Consultants are hired to be the bad guys

Sometimes the consultants are the bad guys:  People hire consultants for many reasons, one of which, is to be the bad guys.  Look at this article about how Deloitte is helping some of Iowa’s public universities cut costs here.

Deloitte restructuring

Consultants usually stay behind the scenes.  This is surprising in the sense that consulting firms like to stay in the background and let their clients take the spotlight, for good and bad.  Ideally, the client is making all the presentations internally and externally.  Not in this particular case:

Representatives for Deloitte Consulting presented various scenarios for Iowa’s three public universities to the state Board of Regents on Thursday, including the restructuring of human resources and technology services by eliminating jobs in an effort to save tens of millions in annual operating costs.

Earning money the hard way. These consultants are really earning their fees, right? Damn.  That is definitely not staying in the shadows.  When you are holding public town halls to talk about cost reduction, you are truly being hired to be the bad guy. 

Be careful.  Judging from this article, it looks like there was a mini-uproar because Deloitte was not providing enough detail on their expenses here.  This is a slippery slope because, honestly, consultants do spend money when travelling.  They work hard (yes, I am in the lobby working on powerpoints right now), but they also eat well and stay in hotels with 20-30% tax.

Deloitte expenses

A few tips, when on a “bad guy” project:

  • Follow the process.  Restructuring, organization design, and cost reduction projects have always existed, and they will in the future too
  • Document everything.  When companies hire you to fix things, a lot of things can change – including the client-side sponsors, executives, and project leads
  • Use benchmarks to create anonymity; compare them to other standards
  • Work in teams; go to interviews together; present results together
  • Be upstanding; don’t give them any dirt to work with; stay out of the limelight
  • Do the work, and forget about it; be at peace because these are changes that must be made in order for the organization to be successful
  • Don’t drink too much

Back-handed compliment: “You are a workaholic”

I do a fair amount of work in the hotel concierge lounge.  Lots of snacks, stimulus, and a nice large marble table to spread-out and work.

Last night, I was the last to leave at 10pm, and this morning I was one of the first in the door at 630am.  The concierge person said, “I have been here 6 years, and you work more than anyone else I have seen.  You are a workaholic:”

A few thoughts:

  • Sadly, I took a little pride in that statement.  Clearly, I am putting in the work.
  • Important to find your good work rhythm and place – where do you work the best? (hotel desk, hotel bed, hotel lobby, Starbucks), when do you work the best (am, pm), how do you work the best (in silence, with Pandora blaring Grateful Dead)
  • Clearly, the Marriott person has not seen McKinsey people burn the mid-night oil; they may not be the most efficient, but they definitely spike high on rigor
  • San Pellegrino is a nice perk, even if I never use the swimming pool
  • It’s not always like that.  The night before, I got 8 full hours of sleep
  • Drucker always asked if you were working smart (effective), or just working hard (efficient).  When people call me a workaholic, Drucker would not be impressed

20140417_130017

Foreign aid, a few charts and graphs

After reading some news this morning, I wanted to re-post this from 2 years ago about US foreign aid.  For my non-American readers, hope you find this not-too-boring.

Consultants make tables and graphs.  That is a large part of what we do.  Please see some visualization of data below.  When you see the graphs, it’s obvious that US foreign aid has been sporadic, and a bit inconsistent.  Can easily confuse people.

Greenbook.  The US government publishes something called the Greenbook (245 page pdf) which shows where all the US foreign aid goes, but you can get the same information on this website in a more useful and friendly way.

1. The US government gave out $38B in economic aid in 2010.  This represents about 1% of the US national budget.  There was $15B in military assistance, but will ignore that for now.

2. US foreign aid has been going up for the last 10 years.  Shown in the graph, aid was relatively flat at $15-20B (based on inflation adjusted 2010 dollars) between 1965-2000.  The current level of $38B is where it was in 1953 time frame.  For a good discussion on the trends of US foreign aid, look here.

US Foreign Aid Trends 1946-2010 - Graph3. Foreign aid goes to approximately 180 countries.  It is clear that US foreign aid gets scatter to almost every country in Africa, Eastern Europe, Latin America and Asia.

Foreign Assistance by Country - Map4. On the surface, it looks like the aid is somewhat evenly distributed.  Without doing a “foreign aid per capita calculation”, Africa and Asia appear to get about 1/4 of the total spend.  Latin American and Eastern Europe share less than 20% of the aid.   The Middle East trails with 9% of spend.  The non-region specific aid probably includes some SG&A overhead costs and generic assistance.

2010 US Aid by Region - Graph5, The Middle East number (9%) is understated since Afghanistan (#1 recipient) and Pakistan (#2 recipient) are counted in Asia.  Also, Egypt (#5 recipient) is counted in Africa.  Israel receives no economic aid, but instead receives $2.8B in military assistance.

Top 10 recipients of US aid - Graph

6. US foreign aid comes in many different forms.  We build schools, provide drug therapies, dig wells, and even ensure fair elections.  In the table below, you can see that US aid comes in 8 high-level buckets, with peace/security and health being the top two.

US Aid by Category - Table7. Each category can then be broken down into finer parts.  For example, the US spent $9B globally on health-related aid.  The majority of this is spent on HIV/AIDS, compared to Malaria which only gets 1/10th of the funding.

Health Related Foreign Aid - Table

8. Poverty is everywhere  In this chart below, you can see that in rural India or Pakistan, more than 70% of the people live on less than 2 dollars per day. The Economist points out here that 1 bad harvest can completely wipe these people out.

Poverty Graph

9. The US is generous in its aid, but inconsistent.  One of the key elements of building trust is consistency.  So, when I downloaded the foreign aid data on a few of our key frenemies (friend + enemy), I can see why they are a bit confused on whether the US is a friend or a foe. Download the entire data set (all countries, all economic aid, 1946-2010).

10. The US gave $4.6B in economic aid to Afghanistan in 2010.  This is more than we gave the country for 56 years from 1946-2002.  Understandably, a lot of this has history mixed up with the cold war, but it is not surprising that they might feel America is trying to force a “all-of-a-sudden” type relationship.

Foreign Aid to Afghanistan - Graph11. The US gave $1.9B in economic aid to Pakistan in 2010.  As you can see in the graph below, it looks like a yo-yo.  It went from a high in the early 1960s, then dropped 90% to almost nothing in the early 1990s.  Looks like a U shape and a U-turn in policy.

Foreign Aid to Pakistan Graph12. The US gave $1B in economic aid to Iraq in 2010.  This is a lot of money – more than most countries receive from the US in aid – but it is only 1/8 of what Iraq received 2005.  Digging deeper, it looks lie 2/3 of the “economic aid” was actually the Department of Defense helping out with “security assistance”.  Does not sound very economic to me.

Foreign Aid to Iraq Graph13. Mexico received about $622M in aid in 2010.  We all too often forget our neighbor.  US aid increased dramatically to Mexico, but in the form of more funding for narcotics control.  If you read the news, the drug / gang violence in Mexico is at an all-time high.

Foreign Aid to Mexico Graph

14. US governmental aid is just a part of the equation.  A reader wisely pointed out that the US government makes up just a small portion of the larger US overseas philanthropy. Completely agree.  Don’t have to look any further than the Bill & Melinda Gates Foundation, Kiva.org, or a local church to see that Americans are eager to assist and invest in the developing world.  Thanks for pointing that out.

15. US private capital flows were $161B in 2010.  That is more than 4x more than what the US government sends overseas for development assistance.  Look at this report from the Hudson Institute that shows how the contributors to overseas philanthropy are changing.

Remittances - Foreign Aid

Direction, leadership, and trust

Tonight I told a client that I believe there are really only 3 things that distinguish high-performing organizations from losers.  Direction, leadership, and trust.

Direction:  Too many companies do not know what they are trying to achieve.  They rest on their laurels from previous hit products.  They acquire new companies.  They mimic competitors.  They optimize profits to satisfy Wall Street.  Basically, they are lost.

Leadership.  The average tenure of CEO, CMO etc. is very short.  People are either coming/going in the executive suite, and there is a lack of consistency.  People are unsure whether they should really believe in leadership, or whether it is a passing fad. When is the last time you saw real servant leadership?

Trust.  What is the culture? Is there a climate of learning, innovation and tolerance? Are there mentoring moments, and naturally-forming relationships?  Are there lots of new hires who were recommended-in by current employees?  Do people know what their responsibilities are. . .or are there numerous approval meetings and silly hierarchy.

Leadership direction trust

Perhaps this sounds naive, but I believe this is true.  Know what you are trying to achieve, demonstrate your passion and competence.  Have people follow you.  Develop a culture of trust, where non-fatal errors are okay.  Innovate to a solution.  Teamwork.

What is missing in your organization?

  • Direction?
  • Leadership?
  • Trust?

Or something different?

MOOCs continue to grow, disrupt, and democratize education

Massively Open Online Courses (MOOC) have been around in their current form for about six years.  They continue their march to democratize education.  If you are not familiar with these free online courses taught by some of the best professors in the business, please see my post from 18 months ago here.

I still believe MOOCs have the potential to completely disrupt higher education, especially for the 3rd and 4th quartile institutions; they just will not be able to charge $40K per year for a mediocre higher-education, when there are free (all be it), different learning opportunities online.  This logo is to enroll in an online course from John Hopkins on Data Science.  Big think.

Coursea course John Hopkins

MOOC momentum.  This article notes a few big, startling statistics.  MOOCs continue to scale, drive quality, and disrupt education. My commentary shown in (red color).

  1. $60 million invested by Harvard and MIT to launch edX (real money)
  2. $21.1 million in venture capital funding that Udacity has raised (real money)
  3. 1.7 million students who have registered for a Coursera class (scale)
  4. 150,000:1 student-to-professor ratio in a fall 2011 Udacity class (scale)
  5. 98% of professors are rejected by Udacity (quality)
  6. 33 universities that have partnered with Coursera (social proof)
  7. 6%–15% of revenue is paid to partner university from Coursera (business model)
  8. 5% pass rate in MITX’s only massive open online course (quality)

Not a new thing. In many respects, distance learning has been around for a while.

Why is this better? Why is this so revolutionary?

1. Online education scales well.  Some of the largest classes, can have 100-200K concurrent students.  Listen to the interview of Daphne Koeller (one of the founders of Coursera) here.  Coursera currently has 9 million students enrolled in more than 100 courses, provided by 40+ institutions.  Scale, scale, scale.

2. Currently, it is mostly free.  Not clear how long this will last.  Coursera and Udacity are both for-profit, while edX is non-profit.  Certainly, there are potential freemium models (e.g., charging for lecture notes, study guides etc), but nothing has really been proposed.  The big three MOOCs have deep pockets.  There many potential revenue streams from certificate programs, recruitment centers, study guides, feeder programs for other learning institutions.

3. It will democratize higher education.  Thomas Friedman – writer of The Lexus and the Olive Tree, and The World is Flat, wrote a bullish article in the NY Times in January 2013 where he imagines how this can really uplift people who do not have access for 1st class education here.  In many ways, it is the exact opposite of the recent US online education meltdown where 2/3 of American students – unprepared for both the financial burden and responsibility – signed up for classes and degrees that they did not complete or benefit from. The average US kid (yes, kid) has $26,000 in student debt.

4. What’s the best way to think through this problem?  Professor Morten Hansen, UC Berkeley, posted a fascinating post on the potential that online courses has to disrupt Executive education.  He mentions 2 things:

4.1 Application of Christensen’s disruption theory from Innovator’s Dilemma to education. This clearly applies.  Less for less.  Lower quality services for dramatically lower price.  Have traditional universities overshot (too high a spec, and too high a price) customer’s expectations?  Are they serving a need that the customer’s don’t value (e.g., Intel building more powerful chips, when people wanted energy saving ones)

4.2 Two types of knowledge – codified and tacit.  This is from a 1990 HBR article entitled – What is your Strategy for Managing Knowledge. This is the first time I heard of this, but it makes sense.  Some codified knowledge can be recorded easily (commoditized) without it losing its meaning and value.  Other knowledge requires some personal or tacit understanding.  The main thrust of the argument seems to be that a lost of Executive Education is codified knowledge, therefore, easier to commoditize.

Top-tier universities will be fine.  There are probably more than 20+ reasons why established, reputable, and branded, top-tier universities will continue to be successful. In fact, they will be able to flourish and extend their brands.

3rd and 4th quartile schools will hurt. It is really the 3rd and 4th quartile universities who are at risk.  Namely, how much value are they providing to their graduates – in learning, job placement, alumni network, skills – compared to motivated students who take the opportunity cost money (sometimes $hundreds of thousands), and educate themselves.  This would make Joseph Schumpeter proud.  Creative destruction.

Data analysis in 20 minutes

Consultants are in the business of taking messy, unorganized data and turning it into information, and hopefully, some insights.  Here is a simple example of excel clean up, and the steps to copy, paste, filter, sort, and cleanse data.  For most consultants, the data cleansing would 7-10 minutes (takes some trial and error) and the graphics would be another 10 minutes, if (s)he knew what graph they wanted to make.

Challenge:

Solution:

Here are the outputs.   Sorting of the 465 retailers from highest discount to lowest.

465 retailers

Unsurprisingly, the retailers with the lowest discounts are the generalist retailers and gas stations.  After all, who does not need something from BP or Walmart?

Lowest discounts

Steps #1 – 12 to clean the data and make these simple analysis.  

We have lots of consultants on this websites, and other left-brained people so this maybe basic for some.  Also, there are likely easier, smarter ways to do this, but this is for education, so don’t be snobby.  Some people might learn from this.

Filtering, sorting, copy, pasting.  Analyst basics.  Here we go. . .

http://www.cardcash.com/merchants/

step 1

step 2 and 3step 4-5step 6-7step 8

step 9

step 10-11

step 12

Practice makes perfect.  Nothing is worse than a slow consultant, so practice. Hope this was helpful.  Note that the website is always updating their inventory of discounted cards, so your results might be different (if you don’t do it on 10/2/2014).

If you want a copy of the starting excel (step #1) and the final clean one (step 12), leave me a message below, and I will send you the excel.

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Profile of success: Theranos founder, Elizabeth Holmes

If you don’t know this company, clearly you are not paying attention.   Theranos is a biotechnology start up merging biological systems with information systems.  Home healthcare monitoring systems to monitor disease progression in real-time. Originally, it was catering to pharmaceutical trials and speeding up the response time, A/B testing of new drugs.  Now, it enables you to use just 1 small pin prick of blood to give you advanced test results in 4 hours, with 1/2 the costs of traditional tests.

Elizabeth Holmes

Elizabeth Holmes was on the cover of Forbes. Here are the highlights:

  • Dropped out of Stanford at 19
  • Revolutionized the blood test industry
  • 27 patents on a disruptive innovation
  • 50% ownership of a business that is valued at $9 billion
  • One of the youngest billionaires in the world

What more do you need to know?    Well look at these Stanford videocasts:

Team:

  • Pick investors who share a long-term vision
  • Find people who can stand by you to build a business
  • The people you choose to work will absolutely determine the the failure and success of your business

Talent network:

  •  Evaluating candidates is difficult; technically you need to be excellent, but  that is only 50%.  If you don’t have the hunger to take ownership . . .it will not work
  • If everyone in the company who owns what they are working on, then we will be able to solve any problem we face.  Look for people who are hungry
  • Find people you can trust

Cash flow:

  • Most fundamental part of business – building a growing business that has cashflow; the market is telling you that you have something of value
  • Understand WHY you are doing the business; what is the source of passion?
  • Have the conviction to make it work . . not the title, money, or glory.  If you do it for superficial reasons, you may end up in the wrong place

Teenage entrepreneur:

  • Lived in the basement of some Stanford graduates
  • How do you convince people that you can pull it off, when you are 19 years old?
  • Michael Dell, Bill Gates, they demonstrated that it is not about age
  • It is about dedication and entrepreneurship … to make it work
  • You have to find people who will back you, who believe in you
  • You have to have the conviction because in the end, it is up to you

BCG: List of top 100 emerging market growth companies

Boston Consulting Group (BCG) just released a report called 2014 BCG Global Challengers here which lists the top 100 fast-growing and formidable companies from emerging markets.  It’s their 6th study and argues these companies are not only growing, but reaching a new level of maturity.  Jumping to the next S-curve.

  1. Fewer companies fell off the list, implying they are stronger and stable
  2. More retail companies, indicating more purchasing power from emerging markets
  3. Five companies graduated from the list, because they are now global leaders

The top 100 global challenger list.  These companies are impressive in their breadth, speed, and cost-competitiveness. While I am not the most global traveler or investor, I recognized 22 of the top 100 and recognized all of the 12 that graduated the list.

100 challengers

What are they doing right?  

  • Capturing middle class consumers – from 2009 to 2020, the global middle class is expected to expand from 1.8 billion to 3.2 billion, almost entirely coming from the emerging markets; monster growth
  • Meeting digital needs – New companies do not have the legacy infrastructure that prevents them from moving faster; asset-light technology also allows them to scale globally faster.  Multiple examples from the telecommunications industry
  • Building and supplying the world – This is familiar story line; local natural-resource companies develop a local monopoly and scale globally.
  • Growing through acquisitions – As just one example, Tencent (Chinese internet company) made 100 overseas acquisitions in the last few years.

End of easy growth.  BCG argues that it will get harder for these fast growth companies as they expand beyond their local (often protected) markets. Unsurprisingly, as these challengers grow, they become more like the staid, inert global Fortune 500 companies they were beating.  The teenager becomes like his/her old parents.

Two markets.  BCG argues that the dichotomy between the two markets is stark and growing.  1) A slow-growth, somewhat homogeneous mature market 2) A set of fast-growing, volatile, diverse, local markets.  Simple, makes sense.

They note that it is difficult for companies on either side of the fence to transition to the other side.  In fact, many emerging challengers are opting to grow into adjacent emerging markets, rather than over-extending into mature markets.

How to growth from a challenger to a leader?  Glad you asked.

BCG provides a clever way to visualize what it sees as the four ingredients to help these companies jump the S-curve.

  • Global enterprise DNA – know who you are and what you are trying to do
  • Operations – Scaling up with concrete processes + flexibility to adapt
  • People and organization – As Jim Collins says, “Get the right people on the bus”
  • Go to market – Knowing that the customer will tell you what they like

BCG challenger to leader framework

Alibaba. Lots of talk of this profitable Chinese internet giant last week.  One of the largest IPOs in history, 100% growth YoY in revenues, and 40%+ margins.  Trust me, you will see a lot more of these ground-breaking IPOs in the near future.

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Consulting secret: stories and storytelling

This week I went out to dinner with team mates twice. On each night, I heard inspirational stories from my team mates – 1 personal and 1 professional – that really made me think deeply about how I am living my life.  One story was about friendship; staying friends and keeping a beautiful tradition for 40 years.  Another story was about bravery and leadership; knowing when to leave a company because it is not a fit.

Consultants tell stories.  From the time we make proposals to clients, we are telling stories of how we did the work previously, how the industry is changing, what we know of their competitors, and why we can be trusted as consultants.  When we recruit, we tell candidates what we are looking for, and paint a picture of what their life and career will be like, if they join us.  When we make recommendations, consultants pull together all the data, interviews, benchmarks, industry trends, hypotheses, and insights into a cohesive narrative, which is often told by Powerpoint.  Simply, we tell stories.

Life is about stories.  My wife and I – certainly the older we get – believe that life is about stories because the most important things in life (getting spiritual here) is about people and experiences.  Once you have enough money, safety, and get over the ambition of the 20s and 30s, it is about people and experiences.

People experience stories

Stories come from travel.  “Are you going on vacation this year?” is one of my favorite questions to ask clients, friends, and strangers.  It gets people thinking about good things: relaxation, friends, family, travel, and fun.  It is what stories are made of.

I was once told that Europeans rarely speak of work, or ask “what do you do?” when first meeting someone at a party or social.  It is crass, and actually, a bit boring. Instead, conversation gravitates to travel, food, hobbies, and sports.  Americans talk about work, while Europeans are more apt to tell stories.  European readers, tell me if this is true.

Stories come from sacrifice.  Very possibly, things that have the most value to us are the things that we worked hardest to achieve.  For hard-charging consultant types, the projects where we really had to invest our head, heart, and hands are the ones we are gloriously proud of.  Also, when we run into cowards, bullies, and ignorant people – they are anti-mentors who we learn not to be like.  This is informative too.  These experience make us better coaches, and managers.   Tough times make us more competitive.

“If you are going through hell, keep going.”  – Winston Churchill

Leaders tell stories.  This is so true, it is almost a cliche.  Leaders get things done through other people.  Leaders make voluntary followers.  Leaders motivate through words, vision, direction, credibility, authenticity, and ultimately, stories.

Storytelling is an art.  

1) Think of 3 people who you know who tell great stories.   What is their secret?  Travel and diverse experiences?  Openness to try new things?  A strong sense of timing, and really making the “punch line” of the story count?  A good listener who knows what the audience is interested in hearing?  Learn from great presenters.

2) Think of 3 people who are terrible at telling stories.  Do they drag on and on?  Do they laugh at their own jokes, when others don’t?  Do they talk about boring things people are not interested in?  Do they repeat the same stories?

3) Watch TED.  Listen to story-telling podcasts.  Visit with people 20-30 years older than you, and ask them about their lives. Pre-internet stories are WAY better.  Trust me.

My favorite story-telling podasts:

Have a story-worthy week.  This is what they say at the end of the Moth broadcast. What a wonderful thought.  Live life fully.  Do work that matters.  Make it memorable. Have a story-worthy week. Amen.

Meeting minutes: 8 good reasons to write up those notes

Meeting minutes are not boring.  Most people see this as a bureaucratic habit straight out of Mad Men, where Joan is typing notes at an old typewriter.  I disagree

1. Notes show effort At the very minimum, it shows good follow-through and commitment.  While others are barely paying attention in the meeting, and promptly forgetting what was said, you are adding some (albeit) minor value.

2. Notes emphasize communication.  I am convinced that better communication could save most businesses 20-30% of their SG&A costs.  Most meetings are not needed.   I did a post on bad meetings here.  I also also conducted a survey of this blog post’s readers.  As of today, 52 people responded to the question:

Meeting survey on consultantsmind

You can see that 82% of people (44% + 38%) felt that meetings were only useful <50% of the time.  That is pretty consistent with my experience as well.  Most meetings would not be needed, if people knew the overall mission, their role, and trusted each other.

3. Notes benefits others.  This is a huge service for all attendees.  It serves as a a summary of topics, agreement and drives accountability on action items.  It’s a force-multiplier because your small effort is enjoyed by lots of people, including people who did not even attend the boring meeting.  It provides continuity for the next meeting because you can just see what was discussed last time.

4. Notes require thinking, if done well.  Good consulting is all about structuring problems, and putting information into buckets.  Meeting minutes are a great way to practice this by putting the content into categories, bullets, and making it easy to understand what was said.  Synthesize what was said, into something concise and consulting-worthy.  You are taking a collection of thoughts and adding structure.

5. Notes define the narrative.  If you write up notes after a meeting, you are crafting the results in your own voice.  It also summarizes the story line of the conversation.  This is a powerful tool – not for bad, or misleading – where you can move the conversation along and prevent people from dwelling or wandering off topic.

6. Notes are flexible.  You can type up “minutes” after a meeting, client interview, or even a phone call.  Call me geeky, but sometimes, I type up a conversation with a peer or my boss, especially if a lot of content was covered.   This reduces misunderstanding.

7. Notes keeps the conversation going.  Meeting minutes are a reason to contact meeting participants, ensure that action items are completed, and driving activity.

8.  Notes allow you to be different.  Let’s agree, most meeting minutes are boring, useless, and administrative.  People write them without thinking.  It is just a written transcript of what was said, without any grouping of thoughts.  It does not advance the discussion and is a waste of time.  It makes the meeting seem even worse.

Luckily, after reading this post, you are not like that.  Your meeting minutes will be professional, useful, and a way to brand yourself.  A few tips for notes:

  • Outline who attended, the date, and the topic
  • Write them up the same day, don’t wait too long or you will forget everything
  • Ask a friend or someone else who was there to “proof-read” the notes
  • Adopt the right “tone” and not be too forceful, or misses the nuance
  • Remember that your notes will likely be forwarded to other people
  • Don’t be afraid to add in weblinks to things that were mentioned
  • Don’t be afraid to cut/paste presentation material from the meeting. .into the notes
  • Outline action items, owners and dates (if they were agreed upon)
  • Put 5% of your own voice in the notes. . . what was the purpose of the meeting, and to what extent was this accomplished.  Re-read the notes and add/subtract words that help you to tell the story that needs to be told.  Be yourself.

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