well, I appreciate that this has been fun. I have no idea whether anything we said was a value to listeners, but they can tell us whether it was or wasn't. But it's always fun talking with you, so thank you so much for this. Oh, thank you.
Speaker 1:As ever, thank you for listening to the Consolvency Growth podcast. This is Professor Joe Omani at JoeOmanicom.
