My Biggest Learnings in 10+ Years of Consulting Work
Business Development in Consulting, Narrow Focus in Consulting, Educating the Target Audience
The start of a new year. Time for reflection.
I usually take some time at the beginning of the year to look back not just at the year that passed but at my experiences as a whole and see what lessons I can derive.
Have there been any shifts in my perspectives, and if so, why? How did my more recent experiences affect my decades-old learnings?
It’s a process, a journey. My reflections don’t happen in just one sitting. I jot down my thoughts over a few weeks and then review and organize them.
In this overview, I’d like to share the ten main consulting lessons I’ve learned in the past years. Many are based on what I’ve come across during my project work with consultancies, while others are based on what consulting leaders have shared with me in the past few years.
1. Consultancies talk too much about themselves
Too many consultancies have a solid inside view (‘here’s what WE do’) instead of a client-centric view (‘here’s what can be achieved’) in all their assets – be it the website, the marketing collaterals, the follow-up emails to prospects, their pitch decks, or business meetings.
The ‘let's-tell-our-clients-how-great-we-are’ mode.
And that just doesn’t work. At least not nearly as well as the outside view of focusing on the target audience’s pain points, educating them, providing them with authoritative insights, and showcasing deep levels of understanding of how these pain points can be eliminated.
That’s why I persistently and loudly keep urging consultancies to shift their focus from themselves and their giant ‘We, we, we’ language to a client-centric language talking about:
- The real problems and pains of their prospects and clients
- The transformational impact that can be achieved
Why is it so important? Because buyers research at the problem level, not at the level of incomprehensible, jargon-filled, self-centered consulting language!
"It's not about what you think you are but about what it does for the client."
Recommended reading: Consultancies Can't Grow Their Business When Their Websites Suck
2. Consulting leaders should learn to control their ego
I’m referring to the ego that makes consulting leaders believe that their teams can deliver outstanding results on every incoming request.
No. They can’t. Not at the level that delivers superior value. Not at the level that pays premium fees and outstanding profit.
So they keep taking on any project, even if it’s not within their immediate scope of expertise and coming from non-ideal clients. That’s terribly tiring. I’ve been there. With burnout as a result. Heck.
Ego is a perfectly normal thing in consulting. Consulting leaders and their teams have to have a healthy amount of confidence in their skills and expertise.
However, when it overflows into the 'Look how great we are, we can crush everything’, type of thinking, the ego becomes a problem. These egos cannot make the difference between distraction and depth.
"When you say yes to almost everything for short-term gain, your yes is not credible. A prospect can smell that!"
My recommendation is to get narrow! Focus and control the ego. Stay in your lane. Love the craft and repetition of work. Enjoy life like me.
3. There is too much (unhealthy) focus on revenue
Revenue, revenue, revenue. That has always been my #1 focus. We had aggressive growth targets, especially after the acquisition by Deloitte. And that’s fine. I love the consulting frontline.
However, step-by-step, in working with and talking to many consulting firms, I also learned that such an extreme revenue focus could be detrimental to a consulting firm for several reasons:
- It stimulates unhealthy short-term thinking
- It causes greedy behaviors
- It leads to accepting work outside of the narrow focus
- It suppresses the development of educational content
- It causes a toxic incentive mindset
- It dilutes a sharp positioning in the market
- It beams the consultancy into commodity projects in the pricing rat race
- It’s just terribly tiring.
While revenue is vital for the success and sustainability of any business, I learned that a sole focus on it could be detrimental to a consulting firm in the long run.
It's crucial for consulting firms to strike a balance between generating revenue and delivering high-quality work while also taking care of the team, building long-term relationships with clients, and becoming a master at educating the target audience.
Like it or not, consulting, revenue, and profit are a byproduct of a strong expertise reputation and its leaders' personal thought leadership visibility.
"We must simply choose to take control, first by specializing and shifting the power back from the client toward us, and then we can begin to shape our future as consultants." (Blair Enns)
4. Consulting firms produce content without demand
Because consultancies create content, it doesn’t mean they create demand for their expertise.
I see this all the time, great content efforts and checking the content marketing box. And unfortunately, it stops there.
I get it. When I embarked on the content-sharing journey, I was focused on writing pieces that fall more into the ‘opinion category.’
It was not exactly what you’d call thought leadership. It took me some time to learn how to share content that delivers unique value to my audience – the type that places trends into a larger context, the one that anticipates long-term challenges stemming from short-term pains, and the kind that helps my audience transform their vision.
"Leading thinkers in consulting are fearless with their content. They write original, fresh content that inspires and educates. They convey their deep levels of expertise with their ability to identify patterns, to address very specific pain points, to predict trends, to offer practical advice."
Here’s the thing. Creating content is not the same as creating demand.
Content (be it a blog article, a speaking engagement, a podcast, etc.) needs to be defined along these lines:
- Inspiration: demonstrating the transformational potential of getting rid of the prototypical client problems
- Education: explaining how the target audience can get rid of their prototypical problems
- Motivation: 1) showing the risk/cost of inaction, and 2) explaining the business case for investing (the ‘unique buyer reason’)
- Activation: making it easy to get started with the problem resolution (e.g., with a discovery approach)
Content produced by consultancies should encourage action. Encourage change. Explain the problem, explain the solution, and demonstrate the firm’s/consultant’s superior ability to solve the pain point and deliver strong results. That’s how firms will generate demand with their expertise-driven content.
The ultimate role that thought leadership plays? Inspiring and preparing clients for change.
Recommended reading: Shaping Your Consultancy’s Thought Leadership To Accelerate Growth
5. Faster decoupling of effort and value leads to more robust business results
I learned that the most profitable consultancies achieved the highest possible degree of decoupling value delivery from the effort.
For them, there’s no direct relationship between revenue growth and headcount increase. But to get there it requires disciplined execution and saying no to all non-ideal work.
Increasing headcount all the time - apart from direct hiring/training costs - substantially reduces:
- Internal expertise transfer
- Team stability & cohesion
- Project efficiency & utilization
- Speed of delivery
- Client satisfaction (clients want experienced consultants)
This is why so many consultancies struggle to grow (especially given the current labor market challenges) and to become highly profitable (because they cannot decouple value delivery from effort).
The ability to decouple value delivery and effort (=headcount) is an outcome of the well-positioned, narrowly focused consultancy.
If a consultancy can grow revenue without linearly adding hours, it can grow very profitably.
And the best way to achieve that is by:
- Narrowing positioning of the consulting business
- Developing deep, high-in-demand, focused expertise
- Repeating similar projects to minimize process and outcome variability.
The ultimate view: repetition of similar projects is the path to decoupling effort and profit.
And that’s why firms need a narrow positioning. Achieving a laser-sharp, differentiating positioning as a consultancy isn’t easy and can feel terrifying. Positioning your service is deciding what your service is, for who it is, what problem(s) you solve, and what specific impact you can have.
"Apparently, in the consultant’s mind, it seems ‘safer’ to be just like everyone else. Let me challenge you with this logic: if your consultancy resembles all other consultancies, it is more likely to fail. If you really want the ‘safest’ option, just go get a job."
6. Educating the target audience is a priority
Educating the target audience difficult? Too much work? No time to do it?
Consultancy leaders/owners who feel this way must have got it wrong. Educating the target audience IS the work!
If educating the target audience is seen as ‘on top of all the other work’, it’ll never work. Indeed, one of my biggest learnings is combining daily work with sharing leading thoughts about that work. This integration is critical and a vital job of a consulting leader.
It all boils down to the leaders' belief that educating their audience will be critical to future success. Maybe it’s even the #1 success criterion. That’s at least the opinion of this successful consulting leader, who writes about his experiences every morning.
That’s why I keep spreading that mission, explaining the ideal approach, and hoping my consulting clients will make the U-turn.
"All major businesses in all major industries are suffering from all-time complexity in combination with a critical lack of the required internal expertise. We are living in times of golden opportunities in consulting for those who know how to take advantage of it."
Unfortunately, there’s not much I can do if the belief is not there. Clients often hit me with their utilization stories. In that case, I always think: they don’t get it. But I know it’s tough.
When we got acquired by Deloitte, I immediately asked for a utilization reduction to enable the educational component. It got accepted because of the belief of the leader. It was easy to convince.
Here's how I feel: if everything goes well in a consultancy, nobody seems to care about educating the target audience, which is shortsighted. If things are not going well, it's almost impossible to convince them about a thought leadership approach because it takes time and doesn't deliver short-term improvement, which is also shortsighted.
I learned that it is one of the most challenging conundrums in consulting.
Recommended reading: Consultancies Will Always Have a Time Problem Until They Do This
7. Consultancies must embrace the disciplined validation of new value propositions
Most consultancies always create services ‘out of the blue’ without doing the critical validation work. I observe this, especially when firms anticipate a challenging economic climate. They add a bunch of new services to capture the interest of a wider audience.
However, this rush to diversify is why so many (new) services have yet to get traction.
Value proposition design: I learned everything about value proposition design: how to create specific approaches for a particular audience with distinct pain points. Most consultancy firms have no clue, sorry to say. They deliver a project and start another service with it, believing they have a great value proposition. Nope.
Client validation: I learned how to validate service offerings with prospects and clients. Launching new approaches, methodologies, and value propositions are at risk of failure without proper target audience validation. I’ve always found (validation) one of the most challenging aspects of successful service offering design (and business development success).
Understanding client pain points or unmet needs is a complex (research) task. Why?
- Clients have needs they don’t even know they have
- Clients don’t always know what they suffer from until they are explained or shown how their work can be improved.
- Client needs change often over time.
- Clients struggle to articulate their pains or needs
A new service? I urge consultancies not to set themselves up for failure by launching services without proper client validation.
Here’s what consultancies can learn from the startup world, where a new product or service development has become sort of a science:
- Doing market research
- Gathering client feedback
- Carrying out pilot testing
- Nail down short iterations to quickly adjust
- Ensure thorough cost-benefit analysis
- And adjust again before launching.
"Most consulting firms keep adding new services because they believe that more services will lead to more opportunities and revenue. Unfortunately, more services mean more competition, more price erosion, smaller margins, thinner expertise, poorer thought leadership, less time to get visible, more hiring challenges, more training hours, more client gatekeepers to deal with, more objections from more stakeholders, and probably 100 more fallouts. Think twice."
Recommended reading: Do You Need New Consulting Services to Fight the Recession?
8. Hitting the project wall massively stalls growth
Consulting work can be categorized mainly into upstream and downstream work.
Downstream work is low-altitude. It centers primarily around day-to-day execution and/or implementation work, which has a relatively low impact on the client's real pains.
Upstream work, on the other hand, is high-altitude. It's all about high-level strategic and/or diagnostic advisory. This type of work has a significant impact on the client's real pains.
Switching to an upstream ‘client transformation’ consulting approach is THE #1 pillar of success in consulting – the type of success where consultants are in control of their time, when consulting leaders comfortably and organically grow the business, when firms pick which projects they work on (and say NO to any project outside of their focus zone), where business development is inbound, pricing is above-market, and margins significantly higher than average.
Unfortunately, too many consultancies never get over ‘the project wall’. They wish to become strategic advisors but get stuck in lower-value project work (or even ‘body shopping’).
Most consultants charge for (downstream) implementation work and do the upfront discovery and problem diagnosis for free. As an authority in your expertise domain, however, you charge premium rates for (upstream) upfront discovery, problem diagnosis, and roadmapping, and you stay away from doing the (downstream) implementation work yourself.
The three ways to break through the project wall I’ve been using myself in consulting:
- Developing a discovery audit: It helps companies understand their improvement opportunities in a specific (strategic) domain, e.g., supply chain inventory improvements, cyber security risk analysis, data analysis feasibility study, etc. It’s a Trojan Horse to move upstream with consulting work.
- Developing a ‘building the function’ value proposition: Most consulting firms don’t have a specific value proposition to help organizations ‘build the function’ (or improve, which can also be included in the discovery audit). And they are missing out on high-level upstream work. I did much work for our clients to help them establish the people analytics function (during my past iNostix/Deloitte era): defining the roles & responsibilities, preparing the job descriptions for new hires, helping them with the first analytical pilots and implementation, setting up collaboration with other functional areas (e.g., the data CoE), etc.
- Developing vertical service extensions: This approach refers to developing new and deeper components of already existing consulting services instead of creating entirely new services. By moving away from order-taker requests (in front of the wall) and developing new and deeper components of existing services, consulting firms can move upstream, differentiate themselves from competitors, command higher prices and margins, position themselves as trusted advisors to their clients, and improve client retention.
In conclusion: To get over the project wall, it's crucial for consulting firms to have a strategic plan in place to move upstream and develop new and deeper components of their existing services (e.g., discovery, functional building, vertical extension).
By focusing on providing value-added services, consultancies can improve their margins, increase revenue potential, and strengthen their relationships with their clients.
Recommended reading: Getting Over 'The Project Wall' To Grow A Consultancy Firm
9. Early prospect disqualification is a must
You probably are thinking now: what is he talking about? Is this a real learning worth mentioning it? Yes, it is one of my biggest learnings in a decade of consulting work: early disqualification. Why?
In my early years, I failed to disqualify prospects early on at the start of the contact. I spent too much time talking to prospects whose projects were misfits. I should have been stricter, more disciplined, and definitely faster in disqualification. Why? Because failing to do so is a drain of resources – time, energy, and, ultimately, money.
And this is the most significant learning of all: it’s the litmus test for the positioning of a consultancy. The better and sharper the positioning, the easier it is to disqualify quickly. Or, misfit clients don’t even show up because they’ve understood the consultancy’s expertise definition.
Hence my reversed thinking: if consultancies struggle with early disqualification, something must be wrong with the positioning: definition of the target audience, with a specific problem(s), a clear value proposition, and supported by a compelling educational program.
Early, thorough, and disciplined (dis)qualification is part of a consultancy’s success. I keep repeating this all the time.
Ordinary consultancies are asked to send a quote, and they say yes to almost anything to protect short-term revenue. Again, I get that. Unfortunately, having to sell all the time is a toxic ticket to the pricing rat race and substandard profitability.
High-in-demand, go-to expert consultancies get invited to solve a problem and say no a lot to protect time and focus, maintain low variability in project process and outcomes, safeguard their expert reputation, and secure premium pricing and profit.
Their success is a side effect of the meticulous qualification of prospects (and positioning clarity, of course).
"Consultancies cannot build and grow a reputational footprint in a consulting market without a clear decision about who they are, what they can achieve, and for whom they have unparalleled problem resolutions."
10. The reputation of the consultancy owners induces profit
Building and growing my market reputation has always been a big focus of mine. I am deeply convinced that the reputation of owners or leaders in consulting can drive profitability.
A strong reputation and personal brand attract clients and boost trust, while a weak reputation can deter business. The owners' market reputation is crucial to the success and profitability of a consulting firm.
I recently assisted an investor with the due diligence of buying a consultancy, and I was surprised by their detailed attention to the market reputation of the consultancy owners.
Of course, the investors did the usual due diligence work, but on top, they ran a ‘special reputation check’, and that’s why I got involved.
Most consultancy owners need to pay more attention to the impact of their reputation. The investors were keen to understand if the consultancy owners had invested time and effort into building and maintaining their market reputation and had laid the foundation for a successful and long-lasting consulting firm.
Here’s what they asked me to assess:
- Published works and thought leadership (the owners' voice in the market)
- Owners’ social media presence and quality of activity (ability to attract new business)
- Media mentions and interviews
- Professional organizations and leadership positions
- Industry recognition and awards
- Reviews, comments, google relevance of/about the owners
- Feedback from clients (I did 5 interviews with core clients)
The investment project leader explained to me loud and clear:
"Beware of consultancy owners with poor reputation and visibility in their core markets! This usually means you'll face sky-high client acquisition costs, a snail's pace when it comes to closing contracts, a pitiful proposal win rate, and substandard client retention - all of which translates directly into slim margins."
And he closed our chat by saying:
“A poor reputation can also make it difficult for a consulting firm to attract top talent, which will limit the firm's ability to provide high-quality services and maintain a competitive edge”.
Wow. Did you ever think of that?
The market reputation of consultancy owners/leaders is a critical factor that significantly impacts the success and growth of their consulting firm. Proven by the special attention it got from these investors.
A strong reputation in the market can establish the leaders as credible experts in their field, differentiate their firm from competitors, build brand recognition, and easily attract potential clients seeking their expertise. Or attract investors.
A wake-up call?
As I reflect on my learnings over the last decade, I realize how much time and energy I could’ve saved early on in my consulting career had I practiced what I preached from the very start. Unfortunately, hindsight is 20/20. Fortunately, arriving at these lessons allowed me to build multiple successful consulting businesses.
That’s why I’m adamant about sharing my learnings with others – with fellow consultants and consulting leaders. Not every success has to come from years of personal experience and mistakes. Some strategies have proven to deliver strong results in a sustainable, scalable way.
This is why reflecting on my learnings and re-evaluating them is essential for me – using them to help my consulting readers save valuable time and energy.
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Hello, I’m Luk Smeyers, and I’m helping mid-sized consultancies become high-performing consulting firms. I have been in the consulting businesses for more than 20 years, in very different roles: as European CHRO in a global consultancy, as a founder of a mid-sized analytics consultancy, and as a leader in a 'Big 4' consultancy, post-acquisition of my consultancy. I had the privilege of achieving global visibility as a consulting leader, and I never had to sell, persuade, or negotiate as a result. I have now bundled all those experiences, expertise, know-how, research, reading, successes, struggles, and failures from managing and advising consultancies in the past years.