By Greg Baranszky
Being a diamond in the rough can be… well, rough. Ask any senior manager of an "embedded" consulting firm. Embedded consulting firms ("ECFs") are those consulting organizations which are units of, typically, larger corporate entities. They often focus on specific verticals, like pharma or energy, which call for deep expertise and extremely rich data and analytics. KIA's analysis shows that in 2009 over $25 billion in global consulting revenue was generated by ECFs.
We have diagnosed problems and prescribed solutions for ECFs for more than a decade.
In one example, we have counseled an ECF client practically since its inception and played a part as it quintupled revenues in six years—providing a more strategic mix of services from compensation benchmarking and market sizing/segmentation to strategic counsel on M&A and other sensitive matters. Drawn from that experience and many others, what follows is a brief take on how ECF diamonds in the rough can be polished to realize their full potential and sparkle in the marketplace.
• Put the Cart Before the Horse. As ECFs are typically "add-ons," a large part of their client mix are already-established clients of the parent. Often corporate soldiers own the client relationship—and are risk averse when it comes to potentially upsetting the existing client apple cart by allowing ECF consultants the "freedom" to range far, wide, and deep. Even under stifling environments, ECF consultants are expected to take every opportunity to sell the parent company's products.
These artificial strictures on ECFs not only hamper their own growth but miss a huge opportunity to generate sales for the parent by unleashing consultants' client relationship building skills and the client intelligence/pain point gathering that is at the core of a consultant's skill set. Unleashing this potential requires fundamental cultural and process shifts that are not easy to create. A SWAT team approach in which specific client accounts are selected can prove its benefits and build the trust necessary between corporate soldiers and consultants.
• Show Me the Money! Compensation at ECFs can be a very tricky business indeed. Often ECF compensation is beholden to that of the corporate parent, even though we all know that the risk/reward equation is very differently ingrained in consultant and corporate DNA. More often than not, this disconnect leads to significant restrictions on ECF pay, especially bonus awards. Non-cash instruments are an effective palliative in some cases but not in all, and especially not in a down market.
The key to addressing this problem is to educate HR leaders on the corporate side about the realities of compensating consultants and the value that consultants bring to the overall business. A continuous dialog between corporate and ECF HR/comp professionals is necessary to drive and realize benefits from this process. KIA has facilitated these interactions and, backed up by solid consultant compensation benchmarks and strategic counsel, has helped to achieve more "real world" compensation for ECF professionals and, consequently, lower turnover, higher employee satisfaction and alignment, as well as enhanced recruiting (especially of star performers).
• Split Personality? "You do consulting, too?" "OK, but you're not a real consulting firm." "You want what for this project? These are just some of comments that ECFs get from prospective clients who know the parent company's wares but are new to the idea that consultants (yes, real ones) are also part of the equation. Once prospects are clued in that the ECF exists at all, there is often a tough uphill fight to communicate the ECFs value proposition in a way that aligns with and supports the parent's brand and also is best suited to winning consulting engagements.
Often "frozen perceptions" (ingrained biases that close the mental aperture for the receiving of information) about the parent's brand must be overcome before the ECF's marketing messaging can be heard at all. The upside to solving this problem can be enormous—especially when the ECF cart is put before the corporate horse and ECF's sales power is unleashed. Our prescription in this case begins with understanding what those frozen perceptions are, how they impact market perceptions (re: the ECF, and then creating ECF messaging, and any needed branding adjustments, to lay the groundwork for the sales process). If you are a senior manager at an ECF facing these challenges or others—or are a senior corporate executive debating the launch of a consulting unit to augment your corporate business—KIA is here to help!
© 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.