By Tony Tiernan
In tough economic times, many consulting firms revert to two tactics that appear essential, but actually dig them deeper in the hole both during and after the downturn. The first is selling work at which they cannot be truly great, and the second is pursuing clients that do not share their values.
Both tactics can help fill the short-term revenue void, but the consequences can be severe: unhappy clients who will not come back; a damaged reputation in the marketplace; and disaffected staff who will leave at the first opportunity. All of these chickens will come home to roost when the upturn comes, as it will.
The pressures to make these compromises are certainly understandable. But they can irreparably damage a consulting firm's core value-creating identity—the often unwritten principles about what the firm does (the business problems it chooses to own and solve) and the way it operates (the meaning and purpose that drives its business—the difference it is trying to make in the world—and the values that shape its relationships with clients and staff).
A consulting firm that does the hard work of discovering and articulating its identity can use it as a tool to shape the firm's three core business processes: developing clients; developing people; and developing ideas. The result is an organization that is "all of a piece"—inherently differentiated and coherent while retaining the flexibility that professionals value. That is the foundation for a powerful professional services brand.
A strong identity, clearly articulated and shared, is a consulting firm's guiding compass and its true source of differentiation. While competitors can copy a consulting firm's concepts and marketing messages with relative ease, the way its consultants do their work and interact with clients cannot be copied.
In the 1990s, I worked for a consulting firm (CSC Index) that lost its identity after setting the world on fire with the blockbuster consulting service of that decade: business reengineering. While there were numerous reasons for the firm's rapid descent and failure (after a breathtaking climb from $40 million to $250 million in revenue in less than 10 years), identity was at the heart of Index's calamitous fall. The firm took its eyes off of solving issues at the lucrative intersection of operational change and information technology, and lost sight of some of the core values that made it unique.
Conversely, I know of a large consulting firm that soared after revisiting, articulating and broadening its identity. Today that consulting firm is one of the largest and most successful in the world. Downturns are times when struggling consultancies need to revisit and renew their identities.This article
explains more deeply what it is about, how to determine when it's necessary, and how to do it.
Why Consulting Firms Need Clear Identities
Consulting firms, possibly more than any other type of business, really need the consistency and direction provided by a clear identity. There are at least four good reasons.
The first is precisely because their services are intangible, hard to explain, and easy to expand and change. Without a clear, shared sense of the real meaning and purpose that underpins the business, the problems that it solves, and the value that it creates, a consulting firm can so easily morph into whatever the client—any client—wants it to be at any given time, or whatever each new senior
hire thinks it should be. That's a recipe for immediate dilution, eventual mediocrity and ultimate disaster.
Staff retention is the second reason why consulting firms need the compass of a clear, value-creating identity. A consulting firm's assets are its people, and these assets appreciate significantly with seasoning—i.e., their expertise builds over time. A clear, shared sense of the purpose and meaning (therefore value) in the organization helps bind your best people to the firm, and helps elevate morale and motivation during tough times.
The third reason is differentiation. The sheer proliferation of
consulting firms, and the relative ease with which concepts and
marketing messages can be copied by a competitor, mean that the stated differences between firms are often onion-skin thin. Add to that the fact that a consulting firm's "brand" is conveyed in large part via its people, and you have a uniquely difficult industry in which to create meaningful differentiation or build a brand. A
clear, strong value-creating identity is the foundation for a strong organizational brand.
The fourth reason is that a well-understood identity enables a consulting firm to harness the emotional value that its clients get through their relationship with the firm. This is an important,
but often neglected, differentiator for consultants.
Five Symptoms of an Identity Problem
A blurred identity will make prospective clients wary of taking a meeting with you. In contrast, consultancies that are crystal clear about who they are can attract clients like magnets, even in tough times. The following questions will help you figure out where your firm is on the spectrum:
How long does it take a prospective client to understand what your firm does? Many consulting firms struggle to articulate clearly who they are and what it is they do. Indeed, some consulting firms seem to willfully avoid doing so. Often this results from a fear that being specific will deter some prospective clients. So it should: if you cannot say "no," then you do not have a strategy, and you certainly do not have an identity.
Do you show or just tell? Could a prospective client or employee infer from your behavior, language, perspective, etc. those values and qualities you say make you distinctive, or are they just words on a page? For example, if you really mean it when you say "Your success is our success," shouldn't you be offering a guarantee or sharing risk and reward?
Do you blend in or stand out? We constantly see firms claim to be "collaborative," to "partner" with their clients, to "deliver results," to provide "objective, fact-based advice," and so on. Those are a client's minimum threshold expectations, completely unremarkable in the professional services category.
Do you tell prospective clients about all the factors that contribute to a superior client result—such as, great hiring and training practices, incentives and measures that focus on quality of work, etc.?
Do you communicate empathy with and curiosity about your clients' world? Many consulting firms talk about partnering and collaborating with clients, but their behavior, their interactions with clients and their choice of language are signaling that their relationship is with the problem, not the client.
If your answers are largely negative, it's time to revisit your identity. It will require much soul-searching, but it's vital.
A Consulting Firm's Renewal
This consultancy had built a very successful business based essentially on its intellectual horsepower and its ability to solve highly complex, often one-off problems. Its culture valued brainpower, detachment, creative problem-solving skills and a certain intellectual combativeness. Over the years, the firm's partner promotion process had evolved to select for these attributes. The unintended and long unnoticed consequence was the de facto devaluation of emotional intelligence and relationship-building skills.
But as the consulting market evolved, there were growing signs that the firm's value proposition (essentially "we will help you understand") was no longer sufficient. Clients increasingly needed help to move from understanding to action. In addition, there was a perception that the firm's partners were often more interested in the problem than the client. Consequently, some clients experienced the firm as transactional. Things needed to change.
The partners had the wisdom to see that intellectual horsepower and creative problem solving were, and would always be, critical components of the organization's value-creating identity. The challenge then was to honor and build upon those core
attributes, while evolving to meet the changing demands of
the marketplace.
The firm set about adjusting its recruiting profile and its partner promotion criteria to value and reward emotional intelligence and relationship-building skills. It expanded its capabilities to offer clients more help with implementation. It developed thought leadership that, while still strategic, was more focused on action and results. It became deliberate and intentional about expressing the "creative" and "relational" elements of its identity in the behavior of its people and in the voice and tone of its communications.
Revenue and profitability have both increased significantly as the firm has evolved and operationalized its identity. While not immune to the effects of the current recession, the business has fared better than most and is coming through it with a strengthened identity and sense of purpose that will give it the resilience and momentum to capitalize on the recovery. Tough times are when you need to be more true to yourself, not less. Consulting firms that use the current recession as an opportunity to demonstrate who they are and what they stand for will find that, when the recovery comes, they have built a magnet that attracts the right clients and the right staff. They will be poised for rapid, sustainable growth.
Tony Tiernan is president of Authentic Identity, Inc., a consulting firm that helps professional services firms attract and keep the right clients and the right staff.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.