Getting Help Without Breaking the Bank

I’m a big believer in avoiding the problems that inevitably emerge when you become too isolated, or spend too much time cocooned in your own little world. I’ve seen lots of companies lose their grip on reality, becoming inefficient and uncompetitive.

That’s why I think it’s incredibly healthy to bring ideas and people in from outside your organization… they inject fresh perspective… they give you access to the most recent innovations… and they help you to upskill your own people.

There’s no end to the number of consultants out there who hold themselves up as experts, and promise to make your business better in oh-so-many ways. But how would you know which options are likely to give you real value for money, and which are likely to be an expensive waste of time?

The management consulting market is segmented quite clearly, but can still be quite difficult to navigate:

At the top of the food chain you have the MBBs… McKinsey, BCG, and Bain. They are the cream of the crop, with the brand reputation, talent, experience, and global reach to really make a difference to any business. But few of us can afford their astronomical rates.

Slightly less flashy, but often just as effective are the next tier of competitors: companies like Partners in Performance, Kearney, Booze Allen Hamilton, LEK, and Oliver Wyman. They have comparable expertise to the MBBs but with a slightly less eye-watering price-tag.

Next, in line are the big four: Accenture, Ernst & Young, KPMG, and PWC. They tend to be a little less focused general management consulting, instead specializing in areas like technology transformations, or risk consulting, or complex analytics.

And so on down the line until you get to the individual who hangs a shingle and calls themself a consultant.

So, why would you spend your hard-earned profits to hire a consultant? There’s only one fundamental objective: to achieve better results – results that you can’t get without some external support.

When I’m considering bringing in a consultant from outside, I look at three internal drivers: Capacity, capability, and independence.

Sometimes, you need a short-term injection of capability that you don’t have within your organization, in order to solve some of your most challenging problems.

Other times, you simply don’t have enough people, and feel the need to supplement your workforce to achieve an outcome. This is generally the case for big technology systems implementations or other project-based work.

And, often, you know that without some level of independent assessment of what you’re trying to do, you could end up going down the groupthink rabbit hole that leads to your inevitable demise.

If you feel as though you might need to bring in the consultants, first ask yourself what problem you’re trying to solve… is it to be more efficient? to develop a new product? to refine your strategic approach.

Once you know that, make sure you understand the incremental value that this would bring to your organization. What’s the upside that you can capture if you invest in some external help?

That should give you an indication of what it might be worth spending to solve the problem.

For example, I found that it was absolutely worth spending a few million dollars on McKinsey to help me solve a problem that couldn’t be solved internally: it added over a billion dollars of value to the company’s balance sheet… but would it have been worth it to pay them to come in and make minor workforce efficiency recommendations? Absolutely not!

It’s horses for courses. So, work out exactly what you need… work out exactly what you’re willing to pay to get it. Then find the most reliable way of achieving that outcome – you’re looking for the intersection of expertise, capability, and price.