If you don’t know what your business model is, then you have more problems than merely creating better proposals! A relationship with a client is a series of small yeses that culminate in a signed agreement—a proposal that’s accepted. Figure 1.1 is an example of a simple but highly effective business model:
FIGURE 1.1 A consulting business model
You begin with a common value system. I don’t mean a spiritual or religious be- lief system, but an agreement about business.
For example, I’ve never performed downsizing or “rightsizing” (now there’s a eu- phemism) because I believe that such actions are simply an attempt to atone for mistakes made in the executive suite. Getting rid of one or two executives who made poor decisions is far better than dumping hundreds of people who have been trying their best. (And experience shows that more than 90 percent of at- tempts to severely restrict costs and improve profits in downsizing fail to reach their goals.)
That’s what I mean by shared values. If those are in place, you develop a trusting relationship with the buyer. This must be the economic buyer we spoke of earlier. That relationship may take 30 minutes or three meetings. (If it takes several months and you still haven’t achieved it, assume that you two just weren’t meant for each other.) That trusting relationship is essential in my model in order to en- sure conceptual agreement.
How you know you have a trusting relationship:
- The buyer shares personal and nonpublic information.
- The buyer asks your advice.
Glossary Trusting relationship: The buyer and you are comfortable volunteering, questioning, “pushing back,” and sharing issues.
Conceptual agreement: Concurrence between the buyer and the consultant about:
Objectives: Outcome-based business results, not deliverables or tasks. Metrics: Measures of progress, success, and/or finality.
Value: The impact on the buyer and organization in meeting the objectives.
- You and the buyer challenge each other’s assumptions.
- You feel free to interrupt each other without ill feelings.
- The buyer does not allow interruptions when with you.
- The buyer admits to uncertainty or a welcome new view from you.
The purpose of the trusting relationship is to ensure that the buyer is honest about the next step—the conceptual agreement. This is where you and the buyer jointly frame objectives, metrics, and value.
An objective is a business result, never a “deliverable” (a favorite word of non- buyers, primarily in the human resources department). When someone presents you with an input, turn it into an output by asking, “Why is that important?”
Examples:
- Deliverable: Strategy retreat.
- Outcome: New strategy to penetrate overseas markets.
Deliverable: Coaching for senior vice president.
- Outcome: Improved presence with media to improve company reputation.
- Deliverable: Focus groups.
- Output: Gain customer contributions for best features that will improve sales in product reinvention.
A metric is an observable, detectable indicator of progress or final success. Examples from above:
- Deliverable: Strategy retreat.
- Outcome: New strategy to penetrate overseas markets.
- Metric: All P&L leaders create support for strategy within two weeks.
- Deliverable: Coaching for senior vice president.
- Outcome: Improved presence with media to improve company reputation.
- Metric: More positive articles appear in trade press resulting from his appearances.
- Deliverable: Focus groups.
- Output: Gain customer contributions for best features that will improve sales in product reinvention.
- Metric: Five innovative ideas that both R&D and sales support with their budgets.
Finally, value is the impact of meeting the objective. It may sometimes be the same, because increased profit is an objective and it can also be considered as the value. But there is additional value from increased profit, such as the ability to rein- vest in the business, pay higher dividends, pay down debt, improve credit rating, and so on.
Examples from above:
- Deliverable: Strategy retreat.
- Outcome: New strategy to penetrate overseas markets.
- Metric: All P&L leaders create support for strategy within two weeks.
- Value: Global presence will improve profit, diversify exposure to volatile markets, and attract new labor pools.
- Deliverable: Coaching for senior vice president.
- Outcome: Improved presence with media to improve company reputation.
- Metric: More positive articles appear in trade press resulting from his appearances.
- Value: Attract more talented candidates for key positions with less cost of acquisition.
- Deliverable: Focus groups.
- Output: Gain customer contributions for best features that will improve sales in product reinvention.
- Metric: Five innovative ideas that both R&D and sales support with their budgets.
- Value: Early adapters will provide immediate boost and momentum for new product introductions, which will be fully supported by our two key departments.
Only at this point, after conceptual agreement, do we create a proposal that is a summation of that agreement (and with options and peripheral information that we cover a bit later). That proposal enables a partnership to be consummated, a project delivered, and results generated that reinforce the relationship, creating the potential for additional business in the present and referral business for the future.