Tag Archives: Consulting

Structuring problems: Consultants use buckets

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bucketConsultants use buckets.  I know it sounds pedestrian and unsophisticated, but it’s harder than it looks.   When you are trying to crack a complex problem, inevitably you will start to group things.  Buckets, I tell you.  Buckets.

Structuring problems forces you to organize your thoughts, and reflect on what your key messages will be.  It is the first step in turning data into insights. A few examples:

1) Bucketing by Time: Here I was explaining to the client what activities were coming in the different phases of a project.  During a long project, showing this graphic repeatedly helps to level-set the client.  Keeps them grounded and in the present – less focused on the past, or the future.

Bucketing by time2) Bucketing by Function: When you do enterprise-size work, inevitably your work will cut across different parts of the organization.  Pretty typical for a process flow chart to show “swim lanes” which buckets activities by group.  In the example, engineering does steps 1 & 4, while marketing does steps 2 & 5 etc.  It’s funny and sad how surprised people are about the way work is done in their own departments.

Process Flow Chart Example

3) Bucketing by Root Cause: This is the “bread and butter” work of a consultant.  After weeks of interviews, data analysis, and observations, you might have 25-30 different potential root causes of a problem.  To really move the analysis and thinking forward, you have to group the stuff into logical buckets.  In the fish-bone diagram below, you can see that all the resource-related items are grouped for easier understanding.

Fishbone diagramSuper bucket example: Deloitte has something called the Deloitte Enterprise Value Map.  You have to see it to believe it (pdf 354K), but it categorizes the buckets that make up shareholder value.  It is like a fish-bone diagram, but it has about 1,000 branches.   I have seen one of these, and it usually takes up 1/2 of a wall of a typical office.  In the small portion I show below, Revenue has two parts.  Volume has 3 parts.  Acquire new customers has 43 parts.  Lots of buckets.

Enterprise Value Map - Revenue

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The best short-answer to give clients? It depends. . .

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“It depends” is a phrase you hear a lot in both business school and management consulting.   To some, it might seem like a boring half-answer, timid, or worse – mentally lazy.  As weird as it might seem, it is often the best short-answer to give a client.

1) Most problems are complex.  This might seem obvious, but clients typically pay for us to solve the difficult and persistent problems.  If it were easy, it would already have been solved. Seth Godin calls them perfect problems.

If you can answer the parts of the problem “off the cuff”, it either means you are a genius (possible), or you are not really answering the entirety of the problem (more likely).  Brainstorm through the potential issues before you jump the gun.

Unsurprisingly, the majority of consulting works sits in the yellow area (complex problem, complex solution).  It can be a bit of a grind, but those are the type of problems that Fortune 1000 typically have, and the type of problems we know how to solve.  We can talk about the innovation and leadership quadrant in a different post.

Simple Complex Problem Solution

2) Context matters.  No question is asked in a vacuum.  If someone asks you if they should invest in Linkedin (ticker symbol: LNKD), the answer is probably “it depends”:

  • Time horizon: How long will you be holding the stock?
  • Risk tolerance: What is your comfort buying stocks with very high PE multiples?
  • Diversification: How diversified are you?  Is this the only investment you have?

Another recent example of the IT DEPENDS phenomenon was the hub-bub with Marissa Mayer banning remote work.   Personally, I believe she had some good reasons (need to get Yahoo! innovating, people were slacking etc), but at the end of the day, the answer for tel-commuting is IT DEPENDS.

Why would someone in accounts payable (clearly defined work, little interaction with others needed) be held to the same commuting standards as someone in product marketing (fluid work product, need for collaboration, interaction with customers)?

3) Beware of false choices.  People tend to over-simplify the situation and paint the pictures as if it were black / white.  This is also called the false dilemma. US politicians are notorious at this.  Watch any political TV ad, and it will make you sick how they set up issues as false choices (good sensible me vs. bad crazy them).

Last week when I was on a conference call with a few people, someone argued for his point by creating a false choice (A or B).  I had to bust him on the false choice, by saying, “That’s a little reductionist, isn’t it?  What about choice C?”

4) Too often, clients want to take short-cuts.  Like anyone, clients are impatient.  They like the rigor and process-focus that consultants take, but they want it done in 1/2 the time with 1/2 the fees.  While it’s good to give updates, make sure you follow the process you outlined in the proposal.  Don’t forget that you are the coach.

Problem with shortcuts

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6 reasons why consultants are revision crazy

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Consultants are constantly revising their work.  Yes, the end product tends to be high-quality because a lot of smart people have spent A LOT of time on it.  Looking at recent files saved on my laptop, I see some with pretty absurd file titles like:

  • ABC_phase 1_02082013 10pm EST.ppt (with a date, time and time zone)
  • ABC client final version 3.doc (uh, if it was final, why is there a 3rd revision?)

A cynic might ask, “why are there so many revisions?“  After all, aren’t consultants supremely good at judging project scope and containing the ambiguity of projects?  Aren’t consultants data-driven, and confident in their answers?  Aren’t consultants excellent at PowerPoint and graphs and the like?   Why so many edits?

6 reasons why consultants are revision crazy:

1. Early prototyping.  It will be a strange day when you start calling consultants innovative, but one thing they do well is fast and early prototyping.  Management consulting is based on the idea of testing hypotheses and quickly narrowing down the answer.   It is not uncommon to start putting together the basic framework of a presentation a month before it is due.  At this point it is just a skeleton – mostly blank pages with placeholder titles – but it grows daily and starts to take a life of its own.

2. Learning on the job.   There are novices on every project, whether analysts (BS, BA) or senior consultants (MBA).  They may have some analytical skills and business polish, but most of the real consulting learning happens on the job.

Few people can put together a consulting presentation from scratch.  It’s a learned skill.  Good consultants can visually represent what you want to say on a PowerPoint slide and add structure (dare I say too much structure) to your arguments.

Analysts cannot learn this in a vacuum.  It requires experimentation and occasional failure.  On the job training is good news for the analyst learning skills.  It’s a necessary evil for the senior manager who is reviewing, editing and teaching the newbies how to work.  Many a manager has secretly wished she had more seasoned consultants.

3. Lots of internal review cycles.  It’s natural for a manager to want to review the work product.  You can call it quality assurance or simply checking up, and a consulting project is no different.  Consultant – Manager – Senior Manager – Partner.

At the bottom of the illustration, you can see how involved the different people are on the project.  It is a typical staffing leverage model.  Lots of consultant time, less partner time.  The consultant is staffed on the project full-time (M-TH).  The senior manager and partner are there some of the time.  As you would expect, the deliverable (whether an Excel model, PowerPoint, or workshop preparation) gets lots of review and scrutiny as the due date approaches.  Lots of revisions late at night.

Involvement in Project by Role

4. Diverse client audiences.  What you present to your day-to-day client counterpart will be different from what is presented to the executive sponsor or steering committee.  Each audience and venue require a slightly different presentation.  In one poorly scoped project, we gave the final presentation 4 times to different audiences.  Sometimes it was a 3 hour presentation, other times we were only given 45 minutes.  Different versions.

Different Audience Different Messages

Thankfully, you are usually able to re-purpose 80% of the material and simply change the titles and order of the slides.  Good presentations should be stand-alone.  If someone were to pick up your slides, would they be able to understand the content, context, and main points?

5. Pulling it all together.  Perhaps the biggest reason for document revisions is the need to harmonize ideas, work streams, writing styles, numbers and words.

Ideally, the consultant’s recommendation is compelling, credible and clear.  It has a strong and logical narrative, is backed by data and analysis, and leaves the client with a clear idea of what to do next.  It is internally consistent and looks like the same person authored it from start to finish.  It has the consistency of an audited 10-K, and the specificity of an investment banker’s valuation model.  It’s solid and authoritative.

In reality, it is a bit of sausage making.  There are multiple authors, multiple work streams, multiple sources of data, and sometimes multiple opinions.  Bruce Tuckman studied group dynamics in the 1960s and describes group development in four stages which I argue apply to developing deliverables and work product.

  • Forming: Individuals work largely independently and are cautiously respectful of other people’s space.  It’s all about getting your part done.
  • Storming: Different ideas and opinions vie for attention.  There is lots of discussion and even disagreement.  Individuals might feel a set-back and the slow grind of consensus building.  Teams that trust and compromise grow from this.
  • Norming: Things start settling down, and there is agreement on the path forward.  Individual and group performance start to increase.
  • Performing: Things are going well.  There is collaboration and synergy.

As a consultant, I want to draw everything out, so here is my rough approximation of relative individual vs. group progress across the 4 stages.  At first, individuals are making good progress (gray bar) on their work stream, but lose steam after there is an effort to rally all the work into a more standardized approach.  Towards the end of the project, the deliverable is really improving because the individual and group sections are all working together nicely.  My apologies to Tuckman for taking his research and making a woefully unscientific chart out of it.

4 Stages of Group DevelopmentOver beers, any consultant can tell you nightmare stories where projects essentially got stuck in the storming phase: people disagreeing or being petty, and someone eventually laying down the law, “I know you disagree with the approach, but I am managing this project and this is how we are going to do it.”  More dictator than leader.

6. Over-eagerness: Many consultants are type A, ambitious, opinionated, and a little bit heavy on the control-freak side.  We like to win.  We like our clients to win.  We are confident that our approach (on the structure of the presentation, or even on the wording on a specific page) is better.  If you would just listen to me, the presentation is going to be 100% better. . .

Sanity check: We should all probably be a bit more humble, listen more, and “major in the majors, minor in the minors”.  Is the order of the bullets on that slide really a deal-breaker?  Wouldn’t that time be better spent teaching the analyst something else?

In this week’s Fortune magazine, Ben and Jerry’s co-founders talked about their 30+ year working relationship and had some good advice.  Jerry Greenfield said:

“Our basic agreement was that the person who felt more strongly about the particular issue got their way,”

Consulting is all about communication.  Gathering broad sources of information, focusing your attention, listening deliberately, selling your ideas to up to senior managers / partners, structuring presentation for easy comprehension, and ultimately giving your client the confidence to take action based on your recommendation.

All those things make consulting challenging, fun, collaborative, and full of revisions.

Consulting jargon: Airport Test

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DL 1512 Landed 463 Min Delay

Yes, I was delayed 7 hr and 45min on Wednesday night.   My flight was scheduled for 4:45pm, and instead left at 12:30am. There were 58 people on the standby list.

During this horrific wait at O’Hare, I had the good fortune of traveling with a work colleague.  We talked, worked, ate, complained, and generally kept each other from going crazy.   It was like being trapped on an island for an episode of Man vs. Wild.  We got so bored that we ate dinner twice: sushi at 6pm , then cheeseburgers at 9pm.

Recruiters look for “fit”.  When picking new consultants, recruiters look for the basics (intellectual horse power, business acumen, academic success, polish etc), but they are also looking for fit.  Fit with the company culture, fit with the team, and generally coolness.  No one wants to work with overly intense, self-involved, or annoying people (especially if they are junior to you).  If they are your boss, hmm, might have to deal with that in a different post.

Airport Test:  Could I take being stuck with this person at the airport for 7 hours? 

My teammate is a good guy.  We have worked together for 8+ years.  He is easy going and a good person to hang out with, even at the dumb airport.  He passed the airport test.

On some level, I must have passed the test too.  My buddy looks over and said, “Thank goodness, you are not Sam (pseudonym).  He’s usually unhappy and complaining even when the plane is on-time.”

Crazy idea:  Judging from the divorce rate in the US, I wonder if the airport test is something we should make all engaged people go through.  It would be a fast and less damaging way to find out if the couple has a good fit.

Get a MBA? Pros and Cons

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I got my MBA 8 years ago.  It was a good use of my time, attention, and money.  That said, there are a lot of MBA skeptics out there, and they have good reasons.

3 CONS of the MBA:

1. MBA inflation: MBA programs are not created equal, there are more than 100,000 MBAs awarded each year.  A plain MBA (however you define that) is just not valuable on its own; the program’s pedigree and regional brand matter.

2. MBA is temporary: Peter Drucker said it 40 years ago, but knowledge workers should never stop learning.  A MBA is perfect at a certain stage of your career, but that is temporary.  Steven Covey said to “sharpen the saw”.  Seth Godin said to “Learn all the Time”  As trite as it sounds, it is true: What Got You Here, Will Not Get You There.   The value of a MBA at age 45 is about as valuable as a BA/BS is at age 30.  Which means, not very.

3. MBAs are not free: I would say that 1/3 of the value of a MBA is the core learning: marketing, strategy, statistics, negotiations, finance, accounting etc. . .  If you look at the curriculum at top MBA programs (e.g., UCLA, Michigan, and Yale) that is what you will find.

As shocking as it sounds, you can find a lot of that online for free.  For fun, I put together a nice curriculum for you from Coursera (one of the big MOOCs)

Some will say that these courses (e.g., Princeton) are not MBA-level programs, and that many are only 5-6 weeks long.  Fair criticism, but let’s remember it is free.  Clearly you can get 50% of MBA-type content online.  Not perfect, but if you are looking to get smart on a topic, it’s a great start.  You have the opportunity.  No relief for the lazy.

So why bother with a MBA?  Depending on the program and the timing in your career, it might be exactly what you needed.  For many of us, our career progression looks like the first S curve in the graph.  It ramps up, but then slows down.  For many of us, it’s when we are 27-33 years old and its when a lot of people head back for their MBA.

The MBA helps you jump the S curve in your early career.   It is a step-jump to the next level of career path.  You’ll note that the MBA doesn’t do anything for your next jump.  That one is up to you and has less to do with your credentials, and more with your achievements.  The MBA helps get your 1st good job out of school, but not your 2nd one.

When a MBA makes sense

4 PROS of the MBA:

1. Relationships: You meet good people.  Diverse people from different countries and professional careers. Lots of personalities – but all motivated learners.  Although I have been out of school for 8 years, I still email and talk to people from my MBA class monthly.

It is the relationships that last.  Trust me, after being out of school – being able to calculate the WACC (weighted average cost of capital) is a lot less important that being able to call a MBA buddy for some advice, referral or a favor.

2. Recruiting: My first consulting role was as a campus hire.  If you are looking to break into management consulting, the easiest entry point is through campus recruiting.  Transferring as a lateral hire into consulting is not an easy or a pretty process.

3. Redefinition: For those who are career switchers, MBA is the way to go.  I saw people successfully move from the military, or education, or sales to management consulting.  I came from a B2B marketing / strategic planning role and made the switch.

4. Recharging: If you are fortunate enough to spend the time and money for a 2 year full-time program, MBA life is a luxury.  It’s a chance to do college right.  The formula I came up with :  MBA = Business Learning + Good Paying Jobs + Solid Friends.

For those interested, there are many websites on MBAs, but here are the 2 best ones:

ConsultantsMind.com 1 Year Later

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Happy Anniversary with WordPressStarted writing this blog a year ago.  At the time I had no idea where it would lead, but after 40,000+ words I still enjoy the work.  As consultants, we are paid by to think rigorously and creatively through problems – and yet, it’s a shame there is not a place to catalog thoughts.  Folders full of PowerPoint presentations seem insufficient and hollow.

What did I write about?  Looking back, these are the topics.  If any of that is of interest, you can type in key words in the search box on the top right of the site.  I see there was a lot about random topics like Amazon.com’s tax rate, half marathons and MOOCs.  I suppose that is the nice thing about a hobby – you can follow your interests.

Management Consulting Blog Anniversary - Topics of PostsHow many people visit? There were about 27,000+ views over the last 12 months.  While that might seem like a lot, it isn’t.  My wife frequents a recipe website run by a home-cook that gets that many views daily.  I guess if I measured success by page views I would have lots of Chicken Florentine, and cous cous recipes.  heh heh.

Where are the visitors from? Since I write in English, it’s no surprise most views come from English-speaking countries ( US, UK, India, Canada etc).  That said, honored that people are also stumbling across the blog from all over the world.  100+ countries.

Management Consulting Blog Anniversary - Views by CountryWhat were the top 10 countries? One of my friends is a huge advocate for tables.  He rightly claims that people spend too much time pretty-ing up charts or maps (like the one above), when a simple table conveys more information.  Here is shows that 52% of page views came from the US, followed by UK, India, and Canada.  There is a long tail.

Management Consulting Blog Anniversary - Top 10 Countries

How many views were there each month?  Like many things, the growth is non-linear.  Starts off slow (non-existent really), then starts to accumulate and grow (more posts + better Google search rankings + RSS + email readers).

The blue chart shows the total number of monthly views.

The red chart shows the average number of monthly views per post.   As a consultant, I would probably focus more on the red chart since it normalizes results for the number of posts.  Comparing May & October you can see on the blue chart it shows more than double the number of views.  Lots of growth, right?

Well, when you adjust for the number of posts that were written during those 5 months, you can see that the average number of views per post (shown in red) was actually less.

Management Consulting Blog Anniversary - Views by Month

What’s next?  Look forward to melding my passion of consulting with education.  Will write more about the disruptive innovation in education and applying consulting to everyday problems.  My friends and I have some of the best conversations – and look forward to sharing some of that on this site.  If you have topics you want to discuss or think through, please let me know.  Best regards,

BCG report: Ending the Era of Ponzi Finance

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Not sure how this happens, but the entire developed world is in debt.  Europe, the US, and Japan have borrowed so much money that they are headed towards ruin.  The Boston Consulting Group even went so far as to call it the biggest Ponzi scheme in history.   That is some pretty bold talk from a buttoned-downed group of consultants.

After reading the BCG report Collateral Damage: Ending the Era of Ponzi Finance, I tend to agree with them.  The 23 page report is well-argued and makes 3 points: 1) the global debt picture is pretty bad . . . 2) and getting worse . . . 3) unless something is done soon.

Developed economies are in enormous debt.  Europe, the US, and Japan have taken on monstrous levels of debt and are not really getting a good return on that money.  It would be different if the money was being invested productively, but too much of it is just being spent.  Governments, companies, individuals – all need to take some blame.

It is not simply that the developed world has borrowed significantly from future wealth to fund today’s consumption, leading to huge burdens for the next generation.  It has also reduced the potential for future economic growth, making it more difficult for the next generation to deal with this legacy.  -BCG

In the BCG graph below, you can see that the total debt (government, corporate, and household) is many multiples of the countries’ GDP.  Put another way, Japan’s debt is 3-4x the total output of the country.  Can you image if your personal debt was 4x what your gross income was?  Any good financial planner would be screaming at you to reduce your debt and increase your income.

BCG: Ending the Era of Ponzi Finance - Total Debt to GDP

The debt situation is getting worse.  This is a bummer to say, but there are many reasons why the debt burden could increase over the next 20 years.

  • Under-funded pensions: Governments and companies have made promises to their citizens and retirees that have not adequately funded.  Pew recently reported that the largest 61 US cities have only funded 74% of their pension liabilities.
  • Longer lifespan and healthcare costs: People are living longer which is good news, but how will this all be paid for?  Healthcare costs are rising faster than inflation.  In the same Pew report, the top 61 US cities have only funded 6% of their retirees’ health care liabilities.  This is a huge problem that is getting worse.

Pew - Retiree Bills

  • Fewer young people: Often times, pension costs are paid for by the contributions of younger workers who are essentially paying it forward.  Well, what happens when you have fewer younger people than older people?  BCG put together this fascinating chart that shows that the population has already peaked in many Europe countries.  Even China (not one of the “developed countries” with a debt problem) has an issue with their population peaking much earlier than India because of the one-child policy.

Peak Population by Country - BCG: Ending the Era of Ponzi Financing

  • Rising interest rates: Although not explicitly mentioned in the BCG report, rising interest rates pose a huge risk.  Like any good monetarist, I believe the increase in money supply and competition for resources will drive up rates longer-term.  Have developed countries become too complacent?  How much longer will investors buy US government 30 year bonds at  3.125% (2/14/13).
  • Many other reasons including lower productivity, under-investment in the asset base, rising prices for resources, international competition, barriers to innovation

What’s to be done?  BCG argues that there are steps that can be taken to reduce the risk of this global financial car-wreck.  Find the full list here, starting on page 14.

They are not simple solutions.  Systemic issues require a strong dose of political will and leadership.  It will take more than just marginal improvement.  Financial sacrifices will be required from all interest groups.   Perhaps the most direct statement in the BCG report:

The critical starting point is to accept the fact that many of today’s debts will never be repaid and to embrace debt restructuring and defaults.

BOOM – If that is not a strong statement, that yes indeed, the debt burden of developed economies is a Ponzi scheme that does need some unraveling.

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7 Key Questions: Who, What, Why, When, Where, How, How Much?

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Who, What, Why, When, Where?  These are five questions kids learn in grade school or when first learning a language.  It covers the basics and helps you understand the situation and context.  My high school friends can attest to my poor memory, but even I can remember these basic words in french: Qui, Quoi, Quand, Où, Pourquoi.

These 5 questions are fairly famous and an often-quoted way to think through problems.  They have been repeated by Cicero, Thomas Acquinas, and Rudyard Kipling.  Journalists are trained to answer those 5 questions whenever they write an article or press release.  These can also be useful for consultants, with two small additions.

How and How Much?  For any consultant eager to see her recommendations implemented, a lot of thought needs to be given to how it will be implemented and how much it might cost.  For all the snark-y comments about strategy consultants giving high-minded solutions that are condemned to be “shelfware”, there is a hint of truth that many good ideas die on the hill of implementation and cost.

What kind of problem is it?   There is a good chance that the client’s problem falls into one of these buckets.  If it is a strategy project, likely it is a WHAT question.  Conversely, if it is a operations-related project, it is really looking at HOW to implement a good idea efficiently. Most seasoned consultants have been on projects that touch these areas.

Questions and Topics

Answer the right question.  It is easy to fall into the trap of addressing the wrong issue.  All too often clients hire consultants to solve problem X, only to find out that the problem is actually with Y.   On a more personal note, I had dinner with a good friend last night and he adroitly pointed out that I was too focused on answering the HOW (on a big decision in my life), instead of taking a step back and answering the WHY and the WHAT.  Sanity check.

“Management is doing things right; leadership is doing the right things.” – Peter Drucker

Think broadly about the problem. Once you have targeted the right question, think a bit more laterally and see which of the other questions should be answered too.  The level of detail will vary, but you want to be as comprehensive as the time and budget allows.  In this example below, this hypothetical project actually covers a lot of ground.

Who What Why When Example

Look for the add-on work.  Chances are very good that during the course of solving one problem, you unearth other issues.  It is all too common for a $50,000 (loss-leader) diagnostic project to lead to a  $750,000 (profitable) project with multiple work streams and consultant teams.  Clients see that you do good work, and want more help.  It is natural and good thing for the client and the consultant.  Look for those opportunities.

“My greatest strength as a consultant is to be ignorant and ask a few questions.”  – Peter Drucker

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Leadership quotations from Maxwell, Drucker, Roosevelt, and Wooden

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This week I thought a lot about leadership and ran across these quotations. . .

What is leadership?

“Leadership is influence” – John Maxwell

“Motivation is the art of getting people to do what you want them to do because they want to do it.”  – Dwight D. Eisenhower

Is leadership inherited or learned?

“Leaders aren’t born, they are made. And they are made just like anything else, through hard work. And that’s the price we’ll have to pay to achieve that goal, or any goal.” – Vince Lombardi“

“Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.” – Norman Schwarzkopf

What do leaders do?

“Do not go where the path may lead; go instead where there is no path and leave a trail” – Ralph Waldo Emerson

“The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help them or concluded that you do not care. Either case is a failure of leadership.” – Colin Powell

“We can’t solve problems by using the same kind of thinking we used when we created them.” – Albert Einstein

Am I a leader?

“Whatever you are, be a good one.” – Abraham Lincoln

“We must become the change we want to see.” – Mahatma Gandhi

“You can’t let praise or criticism get to you. It’s a weakness to get caught up in either one.” – John Wooden

What’s the difference between leadership and management?

“Management is doing things right; leadership is doing the right things.” – Peter Drucker

“Management works in the system; Leadership works on the system.” – Stephen Covey

“The manager accepts the status quo; the leader challenges it.” – Warren Bennis

What is the sign of a good leader?

“The function of leadership is to produce more leaders, not more followers.” – Ralph Nader

“Good leadership consists of showing average people how to do the work of superior people.” – John D. Rockefeller

Are leaders always successful?

“Success is the ability to go from one failure to another with no loss of enthusiasm.” – Winston Churchill

“Strive not to be a success, but rather to be of value.” – Albert Einstein

What is the risk of being a leader?

“You must do the thing you think you cannot do” – Eleanor Roosevelt

“When a man assumes leadership, he forfeits the right to mercy.” – Gennaro Anguilo

“Talent is God given. Be humble. Fame is man-given. Be grateful. Conceit is self-given. Be careful.” – John Wooden

maxwell eisenhower lombardi schwartzkopf

emerson powell gandhi roosevelt

3 kinds of power: positional, relational and expertise

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Recently, I was reminded that there are three types of power in the workplace.  While you might not have all 3 – you better have some.  Positional, Relational, Expertise.

I first heard this on a manager-tools.com podcast, but please let me know if you heard of it somewhere else too.  It’s a simple way to think through the problem, but perhaps the most elegant.  This applies to each of us professionally, and also to the client project.

3 Types of Power

Positional Power:  This is straight-forward.  It is tops-down power.  This power comes from the title, budget, headcount and the role that you hold. If it were a math formula it would look like this:   COO > VP > Director  > Mgr > Analyst

Positional power does work, but it is like a hammer – blunt, short-term and tiresome.  It is like telling your child to do something, and when asked “why”, you respond by saying “Because I am your father, and I said so.”  It works, but not really the best parenting.

Relational Power: This is the primary currency in large organizations.  People work together, help each other out, team-up for success, forgive mistakes, and generally stick together in the organization.  People are inter-related.  History is shared.  In Influence, Robert Cialdini writes extensively about reciprocity and other ways that people persuade each other.  Simply put, we are social creatures and relationships matter.

Expertise Power: This is where the individual shines.  This is where education, experience and real thinking come together to create expertise.  The MBA would direct you to something called the resource-based view (RBV), which states that really competitive advantage comes from things that are: 1) rare, 2) valuable, 3) difficult to imitate.  This is also true for people.

Another way to look at it is how Malcolm Gladwell argues in Outliers that real expertise takes 10,000 hours of practice.   This is based on fascinating research published in HBR called Making of an Expert.  As they state, “Consistently and overwhelmingly, the evidence shows that experts are always made, not born.”

How do consulting team accumulate power? Whether we know it or not, the consulting process is designed to help consultants accumulate power or influence at the client site.  These are the three keys to getting leverage and being effective.

Power - How Consultants Get Leverage1. Kick-off meeting. (Positional) It is customary to have a kick-off meeting where the executive sponsor formally introduces the consultants to her staff, thereby, “loaning” the consultants some of her authority.  This allows the consultants to do work and create change.  It’s like being a substitute teacher, it is a privilege and borrowed power.

2. Project plan. (Positional) Consultants like to stay on the project plan.  This serves many practical purposes such as organizing activities and scoping the work, but it also has a more subtle effect of giving control to the rhythm of the project.  The due dates create project momentum and pressure to finish the work.  It’s like being the air traffic controller; you are not flying the planes, but have a lot of say on how the airport runs.

3. Best practices. (Expertise) Consultants bring some objectivity because they benefit from working at multiple competitors, suppliers and customers.  Clients like to have that “outside-in” perspective and know where they stand relatively in performance.  “What is best practice?” is a common question from executives.  Best practices, maturity models, benchmarks, and survey results are all examples of expertise power.

4.  Data. (Expertise) Many clients actually don’t know where they stand.  They don’t know if they are running a 5 minute or a 12 minute mile.  They have a “sense” (which is usually right), but are hard-pressed to show the data.  Consultants love data for many reasons – including the fact that data gives the consultants credibility and conviction.

5. Being on-site. (Relational)  Generally, consultants don’t have a lot of relational equity.  They might know the “buyer” of the services, but often meet the stakeholders at the kick-off meeting.   So, it is critically important to get to know the working-level stakeholders as soon as possible.  Collaboration is a two-way street.  Some of it has to do with being professional, friendly, and helpful.  Some of it has to do with the tacit understanding that consultants can help (or sometimes hurt) career prospects.

In my mind, one of the main reasons that consultants are often at the client site Monday-Thursday is for relational reasons.  The travel is a beast, but it is an effective way to work with the clients, get to know each other, share meals, and build relationships.  The ex-CMO of Deloitte wrote a best-seller on building relationships called Never Eat Alone.  Guess what the main point of the book is. . . . . never eat alone.

Caveat. All of this power and influence is temporary, borrowed, and sometimes fragile.  Most of the consultants I have worked with are professional, well-mannered, and show the right level of respect to clients – but that is not always the case.  I know of consultants who have shouted, and even threatened working-level clients.  Low-class, unprofessional, and abusive.

The patriarch of McKinsey, Marvin Bower, rightly felt that management consultants should have the highest level of professionalism, integrity, and candor.  Completely agree.

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