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Sunday, October 14, 2012

More or less: The law of diminishing consulting value

This posting may appear to go against the grain, but the assertions may surprise you. You can easily spend far too much on consulting and business advice, but equally, by refusing to invest enough, you may be spending far too little.  The challenge is drawing the line between frugality, carelessness, and strategic commitment.

Here is an example. Tomorrow employees and contractors will gather for an annual two-day planning meeting. A former consultant suggested that these meetings are essential for business success and helped us out with an offer difficult to refuse: "You'll only pay me if you are successful."

We needed the advice. Our business, floundering in a death spiral, needed a lift upwards -- and some basic systems common to virtually every successful, well-established organization.

Eventually, the consultant appeared to achieve his goal. He had obtained a profitable paying client, generating upwards of $20,000 in annual fee income. Then, about 18 months ago, the relationship unravelled. My wife, who I respect and trust, said: "This guy is blowing hot air."

Indeed, while the consultant had offered some truly solid business advice, he had some philosophies and attitudes that didn't quite add up. One of the best examples of this, (and perhaps the eye-opener to me) proved to be his assertion: "I've written 12 books."

It isn't easy to write one good book, and only a few truly exceptional professional writers can produce 12 really worthwhile tomes in their lifetimes. However, with some success with the  Construction Marketing Ideas book, I decided to go out on a limb and publish one of the consultant's 12 books for a fee much lower than he had paid the vanity press for some of the others.

We edited the book professionally, hacking out about half of its content, removing the excessively detailed appendices.  We designed a professional cover.

Time to start marketing it . . .

I asked the consultant to send it to his clients, friends, colleagues -- anyone he thought provide a positive recommendation. After several weeks, one person had written a lukewarm review on The my wife, at a mid-year planning meeting dinner, sat next to the individual.  The next day, she delivered her (negative) verdict.  "He's full of hot air," she said.

I don't think the consultant had bad intent; nor do I blame him for the cost and effort in publishing the ill-fated book.

The consultant went from a contingency fee arrangement, to a lucrative cash-paying contract with spin-off opportunities, to (abruptly) the edge of nothing -- all in a matter of a few years.

What happened?

Simply put, while we bring differing skills and experiences and knowledge to the community, our services only are worthwhile if they add real value. Undoubtedly, in the early goings, the consultant provided value by teaching some of the basics behind standard business processes and operations.  You'll find "Annual planning meetings" and ongoing planning/operations systems in virtually every successful business.  The consultant also taught us how to operate regular weekly meetings efficiently.

After a while, however, we didn't really need him to facilitate the meetings at truly high fees. We could do this work ourselves.  We certainly didn't need his 12 books.

Now, the question is, when should you spend "more" on consulting services, and how do you decide on what works best?

My view is the big name consultants -- the ones with fame, fortune, and power -- are probably way to expensive for most of us. Read their books, listen to their presentations, and borrow their ideas, but I wouldn't rush to participate in their coaching or support programs, because you will almost inevitably be shunted to a junior and a scripted approach to implement the materials you could learn from books and websites.

However, you may want to spend real money for a "middle name" specialized consultant -- one who has enough reputation that you can verify his or her effectiveness, but know that you will be learning new ideas.

Finally, of course, you can see if you can work on trade-outs or contingency relationships with the consultants. You may not always get the top person, but if you are lucky and careful, you can discover a rising star.

Test your assumptions about consulting. Sometimes, indeed, you should spend until it hurts -- because you'll learn quite a bit and absorb every word of advice. However, maybe you can find the advice in an e-book, or even in a remainder bin, and perhaps your best advice may arise from surprising places and unique networks where you will need to spend little or no money to achieve great results.

You can read this blog for free, and two books for as little as $20.00 but not for more than $45.00.

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