The consulting industry and its transformations

The consulting industry and

its transformations

Arnaud d’Hubert

Business Executive Seminar

Vesalius College, Nov 4th 2014

Audience: VeCo BA students in Business, International Relations & Corporate Communications

Who speaks ?

BSc in Philosophy from La Sorbonne University (Paris)

MBA from SBS-EM (Bxl)

DfG in Finance from LSE (London)

5 years in Consulting Sales positions (IT, Engineering & Organizationconsultancies)

2 years as consultant (Marketing, Strategic Sourcing, Communications)

____________________________________________________

What I really like…

Jazz guitar enthusiast & self-taught player(12 years)

Altran Academy trainer (Pyramid Thinkingand Situational Leadership, 3h modules)

Member of the MBA Solvay Advisory boardto the School Dean

Being Wrong & Learning from Others

Plato, Nietzsche & Bergson as personaladvisors

Linkedin Networking

Quick Survey : Who wants to

become a consultant ?

What are your expectations for

this session ?

What is a consultant ?

Some Consulting Firms

Let’s make the client look

simple

Strategy

Tactics

Operations

What do clients pay for ?

Strategic/ Long-

term/Global

Tactical/Mid-term/Region

al

Operational/ShortTerm/Local

Change

the

Business /

Manageme

nt

Consulting

Run the

Business /

Operational

Consulting

VALUE =

SOLVING

PROBLEMS,

SETTING

DIRECTION

VALUE = SUPPLY

COMPETENCIES,

OUTSOURCE

PROCESS/PROJE

CT EXECUTION

Change the Business

S

T

O

time

AS IS TO BE

TRANSFORMATIONAL CONSULTING

NEW PROCESSES, PEOPLE, SYSTEMS OR

PRODUCTS

S’

T’

O’

Customer

Expectation

Run the Business

S

T

O

S’

T’

O’

AS IS TO BE

OPERATIONAL EXCELLENCE IN EXECUTION

PRODUCT/SERVICE QUALITY

CONTINUOUS IMPROVEMENT

S

T

O

Customer

Expectation

time

The best way to understand how

a consultancy works ?

Let’s imagine you’re the boss of one !

2 things to know when you

create your own consulting firm

It’s about how you run your consultancy (the systems and processes)

Strategy Formulation & Planning

Sales Process

Delivery Process

Customer Relationship

Knowledge Management

It’s about who you hire to do the work

Recruitment Criteria

Appraisal & Compensation

Culture & Work Atmosphere

Consulting is Fairly Simple:

People are your costs and your

revenues The service-profit chain

The economics of consulting (Profits

= Revenues - Costs) A detailed

analysis

The « intercontract » or « bench »

effect

The Service-Profit Chain

What does it mean ? 2 things

Treat your employees as you would

your customers, they deliver the

service that customers pay for, you

don’t.

Corollary statement: your customer

loyalty and profits are a reflection of

how well you nurture and develop your

employees.

The Economics of Consulting –

Detailed AnalysisGroup Exercise 1

Reconstruct the Profitability Equation

Answer : The Profitability

Framework

The intercontract or « bench »

effectGroup Exercise II

- You run a 20 people company. 18 consultants. 2 staff.

- Consultant Cost: 450 Euros/day

- Staff cost: 350 Euros/day

Question 1 : What is the total yearly revenue needed to break-even?

Question II: What is the target yearly revenue for a 40% grossmargin if all consultants are invoiced ?

Question III: Suppose the market gets tough for a practice where 5 consultants experience a bench period of 4 months each on one same year,, what should be the target revenue to generate thosesame 40% gross margin ?

NB:

- - there are 220 invoiceable days in a year

- - gross margin = revenue – consultants costs

Break-Even analysis at a

glance(DON’T BE SCARED, IT’S JUST A CONSULTANT’S

GRAPH)

Why it mattersWhere you start

making money

High-value added

consultancies serve

up market customer

needs, and generate

higher margins.

Low-walue

added

consultancies

must go for cost

leadership

(« there can be

only one »), or be

haunted by low

margins and

workforce

instability.

How do you sell consulting ?

« Partner sells » model vs. « Sales

sells » model

Management consultancies seldom

use sales people

Operational consultancies hire and

train sales reps to specialize in

consultative selling or just to do

« bodyshopping »

Sales Management for

Consultants « Are you smart enough to work at

XYZ? »

Customers hire convincing consultants, period.

EQ > IQ = When school’s out, connecting well with others becomes a key skill

Can you sell yourself ? To an employer ? To a prospect ? What’s your 1-minute elevator pitch ? Record it > Improve it

How to get started ?

Listen, Listen, Listen

The art of asking great questions

« What keeps you up at night ? »

Zoom on pain points

Display references or subject-matterexpertise

Draft a project plan

Close them on the first project stage: if you’ve done well, they’ll ask for more

Business Game – Group

Exercise III The lawnmower sales game

A customer works in a very large

lawnmower outlet in the suburbs of

Brussels.

What does he need ?

How can you help him ?

How can you close him ?

Debrief – Expectations met ?

« Your title said something about

transformation, right ? »Consulting is on the cusp of disruption

1st change (past): Management consulting wasdisrupted by operational consulting

2nd change (present): Customers pay for results, not for days of work

3rd change (future): Customers will pay for data, less for judgement

4th change (future): Digital transformation of resource management at operationalconsultancies.

5th change (future): The Global Freelance Community (IT people, MBA people, anyone witha computer)

THANK YOU !

Q&A

Suggested Readings (Books)

« The McKinsey Mind », E. Rasiel and Paul N. Friga

« The McKinsey Engagement », Paul N. Friga

« Getting to Yes » R. Fischer and W. Ury « A Guide to the Project Management

Book of Knowledge », Project Management Institute

« Shipley Proposal Guide » Larry Newman

« Are you smart enough to work atGoogle ?» William Poundstone

« The pyramid principle » Barbara Minto

Suggested Readings (Press &

Blog) « Consulting on the cusp of

disruption », Harvard Business Review

« Clayton Christensen & DominicBarton on consulting’s disruption » HBR Blog Network

« McKinsey’s KnowledgeManagement Practices » ICMR India

Clayton Christensen’s blog on Disruptive Innovation

The « Marginal Revolution» Blog