Before You Hire A Consultant Consider. . .
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This may seem to be strange advice coming from someone whose business centers on advising businesses, but here it is. Before you hire a consultant, consider you might already know what is wrong with your business. Yes, you or members of your organization probably already know quite a bit about your business problem. You just may not want to face it.
As business owners and leaders, it is often difficult, if not impossible, to be objective about our own businesses. No one likes to acknowledge flaws, weaknesses, or other problems. Facing and acknowledging imperfections can impair our sense of worth.
However, if you aren’t willing to acknowledge what your gut instinct is probably telling you about your business, then are you ready to hear it from a consultant? If you hire a consultant who tells you what you want to hear – the things you are doing well – and not the things that are currently impacting your business or put your business at risk in the long term, then you should save your money for a job search or a final vacation.
You know your business operations (at least I hope you do) to a degree that an external consultant won’t achieve without taking up residence. The combination of your knowledge of the business with the objectivity and expertise of the consultant creates a powerful dynamic for change and bottom-line improvements. It will, that is, if you are willing to commit time, resources, and money getting to the source of the problem and making operational changes to deal with the issues and reinforce the aspects of your business that you do well.
Business leaders who are passionate about their business’ product, service, or technology provide energy, commitment, and drive for the organization to move ahead. The belief in the core business purpose and its vision is paramount in success. It cannot stand unsupported. Strategy and structure must accompany the vision for the organization to succeed.
Often our passion for our vision of the company makes our ability to see the organization less than 20/20. Utilizing external expertise and objectivity brings clarity to what needs to occur and how we can achieve the desired outcomes. It isn’t easy. It is rarely a “quick fix” and it may require a significant investment of resources – time, money, and people – to get it done well.
Consultants are often viewed as the bad guys when projects “fail” or run over time or budget. The truth of the matter is that the success of a project falls on both sides of the relationship. Businesses that do not fully disclose information or invest the time to understand implications of technical systems, compliance, or other aspects of a problem or solution erect barriers that even the best consultants can’t overcome.
A colleague working with an emerging biotech company learned on the day he was to present the proposed solution to his client that key information had been withheld. Further, he was informed that a decision had been made to change technology and internal business systems – implementing an entirely new enterprise resource planning system. The ERP system implementation was scheduled to begin in 30 days. Going into investigative mode, he told the company that he wouldn’t be presenting a proposal that day. Senior management was amazed that he wouldn’t present the proposal. He spent two hours explaining why solutions aren’t “plug and play”. The solution to be presented had been designed to address the business processes and gaps that currently existed utilizing the different technology and software in place – not the new ERP system. Also, the resources – time and people – implementing the new ERP system were the same ones needed to lead and implement his proposal. Believe it or not, no one below senior management had been told that a new system was being considered or implemented.
Hmmm! Could that be an issue? So before you hire a consultant, consider that you may already know part of what isn’t working in your company. Before you bring in a consultant, decide if you are willing and able to do the hard work, make the tough calls, and DO something differently. Decide if you are going to listen to the expert advice (if they aren’t an expert, why did you bring them in?) or if you are going to go home and listen to your neighbor, friend, or family member on what you “really” need to do.
Beyond Yesterday: The Organization You Need to Be Now and Tomorrow
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Organizations large and small often fall into the trap of changing to stay the same. Businesses create structures and roles and simply put different people into already existing positions. Further, organizations tend to promote people who are highly successful in a particular role into positions and other roles they are less equipped to handle.
Another aspect of the staying the same is to bring in talented experienced professionals to expand the skill set of an organization and then constrain their ability to contribute. Businesses often recognize the "talent" of a particular individual and expend significant resources - time and money - to get that person to join the organization. Once that person is inside the organization the integration and organizational "learning" necessary to leverage the additional skill set fail to occur. Territorial boundaries and insecurities limit or prevent realization of the expected benefits.
A part of the success of any business is the ability to facilitate the evolution of the organization’s core capabilities through development of existing team members AND through the acquisition of additional members. The challenge resides in addressing the human side of business. It requires skilled handling of uncertainty, risk, relationships, and communication.
While it is unrealistic to expect a leadership team to remain unchanged throughout the life of an organization, the transitional period between various evolutionary stages can be eased by open communication of what the organization intends to achieve, what team members can expect, and equitable treatment of all parties. When changes in leadership are necessary, respect and recognition are key to preserving the integrity, morale, and capability of that organization. When this transition is handled improperly, the organization can lose key employees to uncertainty, resentment, or choosing sides.
The following are key elements of transitioning your organization through significant growth and operational changes:
- Provide open communication about the stage of business development.
- Make a clear statement of any new direction and potential impact on the organization's operations and team.
- Let team members know they are valued and will be given the respect of notification of any impact as early as possible; if any aspect of the change isn't known, state that also.
- Discuss the changes and get input if restructuring or making changes in operations, reporting, or other processes.
- Commit to listening to issues, but retain control of the decision.
- Communicate ideas and issues and be respectful of any input; provided, be clear all will be heard – not all will be used.
- Recognize there will be insecurity, resentment, fear, and other emotions - change is resisted even if its purpose is to improve conditions.
- Share what can be shared and draw clear lines around what has to be kept confidential or is strictly an owner’s or manager’s issue.
- Utilize, where possible, existing team members in critical roles that make sense;, if a current team member will be an obstacle or doesn't fit in the new structure - give him/her due respect due them and provide them with a professional exit and job search options and support as appropriate.
For an organization to achieve and maintain success, it must be willing and able to change its capabilities and fully utilize its resources. Organizational effectiveness and efficiency stems from the organization's human capital - its people. While we tend to think of corporations (and other organizations) as faceless entities, look in the mirror and around your organization. The faces you see are the faces of your business and the corporations of the world.
Ethics – Who Needs Them? return to top
Life is about choices. Business is about decisions. Both require knowledge of your core beliefs and the tenets by which you will operate. Having certain knowledge of what you will and won't do enables you to act consistently and with a degree of reliability that enables others to know how to interact with you.
Over the past several years ethics has come back into fashion. In the post-Enron, ImClone, and Worldcom debacle era, publicly traded companies are mandated through Sarbanes-Oxley and other regulations to evidence ethical codes of conduct. While companies create visible policies, procedures, and structures within the organization, those constructs are only the tip of the iceberg for enacting tangible behavioral changes in those companies.
While the focus is on the public companies, privately owned entities also need to examine their own operations. , How you conduct business, internally and externally, reflects on the owners, leadership, and employees whether you are a small business or an international corporation. If you think "pushing the envelope" or "walking a fine line" in how you deal with employees, vendors, and customers doesn’t becomes part of your business’s image and brand, then think again. Your best and worst marketing message is the one your vendors, customers, and employees communicate through actions and words.
Businesses, academics, members of political groups and institutions, and individuals who do not engage in the ethics "conversation" miss an opportunity to stand out from the pack. While ethics cannot be legislated, it can be mandated/learned through example, practice, and action against unacceptable behavior.
A colleague recently shared that much of the current conversation around ethics programs is that "no one is interested" or that "it isn't a concern" beyond having a formal program. Companies may have a written code of ethics, a seminar, or other elements, but the expectation is that it isn't embedded in the culture of the company - the ethical code isn't a living, breathing part of the company.
This raises several questions: Is that the perception of the entire organization? Is that the intent of upper management and the company? If the code of conduct or ethics is a legitimate program intended to be a guiding principle, then what is creating the disconnect between intention and perception?
If your business hasn't examined the ethics question, maybe it is time to do so. What do your employees, vendors, and customers think about how your business conducts business? Do they hear "make the deal", "hit the numbers", "do whatever it takes" as a license to lie, cheat, and steal? Or do they believe that doing the right things, regardless of the cost, is the core philosophy? Is it somewhere in between? How does your organization know the expected and accepted behavior?
If you have an ethics code, does everyone know it? live it? and hold each other accountable to it? Is your ethics code a document, a plaque, and inanimate thing that exists but has no meaning? What does it mean to your bottom line if the message your business has internally is that ethics don’t matter? - "Liberating" office supplies or equipment, "fudging" the hours you work, "appropriating" someone else's work as your own, etc. does impact the bottom-line. What is done on the company’s behalf to vendors and customers can directly impact financial performance. What your employees and managers do internally to each other and to the company impacts efficiency, resources, and organizational capability - draining the organization's ability to generate financial returns.
Not everyone has the same perspective on what is and isn't ethical behavior even within the boundaries of the United States. When you look beyond US borders, ethical standards of behavior become even more complex. With the diversity of perspectives on codes of conduct and ethics, with the complexity of regulations and transactions in business today, clearly spelling out your organizations belief system and expectations is one aspect of the business that, when left to chance or interpretation, can lead to adverse results - both image and financial - for your organization.
No Easy Answers return to top
Business owners (like everyone else) often want easy answers to difficult business issues. It seems to be reassuring to have someone say, “This problem (or solution) is definitely ‘X’.”. In business, however, there is rarely one specific thing going wrong and creating all the issues in a company.
It would certainly be nice if a marketing campaign, some sales training, or a new accounting system could magically fix an organization’s issues. The reality is that most business issues are a combination of people, timing, money, and the business model. No one aspect can be changed and solve the complete problem. Businesses are a series of interrelated parts and processes. Changing one aspect necessitates changes in the other parts to keep everything working together.
Working with clients on accounting and enterprise resource planning system projects means analyzing what the business currently uses as systems, learning what information people need to do their jobs and run the business, and understanding how the sales, operations, and administrative functions of the business operate. Accounting and enterprise resource planning systems, by their nature, reflect the business processes, activities, transactions, and model. Implementing a standard system in an organization can be the fastest way to cripple a company’s operations.
Other areas which seem to lend themselves to one simple answer are changing marketing messages, adding sales team members, and otherwise adjusting the sales and marketing operations. Companies tend to think that expanding the number of people selling will always generate more sales. If the current sales force isn’t effective, the question to ask and answer is “why aren’t they being successful”, not “how many more people do we add.”
The first step in answering what an organization needs to do is to diagnose what is happening in the organization today. What are the team member’s roles and what are they working on? Who is accountable for sales happening? Does the organization understand the strategic goal? Do they know who the customer is? Do they understand the product or service they are selling?
The second step is to analyze the business processes and systems. It is important that the organization have information on performance AT THE TIME THE ORGANIZATION IS CAPABLE OF DOING SOMETHING TO CHANGE THE RESULT. Getting information after it is too late to make a change does nothing for the bottom-line.
Organizations which are in crisis (running out of money) or transition (growing but unable to sustain growth) need to invest in making changes today. Waiting and expecting money to be available later to do what needs to be done isn’t realistic. Doing more of the same and expecting to get different results is a strategy of HOPE not ACTION. (It is also a definition of insanity!)
If your organization is ready to make a change, begin your business diagnostic by defining your organization’s operations as they are today. Who is doing what? How does that contribute to the bottom-line? What is the core business? How many things are draining resources away from the core business?
Once you have your organization’s current state objectively defined, then clearly state what it needs to become. Define your strategic objective, develop financial forecasts, and determine what resources are needed to reach that objective.
Caterpillar or Butterfly? return to top
Being on the brink of success also means you are precariously perched on the edge of "doom." Success in its earliest stages can more closely resemble failure than our concept of "success." Outside pressures to produce revenues and show a return (draw a living wage) tend to increase and become greatest at the point when businesses are experiencing significant internal pressure to get the business model working. These pressures are like two storm fronts converging on a ship at sea which is attempting to navigate uncharted waters and deal with the on-coming storm.
Businesses have limited options when they reach the "proving point". The proving point tends to occur between the third and fifth years of business. (Note: additional critical points emerge as businesses grow and expand.) The timing of the proving point depends upon the financial resources available to the business and its principals AND on the ability to generate operational revenues during early stage business development.
Every dollar earned and spent has a higher "value" and requires better than average returns. The opportunity cost of each dollar increases as each deal is delayed, lost, or sealed.
How do businesses navigate during these times? It requires the business to change operational structures and processes beginning with decision-making timeframes and horizons. Businesses tend to operate with "traditional" timeframes. "At the end of the month, at the end of the quarter, by the end of the year..." When the business is under significant pressure to succeed, waiting to find out how things are going can cost you the company or major parts of it.
Moving to more visibility and closer accountability - weekly or bi-weekly, and sometimes under worse case scenarios - daily - the organization has to be aligned and held accountable for targets and results NOW! This doesn't mean micromanaging or standing over the sales team as they make calls. It also doesn't mean setting arbitrary targets or activities.
It does mean that in moving to near-term focus the business recognizes that certain activities, deals, or projects are the "mission critical" elements of the business. It means the organization must recognize, align, and act on those things that can make things happen.
What it also entails is clear, direct communication of expectation, outcomes, and the consequences of what the business will look like if things don't happen. This is especially true in smaller organizations and emerging businesses that are very entrepreneurial in their management and culture.
The tough decisions also begin happening at this "proving point". The team that has brought the organization to this critical point may not be the team that comes out on the other side - when the business makes it to the other side. Think of this process as similar to the caterpillar becoming the butterfly. It cannot stay a caterpillar and gain the ability to fly.
The business must transform or fail. Part of the internal pressure arises from an intuitive recognition that a business cannot stay the same and get different results. The skill sets necessary for founding a business differ from those needed to take the business through "emerging". A balance of entrepreneurial and “structural” skill sets is necessary.
"Structural" refers to, for want of a better term, "business" aspects - the financial and managerial controls and reporting, the human resource processes and performance measurement, and other "corporate" elements. The organization begins to be less fluid in its structure, activities, and expectations. It still needs the entrepreneurial spirit and drive, but it also requires a more clearly defined vision and an organization aligned around a key strategic direction.
The business becomes less about the development of the product, service, or technology and more about the business model and the marketing message. It can't be said enough: Business success is ultimately about the business - what it is, how it is run, and how it satisfies customer needs through its product. It isn't necessarily the coolest technology, the fanciest package, or being first to market. It is the ability of the business to communicate with the customer, solve a particular problem, and make money while doing it.
If you are currently the caterpillar, then here are some things to examine in your organization:
- Are your revenues on target?
- Are customers buying?
- How long is your prospect list of?
- How long have you been talking to your prospects?
- What are the performance objectives for the company? Teams? Individuals?
- Who is accountable for results?
- If you have been in the product development mode and now are moving into the sales mode, have you "rebalanced" the organization’s staffing to reflect the new priority?
- What is your organization’s strength - the technology? Marketing? Sales? - If your strength is the technology, marketing, sales, or a combination of these, how strong is your business sense?
- Are you structured and staffed for where you want to go?
- What is the organization’s capacity for growth?
There are numerous other questions to ask, but these get you started on the path to determining the timing and potential of your organization’s transformation. Unlike a caterpillar, your business isn’t genetically programmed to transform. Decisions have to be made, directions have to be chosen, and strategy has to be designed and implemented. For your organization to take flight, it needs the vision, strategy, and structure that will enable it to grow.
Who Is Running Your Business? return to top
In every business there are activities and tasks that the owner, manager, founder, or key executives don’t like to do, don’t know how to do, or just don’t want to do. When those tasks are key elements or effect the key elements of how your business does business, the people handling those tasks essentially begin “running” the business.
At first it may not seem to be important that you allow someone within your organization to make the decision as to how customer, vendor, or product information is gathered, maintained, and reported. It is somewhat of a technical and administrative task – not at all strategic right? In the overall operations of your business, it may very well be a strategic decision that proves costly.
Whenever one person or several people throughout the organization are able to control information or direct activities through withholding information, gate-keeping, or establishing their own “turf”, the organization begins to be less than it can be. Employees who aren’t privy to information, able to use systems or tools, or are reluctant to “engage” the gatekeepers are unable to contribute fully to the organization. The return on employee activities decreases as the organization is less able fully to deploy its resources into key activities.
Another area in which companies are vulnerable is when employees make the decision as to whom the business is willing to do business. This is a two-fold problem in that the business loses revenues AND it can expose the business to lawsuits for discrimination. Say you have a sales person who doesn’t want to handle accounts for certain ethnic, religious, or other demographic characteristic. The business is on the hook for his or her behavior toward that protected class of individuals if someone chooses to make an issue of it.
Another area for potential loss of revenue is when members of the organization make the decision that “small deals” aren’t worth the company’s time or are too “costly”. Often these strategic decisions are made by levels of the organization which don’t have information on the businesses cost structure, capacity, or other key criteria. Businesses make strategic decisions on who they want as customers. The strategic leaders of an organization may decide to utilize a “loss leader” – a product or service that doesn’t make money – to get a customer, then up-sell that customer more profitable and highly profitable products or services. If that strategy isn’t conveyed or understood by the sales force, then sales opportunities may be missed or turned away.
The leaders, manager, executives, owners, and decision-makers in the organization who set the strategic direction of the company cannot, and probably should not be involved in every transaction and business conversation. They can establish strategic objectives and targets, communicate the strategy and expected results, and through monitoring of the organization’s and individual performance keep the business on track.
It may be easier in the short run to let tyrants, dictators, and gatekeepers rule your organization. It is never pleasant to deal with performance or personality issues. It is even more difficult to remove from your organization people who have established “control” of information, systems, and activities in your organization to such an extent that your organization will be “walking wounded” when they are let go.
Here are some suggestions for preparing your organization to make some painful personnel and process adjustments:
- Identify who has sole control of key systems or information.
- Review all potential avenues for first customer contact and determine if business you want or want the opportunity to consider is getting turned away.
- Examine the information on types of customers, size of deals, pricing, and other strategic sales information and determine what the members of the organization understand about your strategic sales objectives.
- Review individual performance, job descriptions, and results to determine if things are on track individually.
- Identify opportunities for cross-training, rotational assignments, and other mechanisms for getting everyone out of the “comfort zone” and “control zone” of their individual roles.
- Consider outside support, temporaries, and other “flex” staffing options for adjusting the balance of skills, expertise, and experience the organization has on systems, tools, and processes. For example,
- If only one person always does the accounting transactions, consider having an expert on the accounting software come in to review your processes; doing all of your own tax filings, etc, have a CPA come in to review your filings, or do a year end audit.
- If you do your own payroll, have several payroll services come in to quote outsourcing the activity.
- If you are using an Access Database for customer or vendor information and only one person in your organization knows how to use it, consider customer relationship management and supply chain management software for your business.
Businesses cannot afford to be held hostage by their own systems or people. Step back from your day-to-day perspective on your business and ask yourself:
- If X quit tomorrow, who would do the job?
- If Y had to go on extended medical leave (or worse, died), how would I get the information I need?
The bottom-line is impacted by who makes the decisions on the strategic direction of your company. Are you making all of those critical decisions? Is the organization taking its direction from you? Who is running your business?
Moderating: Leaving the Nest return to top
Lea Strickland has been asked to moderate the panel
Leaving the Nest: Challenges and Opportunities in Leaving Your University or Corporation
WHAT: CED's Entrepreneur ‘04 – Essential Know-How and Networks Conference
Presented in partnership with The Fuqua School of Business at Duke University
WHEN: October 30, 2004, 8 a.m. – 4 p.m.
WHERE: The Fuqua School of Business at Duke University, Durham, NC
COST: starts at $90; $69 for university faculty and staff
MORE INFO: www.cednc.org/entrepreneur
The panel will discuss their experiences in starting their companies including such topics as adapting your skill set to a variety of new roles, utilizing your rolodex and leveraging relationships to build strategic partnerships, identifying resources to add to your venture, and that one key piece of advice for the potential “nest” entrepreneur.
Copyright © 2004 F.O.C.U.S. Resource, Inc.
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