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Differences Between Implementation, Strategy, and Operations Consulting

One concept is consistently misunderstood in management consulting and that is the differences between strategy, operation, and implementation. Here are the common misinterpretations:

  • McKinsey only does strategy work.
  • Deloitte and other accounting firms are great at implementation.
  • Implementation consulting is the same as operational strategy consulting. 

We are going to explain the key difference and which firms are good at each type of consulting.


Strategy consultants help senior executives determine the overall direction in which they will take the business. It is about taking a top-down view of the business and looking at the allocation of scarce resources. Strategy consulting is difficult. It requires deep analytical skills and the application of strong and disciplined problem-solving skills. Principles like decision trees, MECE, and hypotheses-led research are used. 

What Do Strategy Consultants Do?

Examples of strategy work include:

  • What should be our long-term vision?
  • Should we retain the same portfolio of businesses?
  • Should we enter this market?
  • Do we have a competitive advantage?
  • What is the best way for us to extract value from our SUV division?

At the end of a strategy consulting engagement, the client is given detailed market research outlining the exact market shares, pricing, volumes, business models, and other conditions under which the recommended strategy will work. The end of a strategy consulting engagement must be a report. That’s because a strategy is a plan that helps you gain insight as to what the next step should be. And before you implement anything, you need a plan.

Strategy consulting engagements tend to involve long hours; they are high intensity and involve senior client engagement. Throughout the engagement, strategy consultants must work with the most senior executives of a firm. Proper strategy consulting can only be done for the most senior executives. They are after all the management involved in decision making

The top firms in strategy work are McKinsey, BCG and Bain. Other firms like Roland Berger are good at strategy in selected markets and sectors. However, their standards are generally not as high compared to other firms


Operations consulting services are very similar to strategy but are not implementation work. In operations consulting projects, the operations consultants usually work for senior executives to determine how to extract value (e.g. how to extract more value from a facility, plant, mine, supply chain, or division). The role of an operations consultant is to offer specific solutions to certain challenges. They are also involved in continuous improvement techniques, indirect procurement operations, and developing new operating models

Operations consultants apply the same approach to solve problems as strategy consultants. MECE, decision trees, and hypotheses lead the research. 

Operations Consulting Services

Examples of operations consulting services include:

  • How do we increase the throughput of this plant?
  • How do we reduce costs in this facility?
  • How do we minimize the costs of raw materials?
  • How do we increase productivity in this factory?
  • How do we reduce bottlenecks in this plant?

Here is a crucial similarity between business operations and strategy engagements. At the end of an operations consulting project, the client also will receive a detailed report outlining metrics, benchmarks, and a laundry list of changes to improve business operations. At this stage, the client and operation consultants have not yet implemented the recommendations.

Operations and strategy engagements use the same highly disciplined problem-solving processes, but they apply them to different parts of the business processes. This is a very important point. The role of operations consultants is just as tough, just as intense, and just as appealing as that of strategy consultants, provided it is done correctly.

The top firms in the operations consulting market are still McKinsey, Bain, and BCG. To this list, you can also add AT Kearney. In some areas of operations consulting, firms like Deloitte, PWC, E&Y, KPMG, and Mercer also do well. The accounting firms tend to be good at financial processes, functional business processes, supply chain management, and business process management. The latter firms are not consistently good across all sectors and markets.


Implementation consulting is totally different from operations and strategy consulting. The consulting skill sets are different, the hours are different, the type of work is different, and so is the profile of consultants and fee structures. In an implementation engagement, the consulting team must take the recommendations from the strategy and operations engagement and help the client realize the targets. Let’s assume Bain advised an airline to set up a new low-cost airline division. The strategy calculated that doing this would lead to the airline saving $100 million over 3 years.

The implementation consultants need to determine the pieces of activity required to take all the existing employees within the airline, create a new division, brand it, set up the operating structures, and move the employees to the new division. They need to also get involved in asset management, performance improvement, and customer relationship management where they develop strategies to enhance customer experience and ultimately improve customer satisfaction. Although the implementation consultants will not do everything, like branding where a brand specialist firm would do the work, they will manage everything.

Here are some of the things involved in doing this:

  • Setting up the new division
  • Transferring employees and making adjustments to their employment contracts
  • Creating a new profit center
  • Setting up a new accounting system and adjusting SAP
  • Setting up back-office processes
  • Assisting in deciding if the low-cost fleet will be leased or bought
  • Creating a new organizational structure in micro-detail
  • Set the start date for the new division and begin migrating process and employees
  • Set up a trial run for the new division
  • Determine the go-live date
  • Manage the labor unions
  • Perform advanced analytics

You get the picture? Implementation consulting is not just for the smartest MBAs. It’s for smart people who can roll up their sleeves and work alongside a client to solve countless tedious problems and march towards a common goal. 

A person with below average abilities who can make things happen is a far more effective implementation consultant than someone brilliant with the best solution that is never used. 

Implementation consultants also only use the strategy or operations practices as a guide. No matter how good a firm is, it can never predict all the problems with implementing a strategy. The implementation team will need to find a way to make the strategy work. 

Implementation consulting projects also have less stressful work hours. Since the team is working hand-in-hand with the client, they generally need to work to the clients’ schedule which slows down implementation projects. There is also a need to blend in more closely, use processes that can be used by everyone and focus more on transferring knowledge.

In our experience in the consulting industry, despite the countless adverts, not many firms do implementation well. Capgemini used to be good at implementation through their United Research team. Accenture is great at technology implementation. E&Y is quite good and so is IBM. The rest have poor records. Of course, there are also regional and sector specialists.

So the next time someone says McKinsey only does strategy, know they are wrong. McKinsey does plenty of operations work which is just as rigorous as any strategy engagement, as well as implementation work.

Image from Jon Herbert under cc.

Implementation of an Operations Strategy

Work with an implementation team helping one of the world’s most profitable and largest aluminium smelters improve profits and production by implementing a new operations strategy.

The parent company has divested under-performing upstream (mining) assets during the recession and is relying on the downstream (processing) businesses, like the smelters, to boost profits and raise margins as input costs, like bauxite, rises. You will learn the 4 focus areas, the 8 categories of skills needed, the 20 traits and 25 tools that must be applied in all implementation programs, and how to apply them all.

The study is tough since the facility is already one of the best run in the world, making incremental changes harder to achieve and is unionized meaning that under-performing employees must be retrained versus replaced.

The study is detailed since you will be able to follow step-by-step as we examine the new corporate strategy, build the operations strategy to support the corporate strategy, develop the business case, cascade the metrics into the operations, develop the operating plan for the aluminium/aluminum smelter to support the operations strategy, launch the first pilot to implement the recommendations and adjust the implementation plan using the lessons from the pilot.

You will find that even though general consulting engagements differ between studies focused on corporate strategy, BU strategy, organization design, market entry or M&A, they all follow the same underlying logic. Implementation does not.

If you would like to receive sample episodes of our Insider content, please register on this site (its free) or opt-in to our newsletter. That’s also free. This is the only way to receive sample Insider content and find out about our promotional offers.

The program will focus on the pilot where we will go as far as taking over a small part of the smelter and working alongside the production team to implement the new targets set by management.

Implementation always takes place at this level of detail and you will learn how to change employee behaviour to generate lasting changes.

In the next phase of the study, after the pilot, we will implement one of the largest opportunities identified: lowering procurement costs of raw materials by developing a strategic sourcing program.

You will learn the 4 themes, 8 key performance areas and 25 tools that are used in all implementation programs, including the tracking charts/sheets, and we will show you how to adapt them. While the study is set in a metals facility, these 4 themes, 8 key performance areas and 25 tools are used in any type of implementation: in a distribution centre, back-office, tech company, start-up, bank, digital research centre, Pharma R&D unit etc.

If you master how to use them, you will have mastered implementation. Despite the guidelines above, we strongly discourage rote application of tools. We will teach you how to think through and implement from 1st principles.

We will explain why so many implementation programs fail: it is primarily due to the objective of the program and the definition of implementation, which leads to the wrong tools being used. Implementation is different from strategy and operations.

In implementation the team must bank/realize the promises made in the strategy and/or operations analyses. The tools, techniques and methodologies are different. In essence, it means helping your company/client generate the $xM benefits that were promised.

In a corporate environment, you are promoted for results. This is a major misunderstanding many executives make when trying to adopt the tools of BCG and McKinsey: they focus on smart analysis and slides. You do not get promoted for strategy analyses and recommendations which you fail to implement.

The executive with the ugliest slides and weakest analyses will become CEO if he can implement changes that create value for the client/shareholders. Implementation is about creating measurable value. Implementation is not about planning to create value.

A company’s share price does not rise because of a great strategy document, but rather by the results of implementing the strategy and investors’ confidence that management can continue implementing the strategy.

This program should be watched alongside “Implementation. Building a New Innovation Division” and “The Operations Study”, the latter which includes reading “Succeeding as a Management Consultant.”

The content is exclusively available to Firmsconsulting Insiders.

flickr.com/photos/[email protected]/14174681297/in/photostream/
Image from Robert Cook under cc, cropped, added text.

Hallelujah! I managed to get myself onto an Bain operations engagement, but as you probably guessed, I am still stuck in the airline sector. At this point I have resigned myself to accepting that this sector is so important and growing so fast that Bain would recognize my efforts here. I would not be punished for not having more diverse experience. My end of project performance review for the Eastern European airline project went very, very well. I needed to continue maintaining that momentum. Yet, that was proving to be difficult largely due to my own poor planning.

The fatigue was starting to creep up on me and I was getting a bit more tired more often. Heck, I thought I was too young to worry about this. So far my career was going well despite a very wobbly first project.

Some of my Bain colleagues had a rule of taking about 5 days’ vacation after every 2 month or 3 month project. It helped them relax after the project stresses. I had been at the firm for 18 months and I was still not taking any time away. Between projects I was working on knowledge capture work and internal assignments for partners. The fatigue was starting to creep up on me and I was getting a bit more tired more often. Heck, I thought I was too young to worry about this. So far my career was going well despite a very wobbly first project. I needed to push through and build my career while I had the momentum to do so.


My next project was going to be different. We were going to Asia to help a leading air carrier split out part of their fleet to create a new low-cost carrier to compete in this lucrative space. Low cost airlines were starting to post consistently large profits and eating into incumbents’ territories. The larger, established carriers needed to respond and one believed creating a separate low-cost carrier could do the trick. Bain had been awarded the strategy assignment which recommended the separation. Now Bain was also going to be tasked with preparing the blueprint for separating the operations and helping the airline with the first stages of the implementation. What made this project so challenging was the way the separation would take place. It was a formula which would form the blueprint for many low-cost carriers around the world.

• The parent company wanted the low-cost carrier to be branded differently and appear to be totally independent to the public.

• However, critical behind-the-scenes operations and functions would be merged to drive economies of scale.

• Other critical operations which needed to be separated like check-in, baggage handling and so on would need to be managed separately.

• The airline would be moving all 4,000 of its current employees who worked on the low-cost side of the business into the new company.

Over the next few years we saw many airlines adopt the same model in creating low-cost alternatives to fight against pure low-cost competitors. A couple of things made this a fairly interesting project:

• This was all happening at a time when the airline and unions were locked in vicious salary and benefits negotiations. The unions were suspicious that the creation of a new low cost airline was a tactic to separate the poor performers into a poorly performing unit which would be allowed to collapse into bankruptcy. You must remember this was before the low-cost airlines started dominating air travel and their economics were not fully proven.

• The airline had already communicated a go live date which was about 9 months away. Since this date was already out in the press, there was no way they could change the date without looking totally unprepared.

• At this same time the parent company was going through some of its own major shifts. It had decided to expand into several adjacent markets and industries like catering and engineering. The airline was also preparing for a major switch to an Airbus fleet. All of these changes were sucking up resources and talent. There was a concern the low-cost fleet would be left with the scraps.

• The low-cost airline was deliberately being pitched as the anti-establishment airline. It was meant to be the cool place to work and the cool airline to fly. This created animosity between employees of the parent and low-cost airline, although they were both technically employed by the same company.

Over the next few years we saw many airlines adopt the same model in creating low-cost alternatives to fight against pure low-cost competitors.


I had a very, very interesting role. I had to work with a team who had to create the new organizational structure for the low-cost airline. It was a very exciting role. It was totally new type of work and I was not even sure where to being. Unlike a business-case type of assignment where the next steps were relatively clear, I could not even begin to think this one through. I spent a lot of time talking to Bain organizational design experts to build an approach we could use. It was like being back in university. I needed to go right back to the beginning and learn how to learn a new field. Two of the concepts that were drummed into my head by the senior partner specializing in organizational design were that:

• Structure follows strategy.

• Think of the structure as the element which mops up deficiencies in the strategy.

This turned out to be very useful advice. Using these as the pillars for my thinking, I decided the team would spend the first 2 weeks with the strategy team really understanding and splitting apart the strategy. We needed to perfectly understand what the strategy wanted to achieve and the best way for the organizational design to help achieve this. We also needed to find any possible flaws in the strategy and how the organizational design could mitigate this.

Structure follows strategy.

Differences between strategy, operations and implementation. By the time we had come in, the strategy team was winding up their work. Like all companies going through change, rumors of the recommendations were already sweeping through the corridors. We arrived just at that point in time when the operations needed to start executing the strategy. What you learn in operations and especially in implementation work is that things operate according to an entirely different set of rules from the relatively structured pace of strategy engagements.

Implementation is not about analyses. Sure, you need the correct analyses and it must lead to the correct recommendation. However, the correct analyses will not go very far. I cannot tell you how many hours were spent listening to the concerns and questions of the employees. They saw the analyses, but they did not what it meant or how it would work in the real world. Sometimes, and this was usually the case; they just wanted their concerns to be heard.

For example, during an implementation project, when the CEO miscommunicates or poorly communicates changes, the consulting team feels the brunt of the resistance. For example if the CEO is not clear about the pace of change needed, or is unwilling to create urgency, then the operations staff the consulting team engages is sometimes unwilling to work with us. That is very, very common. Implementation is not about analyses.

Sure, you need the correct analyses and it must lead to the correct recommendation. However, the correct analyses will not go very far. I cannot tell you how many hours were spent listening to the concerns and questions of the employees. They saw the analyses, but they did not what it meant or how it would work in the real world. Sometimes, and this was usually the case; they just wanted their concerns to be heard.

Therefore, most of our time was spent listening to employees and placating their fears. It was a far cry from my previous strategy work when I would spend most of my time analyzing data and developing recommendations. In this project I was spending the majority of my time in meetings and discussions. My objective was to get the employees to start moving forward and building momentum. At the start of the post, I celebrated because I thought I was on an operations project. This was not operations project. This was a mix of operations (analyzing the operations to present a recommendation – organizational design) and a lot of implementation (helping the client achieve the benefits) work. In hind-sight I think that many firms confuse the two. An operations assignment is not implementation work and vice-versa. They are very different.

I found this project to be hugely draining. While we were developing the organizational structure, the rest of the organization was moving head first into meeting the live date target. Therefore we had to provide advice before we had completely verified our findings. This was frustrating and difficult. We needed to ensure that we gave guidance which would allow us to change direction later if needed.


On paper the project was designed to be led by strategy who would hand over to the organizational design team who would work with the systems and processes team, and human resources group. The systems and processes could only be designed once the strategy team decided how the two companies would interact and organizational design sketched out the points of interaction. Human resources should not be doing anything until a skills audit was complete and we were sure who would move across, how this would affect their salaries and benefits, and when they would move across. All of this needed to be timed to work in concert. Although Bain was appointed to lead this process, we found that all parts of the organization were scrambling to get things done:

We could clearly see the chaos that was erupting. We wasted no time in communicating this to the senior Bain partner along with a string of recommendations which were implemented.

• The HR director would remain in the parent company. Knowing this, and wanting to keep the best employees, he had assigned his team to find the top performers and “lock them” into the parent company.

• The engineering crew and already realized they were losing about 50% of their Airbus technicians. To ensure they did not waste any training budget on the wrong 50%, they took matters into their own hands and split the crew. We found engineers sitting in limbo not sure what to do.

• The team leading the SAP implementation where bounced of the executive committees update meeting agenda as more pressing matters crept up. Feeling as if they were losing importance, they doubled their work rate. This would have been fine, except for the fact that they went ahead and redesigned key processes and automated them without checking if they fitted in with the new organizational structure.

• Poaching of talent was taking place in all parts of the organization. Knowing that a staff split was on the horizon managers where trying to retain their best people rather than letting the business needs dictate staffing.

The good thing about this project is that we were working right next to the strategy guys and needed to have oversight over everything else. We could clearly see the chaos that was erupting. We wasted no time in communicating this to the senior Bain partner along with a string of recommendations which were implemented.

• We needed to rapidly escalate the sharing of information and connection points. Limited information in the company meant that employees were imagining scenarios and responding to them. Their imaginations always created worse situations than reality. Friday’s were set aside whereby the team leaders for each part of the transition would get together, debate progress and reach decisions.

• The CEO needed to take a tougher stand and stop the bad behavior. After a few months of hand-wringing he eventually did. He replaced the HR director and replaced the Operations Director. The tone dramatically changed with these actions. He also asked the new HR director to ensure metrics measuring the ease of the transition was built into everyone’s performance evaluation.

• The company embarked on a massive communications exercise so everyone knew exactly what was happening and when.

• We were also much more brutal on separating areas where decisions where outstanding from the operations and strategy analyses, and where the implementation teams could move along. This worked really well. Especially after spending 3 full working days to prepare a critical path for the creation of the new low-cost airline.

• The part which came back to almost derail the project was the tax implications of transferring assets, pension funds and other liabilities. We spent a few long and tense meetings to nail these down.

I realized that while strategy projects have this image of superiority, implementation projects are a little like driving a car at high-speed around a circuit on which you have never trained. Rather than instructions being radio-relayed through your helmet, you also have to watch for clues from the pedestrians. It is tough and there is much room for mistakes and spectacular crashes.

Our days were long and tiring at first. To get the organization to start moving we needed to run a project which generated lots of momentum. You cannot generate momentum by sitting in your office running analyses, emailing requests or via phone calls. Our evenings were spent running the numbers and our days were spent meeting key operations people to provide updates and help them move along. We sometimes had to meet key people three times before they did anything. Therefore the first few months were packed with these meetings and setting up the processes for the project to move ahead as we scaled down our involvement. I can safely say that only after three months did the momentum really pick up from the clients side. We still faced some big obstacles but the organization was moving in the right direction.


This project was important for one reason. It finally showed me how important operations and implementation consulting were. Like most consultants I had been enamored with strategy consulting. While that was certainly exciting and I enjoyed the few projects I had done, I was starting to see that operators kept the cash register ringing. You could have the grandest vision of bringing together two great companies, however, to make that work; you needed to actually make the deal work. Strategy was just as important as operations and implementation. I started talking to some of the London partners about interesting operations projects they were about to start.

Like most consultants I had been enamored with strategy consulting. While that was certainly exciting and I enjoyed the few projects I had done, I was starting to see that operators kept the cash register ringing.

Building a Digital Gold Mining StartUp

With Peter, a FIRMSconsulting Case Coaching Alum, and his family, we will help them take over a decommissioned, lower-yield gold mine and bring it on stream to profitability by using a digital process to engage the workforce to increase profitability.

This will require significant implementation skills.
Mining is a tough, messy and unforgiving business.
Rolling out a digital strategy is a lot harder with an illiterate workforce.
We will deploy an unusual business model to run a mine long abandoned for its low yields.

This is the 3rd business we are co-founding to demonstrate how a strategy partners’ thinking would guide a start-up. Yet, unlike the Luxury Brands Digital Start-Up with Tati, or the Electric Car Start Up with Peter, this is an old-school industry where we will be deploying significant digital capabilities to wring out efficiencies in a highly labor intensive sector.

All programs teach valuable lessons that we do not repeat. So you should watch them all.

If you would like to receive sample episodes of our Insider content, please register on this site (its free) or opt-in to our newsletter. That’s also free. This is the only way to receive sample Insider content and find out about our promotional offers.

We will capture all our steps, insights, analyses and lessons and you can follow us along. Our goal is to teach you to think the way ex-strategy partners do, introduce you to advanced problem solving skills and teach you how to build a business, or work inside a high-tech business in a brutally competitive space.

You will see the process is disciplined in its thinking, but messier than a consulting engagement.

The Program

Deep in a thriving emerging markets economy, we are partnering with a client’s family to take over and bring on-stream a decommissioned gold mine. Like the Electric Car Startup, Building an Innovation Practice and the Digital Luxury Brands Atelier, you can follow the entire journey via detailed episodes outlining the entire process: every meeting, every challenge, every tactic, every obstacle, the finances and the implementation of our strategy.

This is one of 4 businesses we co-own and are co-developing with clients to teach you, our loyal and valued Insiders, how it can be done.

Mining is a tough business requiring critical decisions that are hard to reverse. Should the mine be mechanized or mined with a labor-intensive process? Mines are typically in under-developed parts of the world so the miner must decide what role to play in developing the local community. Should it play a role?

Implementation, for those of you following our McKinsey Implementation Program, requires teaching workers the tools to identify and roll out changes to the business. We will have to figure out a way to empower a workforce that is largely illiterate, lacking in basic services like healthcare and operating under harsh conditions.

How do we strike a balance between enabling a humane working environment and the reality of a very harsh operating theater where fatalities are a common occurrence? Do we merely obey local rules and regulations or hold ourselves to higher and costly western standards?

Do we make the common mistake of merely mining the gold and sending it to foreign countries for refining and beneficiation? The latter being the step where the most value is created in using gold within advanced products like memory chips and equipment for the space program.

Can we do all of this and still make a profit? Find out if we can.

Going Digital

Most digital strategies rely on a highly educated labor-force to understand and use digital technologies. We will be using digital capabilities in a different way. We have to find a way to help and support a labor force which has close to 90% illiteracy and create smart digital solutions to empower them, motivate them and support them as they pursue an ambitious plan to bring the mine online.

A mine that has long ago been abandoned due to his low yields and increasing fatalities.

The digital solutions will not be rolled out in nice air-conditioned offices with easy access to the IT team if a server fails or an App breaks down. The crew will be deep underground working under extremely challenging conditions at high temperatures, dust, moisture, deafening sound, and incredibly high risks. Taking out one’s phone to use an App one cannot read and understand, that fails to load or takes too long to load can lead to fatalities.

This brings a whole new dimension to a digital strategy.

It would be a good idea to watch this program to gain a sense of the implementation challenges we will face: https://www.strategytraining.com/implementing-an-operations-strategy

Disclosure: When we admit clients to this program, Firmsconsulting assumes a controlling equity stake in the business, though we are not investors.

We work with ex-partners of McKinsey, BCG et al to teach you critical thinking, strategy, operations, and implementation skills. We teach you how to apply their skills. We teach you to apply those skills within case interviews. We teach you how to apply those skills to solve complex consulting assignments. We teach you how to apply those partner skills to transform your career. These startup programs continue the theme of teaching you to apply the analytic and problem-solving skills of partners to set up and build businesses, be it a startup or building an existing business within a large company. We are always teaching you to apply those skills.

Recorded Episodes

Part 1, The Opportunity

1 GMS P1 What is the Gold Miner Start-Up?

2 GMS P1 Introducing Peter and his fears.

3 GMS P1 How does this link to the MasterPlan Program

4 GMS P1 Mapping out the overall strategy

5 GMS P1 How do you implement through illiterate workers?

6 GMS P1 Why this program is just as relevant to those only interested in the strategy skills of partners or don’t care about mining

7 GMS P1 Peter’s greatest challenge is not what you think it is

8 GMS P1 All the governance problems

9 GMS P1 Why we are against mechanization

10 GMS P1 Issues in emerging markets

11 GMS P1 Can we build a business model to mitigate the risks?

12 GMS P1 The right attitude to do this kind of work

13 GMS P1 Michael, aren’t you too old for this work?

14 GMS P1 Gold mining is a cruel joke on humanity

15 GMS P1 A digital strategy when 90% of the workers are illiterate

16 GMS P1 Why is this a startup and not a normal gold miner?

17 GMS P1 New dimension of value- collective responsibility is not about being nice

18 GMS P1 I was a resources partner, not a resources expert

19 GMS P1 The unique advantages that YOU have, that YOU routinely ignore

Part 2, Developing the Strategy

20 2.1 GMS P2 How we developed the strategy- follow us

21 2.2 GMS P2 Step 1- Be crystal clear about what you want

22 2.3 GMS P2 Step 2 – Eliminate the next best option

23 2.4 GMS P2 Go ahead. Make a decision on the strategy

24 2.5 GMS P2 Compare your problem statement with the new problem statement

25 2.6 GMS P2 Big change difference in our strategy. Learning from a famous tech start-up

26 2.7 GMS P2 A new way to run a mine

27 2.8 GMS P2 Can this work? Always make sure it can work

28 2.9 GMS P2 Why not build a decision tree and use the usual language?

29 2.10 GMS P2 What is our asset? How would you value us?

30 2.11 GMS P2 Charitable actions are the easy way out for a company

Part 3, The Challenges We Will Face

31 3.1 GMS P3 Managing the family dynamics

32 3.2 GMS P3 Aligning goals and expectations with all stakeholders

33 3.3 GMS P3 Working through Peter

34 3.4 GMS P3 Changing the families view of the business

35 3.5 GMS P3 How to properly negotiate

Business Consulting Services: What is your point of differentiation?

Hi everyone, and welcome to the next episode of our management consulting iTunes channel where we discuss the business of running and growing a consulting firm. The title of this episode is, “Business Consulting Services: What is your point of differentiation?”

So, for those of you listening to this podcast channel, remember we have two other podcast channels. We have the Strategy Skills podcast channel, which dives into, usually, one particular study and explains the mechanics of how we develop the thinking. So that’s heavy on the analysis side of things. And we have the Case Interviews & Management Consulting podcast channel, which is about case interviews, where we help people develop the skills to secure employment at firms like McKinsey, BCG, Bain, and so on.

But that is very useful channel because we teach foundational skills like brainstorming, business judgment, hypothesis generation, and so on, which will be useful to anyone, whether you’re launching a boutique consulting firm or you are trying to do analyses. This channel is about the business of running and growing a consulting firm.

Your point of differentiation is the reason you think clients will hire you. This is the difference you continuously emphasize to clients as you market your business consulting services

Today I want to talk about your point of differentiation. So, for example, I’ve talked about what should be your strategy (How Should You Develop Your Strategy). Your strategy should be trying to figure out the process of how you’re going to get sales. The point of differentiation for your business consulting services is that reason you think clients will hire you.

Clients will agree to pay for your business consulting services because you are different from someone. If you are the same as someone else, they would just hire the other person, if they were cheaper. For example, if a client perceives you to be exactly the same as three other types of consultants, it will come down to things like pricing, ease of working with you, and so on.

If you Business Consulting Services have a point of differentiation, you need to emphasize it to clients

But if you have a point of differentiation, you need to emphasize that with clients. So, your point of differentiation is the difference that you continuously emphasize to clients, and (hopefully, I would say) organize yourself around. Because if you have a point of differentiation, but you don’t organize yourself around that to protect that point of differentiation, over time, your point of differentiation will erode your point of differentiation (perhaps without you even knowing) until you become a different type of firm, whereby you are differentiated in a different way.

When firms do not protect their point of differentiation

So, I have seen this with many, many organizations, whereby they have a point of differentiation but they don’t protect it. So that over time they lose it. An example of this is Tiffany & Co, American luxury jewelry and specialty retailer. They have a very strong reputation based on many movies done about them, the powerful branding, and so on. But if you’ve visited some of their flagship stores today, it’s a bit of a surreal experience. It’s not what many would expect!

I visited one of their flagship stores and it was run down, grimy. It was not a magical experience. And they’d built that image, that was their point of differentiation for a very long time. And they lost it because they didn’t protect it.

You see this with consulting firms as well. They are known for one thing, but in the quest for growth, they try to be known for many things. And at the end of the day, why are you hiring them? Well, that is not very clear but they are growing and that is what matters to the them. But what happens when things are not so good, when a recession comes through and so on?

Your point of differentiation is the thing you choose to keep during bad times

Here’s the rule. Your point of differentiation is the thing you choose to keep during bad times. So, no matter what firms say as they grow in times are good when things go bad and they’re forced to sell divisions, the part they keep is the part that they think differentiates them (and during recessions, companies always sell off). But consulting firms are notorious for that. They’ll sell off the entire consulting practice in a recession. They do it all the time. I mean, it’s like musical chairs going on there.

Different ways to differentiate your business consulting services

There are different ways to differentiate yourself. I want to talk about some of the major ways here and what I think you should be doing.

Business Consulting Services point of differentiation #1: Generate Deep Insights

The first is “we generate deep insights.” This is the one everyone goes with. When I say ‘everyone,’ I mean it in inverted commas. Obviously, not everyone, but the majority. If you go to the websites of most boutique firms — or most firms — they always talk about deep insights because they want to be like McKinsey and BCG.

They don’t say it; I’ve spoken to many people, whereby they’ll tell you they’re not like McKinsey and BCG… but they’re doing everything in their power to be like McKinsey and BCG. The word insights is so sexy, so magical… it’s like decadent chocolate mixed with a nice bottle of Barolo red wine (well, don’t mix them and drink them, but you know — eat the chocolate and drink the wine at the same time).

The point is that the assumption, invariably, is made that insights are valuable, clients will pay for insights, so if we brand ourselves as a firm that generates insights, we’re going to be different from everyone else. Although, if everyone is branding themselves as being a firm that generates insights, I don’t know how you’re actually different! But that’s for a different discussion, So that’s one way firms differentiate themselves. They call themselves organizations that generate insights.

Business Consulting Services point of differentiation #2: Trusting through Pedigree

Another way organizations (consulting firms) differentiate themselves is that they brand themselves on pedigree. You see this from alumni of all consulting firms, whether it’s Deloitte, Accenture, Ernst & Young, McKinsey, BCG, whatever big firm it is. If you were an alum of that firm, that is the way you have a pedigree in the market. You may make a big deal about the fact that you were an ex-McKinsey person, or an ex-Deloitte person, and so on. You also see graduates of elite schools do this. If you went to Harvard, Stanford, INSEAD, HEC, Richard Ivey in Canada. Every country has their own super-elite school. You’ll use that as a major point of differentiation.

Alumni of powerful brands within a sector do the same thing. For example, let’s assume that BP is the number-one refiner of oil in the world, and you have 15 years as senior executive vice president, running the refinery division. That’s going to be your calling card. That’s going to be your pedigree!

So, pedigree is not only the firm you worked at (if it’s a consulting firm), it can be the school you went to, it can be the (non-consulting) company you worked at. It could even be where you were born. In fact, I’ve seen in Switzerland, Germany, and the UK, even the high school you went to is a form of pedigree. High school! Can you imagine that high school can be a form of pedigree? I mean, there you are, a 65-year-old consultant and you start up a meeting by saying “Hey, jolly good old chap, remember the time we beat Oxford at…” (I don’t know what they’d beat Oxford at, but you get the point, right?) So, Oxford University and these guys were in high school together. They played the university. But I have actually seen consultants do that. I’ve seen partners do that!

business consulting services boutique consulting firm

Business Consulting Services point of differentiation #3: Bankable Value

There’s nothing wrong with any of these things. They are all wonderful ways to build points of differentiation. But, if you lack deep insights, and you lack pedigree, then I would go at bankable value.

It’s simply a better way of saying implementation but I like “bankable value.” It’s very uncommon, but when you talk about implementation, it doesn’t mean that you generated the results you promised as a result of implementation. It just means you implemented it. True implementation is, whereby if you said you’re going to generate 20 million dollars of savings at the end of the implementation, the client had 20 million dollars extra in their bank account.

If you get results, clients will not care about your pedigree and your insights. This is a very important thing to remember!

When clients hire you because you have a reputation for insights, the assumption is that, if they hire you, insights will lead to bankable value. But it may not. If clients hire you because of your pedigree, the thinking is that if they hire you because of your pedigree it will lead to bankable results.

Finally, if clients hire you for your implementation skills, the thinking is that the implementation will lead to bankable results. But if clients hire you due to your reputation for bankable results, there is no implication. You get bankable results.

You have to pick the point of differentiation that will work. Don’t pick the one that sounds glamorous! That’s what I always tell people. They always want to talk about insights and new ways of thinking, and being innovative… I say, if you can do what you promised for a client, they’ll hire you.

Think carefully whom you would hire below based on the principle way they differentiate their business consulting services

So let’s think about how this plays out.

If you generate deep insights, what you’re telling a client is “we produce deep insights, which allow us to find new ways to create value and beat the competitors.” But there are no guarantees here, implicit or explicit. If it’s because of your pedigree you are basically saying something along the lines of “with 20 years of combined experience at General Motors Plant Operations, we understand manufacturing and can help you rethink your positioning.” No promise, but it’s kind of implied when they say that, because they’ve done it at GM for 20 years, “if you hire us” (they can’t say it, but…)” you can expect the same results.”

But here’s the word about bankable value: “We have created two million dollars of average verified benefits for five clients, and the value we create is typically ten times the fee. So, we don’t take projects on unless those bankable savings (or the bankable benefitsm it may not be savings, it could be cost-avoided) is at least ten times our fees.”

Most consultants don’t want to do this, because it means you have to pay careful attention to what you are doing to make sure you generate the savings. And unfortunately, I hate to say this, but most consultants just want to get the sale and do as little as possible to deliver it (as long as they get paid).

But think if you are hiring someone, who would you hire of these three? The one who promises deep insights to beat competitors and create value but can’t stand behind it, the one who has deep experience — 20 years! —  but can’t stand by what value they create for you. Or the one who is only going to take this work, whereby if they think they can generate at least 10 times their fee, and this is the way they’ve always operated?

Bankable value always wins, all other things being equal. Now, all other things are not equal. If two guys went to Oxford together, or if the executive vice president of some company that you were trying to enter went to Stanford and only hired Stanford people, you’re going to lose (if you don’t have a Stanford degree).

Or, maybe your firm is new and they’re not really sure if you can do this. There might be people reading this who will want to put it into their point of differentiation but they but don’t really believe it. So they say it, but they do everything, body language and so on, to indicate that they don’t really believe it. If you are one of those people, people are not going to hire you.

Your positioning strategy should be that people who work with you get results. And if that’s your positioning strategy,  if people know that when you are brought in there’s always results they will always hire you.

Would you rather hire someone who implies they could create banked benefits or who only works on that condition?

“We generate deep insights” … again, this implies banked benefits but does not guarantee it. “Insights” sounds amazing, but here’s the thing: you can produce insights without any banked benefits. I’ve seen this in many situations, where an insight is produced — wonderful — but there’s no benefit to the client.

Pedigree also implies benefits, but does not guarantee it. The firm is implying that their experience will lead to great results, but they don’t talk about it. We create bankable results that can be measured. There are no implications. This is the goal. This is more powerful.

Examples of how this can be done across variety of projects

Now, if you want to see examples of how this can be done across variety of projects, you should go to firmsconsulting.com/promo. For a limited time only, if you opt in (it is free), we will give you exclusive previews of some of our content that is only available to FIRMSconsulting Insiders (members of our loyalty program).

So, you’ll get a series of emails once you opt in, over several weeks, giving you access to some of our most advanced content, to show you some of the work that can be done — some of the work that you could be doing — and introduce you to new, advanced concepts and thinking.

You must be explicit and get to the point of your value

The point is, you must be explicit and get to the point of your value. If you lack pedigree, stick with results. If you feel lack insights, stick with results. Generally speaking, stick with results!

Even if you have the right pedigree and skills you will find it really hard to set up a consulting firm if you pick the wrong path

And this not a hypothetical thing. Even if you got the right pedigree. We at Firmsconsulting work with consultants all over the world. What I point out to people is that, even if you have the right pedigree and skills, you’ll find it really hard to set up a consulting firm if you pick the wrong path.

An example of a non skill-market fit

So, let’s assume we have an ex-McKinsey engagement manager who launches a strategy boutique consulting firm in Boston. But here is a problem with the Boston market, it is saturated with ex-consultants. There are so many of them all over the place.

So the supply meets, and often exceeds, demand for strategy skills at the engagement manager level. So, if you’ve got a lot of McKinsey people launching boutique firms in the market, how are you different from them? If your point of differentiation is that you’ve worked at McKinsey, and can generate insights (you can substitute any firm, you worked at Deloitte and you have this kind of insight), you will first have to compete on price… or change your position.

Now if you stay in Boston, over time you’re going to notice that you’re going to have to drift towards a positioning that is easy to explain. This is because if you go out and meet clients and you just say, “Look, I worked at McKinsey (or Deloitte, or Accenture) for five years” which would make you a very slow progressing in EM, but that’s beside the point. But if I worked at McKinsey or Deloitte and I have these skills, why would people hire you? It’s going to become difficult, because there’s an excess of supply in the market.

So you’ll have to figure out very quickly that you need to make your work easy to explain. Now, what happens is that you start moving towards bite-size packages of work. A client understands a market-sizing piece of work, a client understands a market-entry analysis, a client understands a financial model. So, rather than saying, “I worked at McKinsey. I understand how to find issues and identify them” because the client doesn’t understand how to create a scope of work around that, but can understand a financial model — you start bidding for financial model work.

Now because you have McKinsey or Deloitte or whatever in your name, you can charge slightly more than the average person building a financial model. But the opportunity cost is still significant, because you could have been earning a lot more if you could position yourself as a generalist. But you can’t do that, because there are so many generalists in the market. Even if you did, there’s no reason why people would hire you because your point of differentiation is not that different.

Now what’s going to happen here is that, when you start bidding for financial modeling and so on, while you are differentiating yourself from other McKinsey people (and other Deloitte people, and other Accenture people) in the market, you are entering another market, whereby there’s a lot of people bidding for financial modeling work (and market entry analysis, and market sizing work).

You’ve actually entered a much toughermarket, and the only reason you’re winning in that market is because you have a strong name on your resume. You may be earning a premium relative to other people who are building financial models, but who don’t have your pedigree, name, and experience, yet you’re not earning that much.

So the fees are smaller, you have to do more work, and fatigue is going up. And after a while, even if you have McKinsey (or Deloitte, Accenture, Goldman Sachs, or wherever you worked) on your resume, if you keep doing financial modeling work for five years, you’re going to become a financial modeling consultant, and that will become your pedigree.

Lower level consulting work

Now, if you’re building financial models where the margins are generally lower, and you’re going out there and trying to meet clients to sell them the work clients generally don’t want to meet you to do financial modeling work. No executive wants to meet anyone to award financial modeling project.

They’ll ask some of their junior people to award it. So, what’s going to happen is that you take time, you prep for meetings, you spend money to go out and meet an executive (it costs a lot!). But even if he awards you a financial modeling project, which he most likely will not, the amount of revenue you’re getting is so small that you ask yourself, why do all this work for a financial modeling project that isn’t earning that much?

Even if you earn a lot of money for the first financial modeling project, you will very quickly notice that the client organization is going to say, “You know what? We paid this McKinsey guy a hundred thousand dollars to build this model, and Bertie O’Malley from XYZ Financial Services, who has started his own consulting firm, can do it for twenty thousand dollars, and the models look exactly the same! So, why did we give it to this McKinsey (or Deloitte, or Accenture, or whatever the firm you worked at is) guy?” So, very quickly, even if you succeed the first time, your second time becomes harder, and harder, and harder.

Drifting towards commoditized work

What’s eventually going to happen is that you’ll realize that the effort to sell is going to become so difficult that you’ll need to reduce your cost of selling… which is why these online platforms have been created whereby the derogatory term ‘McKinsey Mom’ has been created, whereby a woman who worked at McKinsey, who went on a maternity leave, wanting to take care of the kids, can build financial models and do market analysis on these platforms, whereby people can go in, put up a project, and people bid for work. But the point is, I don’t think some McKinsey Mom is pleased for a $10,000 market entry analysis! But that is what is going to happen to you. You going to drift towards commoditized work.

You’re only valuable relative to the scarcity of a skill you have

So, the lesson here, you’re only valuable relative to the scarcity of a valuable skill you have. A skill is not valuable if it’s not scarce. Economics 101. I’m not teaching anything new!

If you’re in a market where everyone is pitching themselves as insightful strategists, it is hard to stand out. It takes work. If you have phenomenal skills, but there’s no scarcity of that skill, it is not valuable. That’s economics 101.

So it doesn’t matter what your pedigree is. It’s about the relative pedigree of the market, right?

Doing the same work but positioning yourself in a different way

Now, you have a couple of options. You can be doing the same work, but position it in a different way. Now, if you want to know how to do that you’ve got to listen to The Bill Matassoni Show, where he talks about how he repositioned McKinsey away from being a “strategy firm,” or you can read Bill Matassoni’s memoir, which is on Amazon).

Or, you can stay in the same space but take on increasingly commoditized work just to earn a living… which you don’t want to do, right? And this happens to many consultants who start their own consulting firms. I know many partners who started consulting firms. I think all of them shut it down, because the market very quickly values you (mark-to-market size, as they call it).

Skill, positioning, and market

The combination of skill, positioning, and market that you pick is more important than any of the three alone.

Here’s the thing. When most of us start, we just look at the skill gap. We don’t care about the positioning and the market. The positioning is how you explain the skill in the market. Do you position yourself as being the same as everyone else, or different? The market is where you want to operate. Are there enough buyers? Positioning is how you distinguish yourself from other sellers. It’s that combination.

A weak skill, well-positioned in a strong market is going to work. A powerful skill, poorly positioned in a strong market may work. A powerful skill, poorly positioned in an average market, will not work. But too many of us are just worried about the skill.

Self-Assessment: Compare your own performance/planning to where you should be

So, what you need to ask yourself is. Well, don’t ask yourself, state it out. “My point of differentiation is…” And remember, your point of differentiation is not your skill. It’s the way you going to position your skill in the market. The way McKinsey does not position itself as a strategy firm but as a leadership firm. We see this with multiple companies. They position themselves in different ways.

Your client pays attention to your point of differentiation

Your point of differentiation is important to your client. Don’t just pick a point of differentiation that is not important to your client.

How will you lower resistance from the client?

When I worked as an Associate at a major firm, the partner would send me to work for free for a senior executive over Christmas time. “Here’s a guy. A smart guy, hopefully. You’ll find out, anyway, in a week. What do you need him to do for a week?” I’d work there for a week, and come up with some business case, and some idea for the firm to do work. That’s what I used to do. I would avoid doing long presentations. Resist desire to do long presentations to prove your point.

As always, for any comments, remember that we would be happy to read them. Please post them on youtube under related video (above).

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Recommended books:

Business Consulting ServicesWhen people think about the business strategy we often think about the field of strategy consulting/management consulting and firms like McKinsey, BCG, et al. If you are interested in learning how to conduct a management consulting engagement, you will likely enjoy this book. Succeeding as a Management Consultant is a book set in the Brazilian interior. This book follows an engagement team as they assist Goldy, a large Brazilian gold miner, in diagnosing and fixing deep and persistent organizational issues. This book follows an engagement team over an 8-week assignment and explains how they successfully navigate a challenging client environment, develop hypotheses, build the analyses, and provide the final recommendations. It is written so the reader may understand, follow, and replicate the process. It is the only book laying out a consulting assignment step-by-step. A great book to read if you are offering business consulting services.

Business Consulting Services Marketing saves the worldMarketing Saves the World, Bill Matassoni’s Memoir 

Bill Matassoni’s (Ex-McKinsey and Ex-BCG Senior Partner) Marketing Saves The World is a truly unique book. Never before has a McKinsey partner published his memoir publicly. This book is a rare opportunity – a true exclusive – to see what shapes the thought process of a partner and learn about marketing and strategy. The memoir essentially lays out McKinsey’s competitive advantage and explains how it can be neutralized. This is a great book if you want to learn more about how to market business consulting services successfully (example of how McKinsey got ahead over BCG).

Business Consulting Services Turquoise eyesTurquoise Eyes: A Novel about Problem Solving & Critical Thinking

Turquoise Eyes started off the groundbreaking new genre developed by FIRMSconsulting that combines compelling narrative while teaching problem solving and critical thinking skills. Set after a bank begins implementing a new retail banking strategy, we follow Teresa García Ramírez de Arroyo, a director-general in the Mexican government, who has received some disturbing news. A whistleblower has emailed Teresa with troubling news about a mistake in the loan default calculations and reserve ratios. The numbers do not add up. The book loosely uses the logic and financial analyses in A Typical McKinsey Engagement, >270 videos. 

WHAT IS NEXT? We hope you enjoyed the above article Business Consulting Services: What is your point of differentiation? If you would like to get more training resources sign up for our email updates on FIRMSconsulting.com/promo. This way you will not miss exclusive free training episodes and updates which we only share with the Firmsconsulting community. And if you have any questions about our membership training programs (StrategyTV.com/Apps & StrategyTraining.com/Apps) do not hesitate to reach out to us at support @ firmsconsulting.com. You can also get access to selected episodes when you sign-up for our newsletter above. Continue developing your strategy skills.

Cheers, Kris

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How to Sell Consulting Services: Secrets to Selling High Priced Consulting Services

Hi everyone and welcome to another podcast about How to Build and Grow a Consulting Firm or Practice. In today’s episode, I would like to talk about new clients and address how to sell consulting services.

I want to mention that this entire series is based on our experiences while helping numerous boutique consulting firms and offices of large firms as well as on our personal experiences. For FC Insiders, our loyalty members, we are launching an Insider version of this program, which is slightly difficult and a little bit different.

While we will cover the same concepts, in the Insider version if the program we will discuss a case study of a fairly large firm with revenue of about two million dollars and how we help the firm to significantly increase that revenue, change their client mix, and so on. We will show you how to use each of the tools and techniques and how we took the client through each step.

You can also go to our YouTube channel and watch the YouTube version with graphics (also inserted below).

How to sell consulting services: tip 1

So, let us just talk about clients. We know sales are important. You cannot do much without revenue a.k.a. sales coming in even if you have the best plans and noblest intentions. You may want to change the world, maybe do things that are important to the well-being of your country. But unless you have revenue coming in, all of that is just an aspiration that will never see the light of day.

how to sell consulting services

So, one of the first things I always tell clients who run a firm whereby it is just one of them or a group of people or even an office of a large firm, is that you need to find clients and do it in a way that closes the sale fast. You also need to avoid what I call the layman’s view of the way McKinsey, BCG, and so on, does sales because the way they do sales is very different. But I am not here to talk you through how they close sales because a lot of the things McKinsey or BCG do, are not possible to do as a boutique consulting firm.

I am going to talk you through the things we have done with the client in the Insider program and similar clients that are suitable for smaller organizations or consulting organizations that are different from the larger firms.

If you stick to the basics, finding clients is not difficult, but you must follow the plan of not acting like a large firm.

how to sell consulting services management consulting

I will tell you a little bit of an anecdote here. Many years ago, when I was a Partner, I was sent to Latin America to help stabilize one of the offices. I was working with quite a few of my colleagues. As a resource partner, I had skills that the potential clients of this office would want. I remember arriving there after a long flight of about 17 hours. Having lost my clothing, I went to office the next day wearing the same clothing from my flight, not feeling so good. I met everyone and the Partners talked me through an analysis that they had been working on for a fairly long time, led by some engagement managers and associates, on clients they should target and sectors they could target to rebuild the practice.

My feedback to them was, we already have a strategy and it is called Amex card. What I meant by that was that I was not interested in sectors or industries we should target or clients we should target or clients we need to get into. Instead, we need to focus on clients we know and take them out for drinks and dinner.

A common mistake I see most consulting firms making is that people trying to build a consulting firm focus too much on clients that they think they should be serving, while ignoring potential clients they have access to. In that situation there is never a market analysis. I have never seen a market analysis done with Partners. What we do is, we work on the relationships we have and start from there.

So, if you are thinking, “Whom I should target, which sectors, which industries,” then you are asking the wrong question. The correct question is “Who are the clients I know and who are the clients I can get a meeting with?”

Those are the clients you target even if they are in a sector that you do not want to serve. In fact, there is no such thing as a sector you do not want to serve. Every sector matters. Every sector in the world is going to have some segment of clients who will be attractive to you because if you worry about clients, the first part is to go for clients you can access. Go for clients you know and meet them.

There is another story about when I was serving my first major client. If you follow “Rebuilding a Consulting Practice” and “Partnership. A memoir”, I talk about this client a lot. It is the client that made me, and I ran the most important engagement at that client.

They had a very simple office and they believed in a low overhead structure, and a small head office. The head office of the resource’s client was in this luxurious high-end building complex with fancy Italian and French restaurants on the lower level. I would go and have a meeting with, usually the chief financial officer or the chief operating officer, or sometimes the CEO was involved. I was just starting out and was still only an Engagement Manager at this stage.

So, I did not have the access that I had later in my career. But I would meet these clients for a 30-minute to a one-hour meeting and then I would go to the Asian restaurant on the ground floor so that every time people from the client were leaving, they would have to pass the restaurant and they would see us. I would be sitting there with another Engagement Manager who was running studies for me and we would be having a four-hour lunch and drinks.

People from the office would see me but it did not matter because every time an employee of the resource’s client that I wanted to meet would leave, I would invite them along saying, “Hey, you know it is a Friday evening. Why don’t you join us for drinks?” That is basically how I did sales. There was some thinking involved but there was no PowerPoint presentation with an analysis of the issues. That is because as someone who was serving that client, I knew the issues.

It was not as if I was serving a client that I knew nothing about and had to do research to know the issues. I was working with them on an operation strategy for a few months. I was exposed to their financial strategy issues among other things. So, when I saw an employee I wanted to meet, I would just pull them or say, “Would you like to have a drink with us? It’s Friday evening.” Some would say, “Well, I gotta go home, I promised my kids.” I would say “Just one drink.” We would have one drink and, of course, it would turn into 10 drinks. By the end of that I could not walk so I would have to sit there for another three hours, have coffee, and get to the point where I could get myself home safely.

So, how to sell consulting services? The most important thing is to meet clients you can serve.

How to sell consulting services: tip 2

Another strategy of offering to demonstrate our skills for four days a.k.a. free is something we did as well.

If you follow “Rebuilding a consulting practice”, I moved to a badly performing emerging markets office. I had a chance to go to London. I also had a chance to go to Boston. But I turned them all down and went to a terrible office.

And I remember that the Associate Principal who groomed me to become a Partner, would call up people he knew in the executive offices of resources clients. Clients that we wanted to serve. They were not yet our clients but the clients of the firm. But this particular branch of that client was not being served by us.

So, we use to call them up and sometimes the head office as well because there were a lot of resources companies in the area. We would say “We know it is Christmas time. Why don’t we send one of our top people to work with you and think through issues? And see what happens.”

It was free but he would never say that. He would call it a secondment or whatever he wanted because we were trying to work with clients and see what could happen. And I would be deployed and later on when I became more senior and become a Partner, I would do the same with my top people.

The point is it is five days of continuous access to clients. You are doing work for free. But what is the alternative? Sit in an office and send them emails or proposals? No. At the end of this, I have never been in a situation where it did not lead to some work. Maybe the work came immediately. Sometimes it came three months later. At times it led to a significant improvement in the relationship. But it always led to us doing work.

In those four or five weeks, we would do one of two things. We would sketch out an issue that required us to do an analysis or we would identify an issue and say “You know what, we think we know what we need to do to fix this. But why don’t we do a short two-week pilot with just two people.” Obviously, it was paid. And then that would lead to billable work, which then would lead to implementation.

How to sell consulting services: tip 3

So, whenever I look at firms and they talk about how they are going to do the studies and the analysis – that is for the clients they do not know. Now, for clients you do not know, the easiest thing in the world is to do a survey of supply chain issues in their sector. Do a study. Firms invest in intellectual property. Do some kind study for this of the sector.

Do an analysis, a summary or develop a new approach. Do some benchmarks and then use it as an opportunity to meet an executive to talk about what you find in the sector. That is how you meet clients that you do not know.

All of this can be done cheaply and quickly. Here is the interesting thing. In the FC Insider version of the program, we are going to talk about that one client we work with, which is representative of other clients as well. But the interesting thing for them is that this area of work eventually generated over 50 percent of their revenues when we were done with them because we wanted them to diversify away from revenue that was purely generated from billable hours. It was difficult because quite a few of them were ex-McKinsey and so on. They had this view that consulting is pure. It must only be billable hours.

So, focus on clients you know. That is the most important thing.

If you are watching this video on YouTube or listening to us on iTunes and would like to see some of the more advanced things we do, go to firmsconsulting.com/promo and opt-in for free. You will receive complimentary episodes of some of the advanced material which we make available only to FIRMSconsulting Insiders.

how to sell consulting services consulting sales

Self-Assessment: Compare your own performance/planning to where you should be

What changes should you make to shift your priorities?

As you go through this program, remember, it is all about going after the clients you have access to. Even if you have served them from a long time. What I always tell firms is to ‘serve larger clients’ because even if you finish one engagement with them, there is always a chance that something else will come up. If you serve a smaller client, the odds are they are going to be doing less consulting work and there is less for you to move on to.

So how are you approaching your current clients? How many meetings have you arranged? How will you lower resistance? What are you going to do to get them to speak to you?

And then the other category, which is for further down the line, but you need to start pursuing now, is how do you get to clients you do not have access to but you want to know.

how to sell consuting services consulting sales management

How to sell consutling services: summary

The insights shared above on how to sell consulting services apply to new, young, small consulting offices, but it also applies to large offices. These are techniques I used when I was at the firm and I had to go after big multi-billion-dollar clients. When we had to turnaround offices with 70 people, 120 people. Let’s tie together some of the things we have already seen and learned about how to sell consulting services.

Go out there. Meet clients

The first thing is that you should not spend your days and weeks developing a strategy for “how you are going to serve a client” and “how you are going to grow the firm” and “how to sell consulting services” because you just do not know enough about the market and you cannot afford to burn so many hours on something that is really an expense.

Go out there. Meet clients. As you talk to them, you will find out what their issues are. Having two associates at an office reading annual reports to find out the company’s issues is really a hit and miss. If you sit with a client for an hour, you are going to find out more than anything anyone could ever do in the office to prepare you for that meeting.

Do not waste time on complex sales presentations

Do not get bogged down with complex sales presentations. This is something that people tend to forget at major firms. We generally do not really have to put together complex presentations. Because of our reputation we usually get to put together very simple presentations and get the work. But because you usually do not have a reputation as a younger, smaller office and smaller consulting firm, you should position yourself as someone who can get bankable results.

Do not talk about implementation

Do not talk about implementation. It is such a cliché. Implementation is not the same as bankable results. You can implement something and not get the results you promised. Bankable result says, “You hire us, you will get this.” But if you talk about implementation, it does not mean that you can get bankable results. A lot of implementation fails.

Approach the clients you know

Focus on the clients you know. Even if they do not agree to free work, go to them four days, five days in a row and talk to them. Help them identify issues.

I have been in situations where I remember the CEO of a very important client wanted to work with us. She did not really like the firm so much, but she liked me. She would call me, and I would go every day. I went to see her for something like a week. I obviously did not bill her for anything. I would sit in her office. She had a nice lounge. And I would do work for her, help her think through issues. When meetings came up she would go for the meeting and when she would come back, we would talk about things.

That led to an incredibly important mandate for the firm to work for a very prestigious client that we really wanted to work for. That is the same thing as working for free. But you can be creative in the way you do it.

Meetings for five days in a row where you are thinking through issues and providing updates is free work. But we do not talk about it. We do not call it free work.

If you want to meet new clients and you have a great reputation it is going to be easy. But if you do not have a great reputation, then do some kind of free work, e.g. analyzing the sector and present the results.

Create sustainable revenue streams

Finally, the goal is always to create sustainable revenue streams and not follow traditional consulting models. I may talk about this more but in the insider version, we definitely talk more about breaking the revenue streams. Because it is just tiring and demoralizing to go through these periods where you do not have revenue coming in for billable work.

Ask yourself, “How am I spending my day?”

You need to ask yourself, how are you spending your day because it should be in front of clients.

If you have any questions or comments on how to sell consulting services, post a response on iTunes or YouTube. As always, we look forward to sharing with you the next episode/article.

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Recommended books:

When people think about the business strategy we often think about the field of strategy consulting/management consulting and firms like McKinsey, BCG, et al. If you are interested in learning how to conduct a management consulting engagement, you will likely enjoy this book. Succeeding as a Management Consultant is a book set in the Brazilian interior. This book follows an engagement team as they assist Goldy, a large Brazilian gold miner, in diagnosing and fixing deep and persistent organizational issues. This book follows an engagement team over an 8-week assignment and explains how they successfully navigate a challenging client environment, develop hypotheses, build the analyses, and provide the final recommendations. It is written so the reader may understand, follow, and replicate the process. It is the only book laying out a consulting assignment step-by-step.

strategy consulting firm Marketing saves the worldMarketing Saves the World, Bill Matassoni’s Memoir 

Bill Matassoni’s (Ex-McKinsey and Ex-BCG Senior Partner) Marketing Saves The World is a truly unique book. Never before has a McKinsey partner published his memoir publicly. This book is a rare opportunity – a true exclusive – to see what shapes the thought process of a partner and learn about marketing and strategy. The memoir essentially lays out McKinsey’s competitive advantage and explains how it can be neutralized. This is a great book if you want to learn more about some of the best consulting firms mentioned above, including for gaining a better understanding of the consulting sales process (insider stories on how McKinsey and BCG operate).

strategy consulting firm Turquoise eyesTurquoise Eyes: A Novel about Problem Solving & Critical Thinking

Turquoise Eyes started off the groundbreaking new genre developed by FIRMSconsulting that combines compelling narrative while teaching problem solving and critical thinking skills. Set after a bank begins implementing a new retail banking strategy, we follow Teresa García Ramírez de Arroyo, a director-general in the Mexican government, who has received some disturbing news. A whistleblower has emailed Teresa with troubling news about a mistake in the loan default calculations and reserve ratios. The numbers do not add up. The book loosely uses the logic and financial analyses in A Typical McKinsey Engagement, >270 videos.

WHAT IS NEXT? We hope you enjoyed the above article How to Sell Consulting Services: Secrets to Selling High Priced Consulting Services? If you would like to get more training resources sign up for our email updates on FIRMSconsulting.com/promo. This way you will not miss exclusive free training episodes and updates which we only share with the Firmsconsulting community. And if you have any questions about our membership training programs (StrategyTV.com/Apps & StrategyTraining.com/Apps) do not hesitate to reach out to us at support @ firmsconsulting.com. You can also get access to selected episodes when you sign-up for our newsletter above. Continue developing your strategy skills.

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Consulting Practice I Inherited

“Trust but verify.” Pres. Ronald Reagan

This series examines the ways in which best practices from BCG and McKinsey can be applied in other work environments, such as in a smaller boutique consulting firm or even a corporate role. This article is a part 2 in this series, part 1 is available here

Some of the details have been modified for confidentiality reasons.

What was I inheriting?

I had inherited a very disorganized consulting practice. It was very hard to create a boundary around management consulting to analyze the business. I was going to apply all my skills as a consulting partner to analyze this consulting business.

My rule was to write out what I found in the first 2 to 4 weeks. After 4 weeks, weird practices would begin to appear less weird to me. I would, therefore, routinely refer to the write-up to ensure my priorities did not change. This was a crucial action.

There was no administrative support team for the consulting practice: no finance manager, no personnel manager, no training manager and no other critical functions. Just understanding the business took me over 2 months since I had to politely convince support staff from the parent company to spend 4 hours a week helping me pull together the numbers we needed.

I spent a lot of time hanging around cubicles, buying little presents for employees and taking out many people to lunch to gain their trust. Do you have any idea how many cupcakes I needed to buy? And that was just for the executive assistants and junior staff.

Boy, did I eat a lot of pasta in those first few weeks and months. It was heavy penne with peas and Italian sausage. Certainly delicious and the only thing I could eat while speaking. I decided buying cupcakes for the senior executives and board members would not work, hence the pasta.

Not a single person could give me a definitive number of people in the consulting practice. It ranged from 150 to 350 depending on whom you asked.

Salaries where completely out of whack with some senior consultants paid as much as some directors due to their specialist skills. The company hired some of my own people from the firm and paid them not for the role they had been hired, but due to the previous title and brand they had on their resumes.

So you had these really expensive ex-McKinsey and ex-BCG consultants doing basic due diligence work, coming in at 8:30am, taking a 60 minutes break, going to yoga or gym and finally leaving at 5 to 5.30 pm. The ex-PWC consultants where slightly better – but not by much.

In effect the boutique was simply renting their brand-name resumes without actually using the asset effectively.

There was no link between value of the output they provided and their input salary costs.

For example, one consultant recently had a child and his wife decided to return to McKinsey. He was also ex-McKinsey. He had been a mere associate at McKinsey with just 1.5 years experience but he was being paid $140K along with a guaranteed bonus and share options.

Moreover, he had somehow figured out it was okay to come in at 9.30am and leave around 3pm. How in the world can you work as a team from home on consulting studies!

That had to change. Either the salary would need to go down or his output and quality would need to dramatically improve.

And on my second day one of the directors had the audacity to intimate we need to raise salaries to compete with BCG!

What about raising the quality of the work? Lets have that discussion first!

There were people on the consulting payroll who where not consultants and had never been on a consulting study. The teams within the consulting practice where split between 8 offices and rarely, if ever, communicated.

Strategy Consultants

Only the self-described elite offices in New York and Moscow worked closely together. This group called themselves the strategy consultants and considered themselves an independent part of the consulting practice. They ignored everyone else.

They were extremely arrogant, negative, condescending and loved making all the other consultants feel small.

Everyone in New York and Moscow talked of being in the league of McKinsey and BCG. Yet McKinsey and BCG, for sure, had never heard of them. I had never heard of them and I specialized in their sector.

I am certain none of my previous clients had ever heard of them either.

The majority of work done in New York and Moscow were these incredibly detailed market sizing studies such as estimating the number of aluminum containers Gazprom would buy and the studies were done for companies who supplied Gazprom.

The New York and Moscow partners loved throwing in the word “strategy” and “strategic” into the word play, but this was not strategy.

At best, it was strategic. In truth, they were doing very detailed market sizing work and since they were placing lots of numbers in their reports, they called it strategy. Moreover, who needed more strategy consultants? How was this of use to the parent company?

The economics of the strategy group was a stinker!

It reeked of bravado not matched by profits. They were billing clients $150,000 to do a 4 to 5 week study. Those were crazily cheap rates. Forgetting about the need to have a strategy consulting practice, they were not even being appreciated in the market.

This is the equivalent of a car company producing sports cars and saying it is in the league of Ferrari. Yet, forgetting that if you sell your cars for 10% of the price of the Ferrari, you are not in the same league.

And I find this to be the case in many boutique consulting firms. They love the word strategy. They use the word strategy, insist they do strategy but become all bashful and shy when you ask about their strategy to make a profit at least comparable to moderately successful consulting practices. They usually don’t have one.

In effect, the parent company was subsidizing the strategy directors’ fantasy to run a strategy consulting practice.

Moscow and New York did not communicate with the other 6 offices within the consulting practice. They did not even know the names of the other consultants and partners. They felt the offices in Latin America and Central Asia were staffed by knuckle draggers who where lower class. The consultants in Central Asia where treated particularly badly.

And the irony is that the Central Asian consultants desperately wanted acknowledgement from the Moscow and New York partners. The Central Asians where falling over themselves to get transfers to New York and Moscow.

Essentially, this created two consulting practices.

The accounting department generated productivity ratios of billings versus employee costs for every division across the entire company. The strategy teams were so pleased to show me they had a ratio of 3.7. The procurement, extraction, surveying, geological and engineering teams had lower ratios, averaging around 3.5. In effect the consultants where just 6% ((3.7-3.5)/3.5) more profitable then the engineers.

Just 6%. That is nothing. They should be around 250% more profitable given their higher cost base and the type of work they were allegedly doing.

Yet while the consultants billed more per hour, they were not heavily utilized, which lowered their overall profits. They were under performing compared to industry standards.

The strategy consultants assumed I would support them since I was a former corporate strategy partner.

Due Diligence & Operations Consultants

These guys where most concerned about my arrival. All they saw was “another” strategist arriving and they resigned themselves becoming even more marginalized.

The rest of the offices within consulting practice performed two types of work.

First, they were involved in these insanely complex technical due diligence studies. Let’s assume J.P Morgan wanted to buy a mine in Ukraine. J.P. Morgan would need a truckload of due diligences done. The technical due diligence work would be done by a combination of engineers, and geologists etc., working with the consultants to estimate the costing and breakeven costs.

This was the bread and butter of the rest of the consulting practice. Many members of the consulting team were simply rotated between these studies to help with the economic analyses. The profitability of this work was fine and the relationship with the rest of the business was very strong.

I cannot say this was the most exciting work. I knew the consultants did not like this, but we were actually pretty good at it and this ability to leverage all our deep technical skills actually gave us a pretty big advantage versus firms like BCG, Deloitte, Accenture and so on.

Yet, many consultants are caught up in the glamor of consulting and this work was far from glamorous. It was hard to recruit people for this type of work.

We had ex Bain, BCG and McKinsey consultants being overpaid to do this kind of work. We either needed to change the economics of the work or lower their salaries.

Second, a unit within the consulting practice had been developed to scoop up all the technical skills the business had and, led by the consultants, roll out a type of implementation that no one else could do. I actually thought this was very unique.

Back at the firm, our version of implementation was largely setting up program management offices and working with experienced hires to roll out the changes. This was the way BCG and McKinsey did it and it is still the way they do it. Only recently have they tried bringing in seasoned implementation experts.

However, there is a key difference. McKinsey and BCG implementation focused on management practices. The boutique consulting firm focused on operation and technical practices.

This unit within the consulting practice was doing something completely different and they had a very clever business model as well. They were not simply selling the work for the sake of revenue. They attacked the problem from two fronts.

On the first front, the consultants had worked with the internal engineers to develop these detailed benchmarks, costing models and technical metrics to optimize operations at, for example, one of the parent company’s leading aluminum smelters. In other words, they had tested the thinking and it worked.

They had, thereafter, built up a set of management steps that could be taken to optimize each metric.

Yet, increasing the productivity much further at the smelter was risky. So they needed a guinea pig for more risky ideas.

They would take all their work, done at the parent company’s smelter, to a rival and offer to show how to improve the rival’s operations.

Then they would take what they had learned from perfecting the approach at a rival and bring it back to the parent company to beef up our operations.

So they did the trials at a rival and also returned with a deep understanding of the rival’s operations, culture, management techniques, metrics and targets.

They would then feed the competitor data into our models on mines etc., to figure out the true economics of our businesses, versus the competitors, and feed this back to the board. They would simultaneously see if the management of our smelters could be improved.

In my time there, only 2 clients made us sign such restrictive contracts that we were not allowed to use the data we collected. Only 2!

So this was a good business blending the best of consulting with the best of the technical skills to help the parent company. They were not trying to create some orphan child consulting practice that made no sense and had no synergy to the parent.

On the second front, they used this skill to develop goodwill. Most large resources studies are done in pretty impoverished parts of the world. While the parent company was running a copper mine in Zambia, for instance, these guys would go to the government and offer to help optimize the local water treatment facility.

This led to relationships that often times led to more work for the parent company. They were basically a very unusual front end of the consulting practice that never tried to sell anything. They just arrived, impressed and let the work build goodwill.

That is the best kind of “sales” team: the kind that does not sell.

And they were very nice guys as well: very open to sharing and helping everyone.

That blending of deep and real engineering know-how with the general consulting implementation skills was a pretty strong combination. However, the unit was young and resource starved.

Like the board, I felt we had to invest in growing this part of the consulting practice. I almost envisioned something along the lines of a more sophisticated industry services unit, like what exists in the oil and gas sectors.

To be continued …

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Executive Update 1

      1. Objectives
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Executive Update 2

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  1. A distinctive approach/methodology
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  3. Suggested pricing/resourcing based on a premium practice in the US

Change Management (Global leader of McKinsey Organization Practice)

Leading large-scale change at your business is urgent, but how do you overcome the challenge change management presents? 

Interview with McKinsey & Company Global Leader Bill Schaninger, coauthor of BEYOND PERFORMANCE 2.0A Proven Approach to Leading Large-Scale Change (Wiley, July 11, 2019) about:

            • How to know when your company is ready for large-scale change
            • What’s wrong with most approaches to change management
            • What companies can do today to flip their odds of success
            • Why organizational health is more important than ever
            • What behavioral science biases leaders must guard against when building their change management vision

About Bill:

“Since joining McKinsey in 2000, Bill has focused his work on driving large-scale organizational and cultural change for diverse clients across North America, Europe, and the Middle East. An expert on the role of culture, values, and leadership in improving business outcomes, he helps top executives enhance organization-wide management effectiveness.

In his advisory work, Bill has helped CEOs, government ministers, and other top executives assess organizational health and lead initiatives to improve it. He also brings strong experience in strategic human resources, helping organizations understand how to create world-class talent systems and winning workforce dynamics.”

Meet Bill Schaninger, McKinsey senior partner

Michael: Hi everyone. Today we have an exciting and very interesting guest. Bill Schaninger who is a senior partner at McKinsey and is the worldwide leader of their organization practice. Thanks for joining us Bill.

Bill: Well, thank you. I’m really happy to be here.

Michael: Fantastic! So, maybe just as a start, give us a brief overview of your background, where you studied and so on, so the audience gets familiar with who you are.

Bill: Right. Well, I’ll tell you. If you listen to me and you would think that applies to McKinsey you would get the wrong impression. I’m rather atypical.

Michael: Yeah. Why is that?

Bill: Well. I don’t have a particularly prestigious degrees. I have a lot of degrees but not from our core schools. I went under undergraduate I finished at a place called Moravian College.

Michael: Okay.

Bill: Which is a new liberal arts school. Sixth oldest in America – 1742. Notable because we were the first to enroll women. And when we educated Native Americans we educated them in their language, not ours. So, I’m obviously very proud of that Institute.

Michael: Yeah.

Bill: I’m a Trustee there now. So, you know, the difference. It has a seminary. So it was.. when I was going there it was very much in the liberal arts tradition. My undergraduate degree is in business administration but that was after two years of forcing me to think a little bit. And then I went and my first job was I ran a residential psychiatric treatment center. A unit there so I’d like..

Michael: You run a residential psychiatric treatment center?

Bill: So think about when.. I had four.. I’d four or five units over my time there.

Michael: Yes..

Bill: As young as 8, as old as 20. In many cases, court-ordered. In fact, the majority of cases court-ordered and rather than going to detention or somewhere else. It was usually kids who were dually diagnosed. It’s some combination of a, you know a psychological deficiency or say a cognitive deficiency or just came from a brutal background.

Michael: Yes.

Bill: You know so I’d have staff and I’d have the kids.. and you know what social worker who is there to make sure that we were doing okay.. and yeah I did, I did that for like five years. But now while I was doing that I discovered that I was surrounded by really smart people, way smarter than me. Who all wanted to have a big impact in the world. But we were terrible at running the place.

So, you know, passion only gets you so far. So then I figured okay I’ll go back to school full-time at night. Back to Moravian, because it was both here where I live and and close to where I was working and I just started going to school full-time at night I take classes, Monday, Tuesday and Wednesday you know 3-3.5 hours a night and just started working on an MBA. And when I was doing that.. I really came around to this idea that plans are great and I’m really interested in how people make money.

Michael: Yeah..

Bill: But plans are just plans until people start behaving differently.

Michael: That’s true.

Bill: And so that really turned me on to the organizational part of it.

Michael: Yeah.

Bill: This was 1996 and I made a decision to go back to grad school. So I went to Auburn because there were some really, really good faculty then studying change or behavior and I got another masters and a PhD and it was effectively org side taught in business school.

Michael: So you never came from a sort of traditional business background. You started with an interest of people.

Bill: Yes. Yeah. I was always interested in making money but it was how people were involved in making money, you know.

Michael: Yeah but that’s interesting you know, a lot of people when they when they go into business they start from the business side and they figure out they need to understand people, and they kind of do a few courses and so on but you started from the people-side.

Bill: Yeah, yeah. That’s right.

Michael: And then you figured out you need to have some structure to this, and then you picked up the business skills, I am guessing.

Bill: Well Yeah. I mean look. I was.. because of the work I was doing I was fascinated whenever I’d look at something and say “why wouldn’t otherwise a well-intended person be doing something that seems so counterproductive” and I wanted to understand that. And then I want to understand what the company did and what leaders did that encouraged or disappointed that.

Michael: And so what was your PhD in.. what was your thesis.

Bill: Well, officially it’s a PhD in management. My.. my.. dissertation was on why people go above and beyond at work.

Michael: Oh that’s interesting.. and what did you find?

Bill: Well, so I was studying what’s called social exchange relationships. So, you know, obviously there’s the basic economic exchange, which is I do something and you pay me. In a straight quid pro quo. Social exchange is a little different because that is a give and a get between you and your leader (leader-member exchange), you and your teammates (team-member exchange) and then we created a construct called org-member-exchange, which was this idea of what the company is doing for you and what you’re providing the company.

Michael: Yeah okay.

Bill: So these things like loyalty, extra role behavior, you know, contribution, influence. Things like that right. It’s basically, the people you see that get the best.. the best projects, have the ear of the boss. You know, that sort of stuff. In other words.. the respect, the trust. It’s understanding that dynamic and then what you can or cannot do that increases the likelihood that people gonna give discretionary effort towards your goals.

Michael: Wow. You are really into organizational thinking. It’s not something you just picked up and decided to specialize in Mckinsey. That is where you are started from.

Bill: That’s right. That does make it a little atypical, right? I came with the org stuff first and then learned.. learned the broader.. with a broader range of topics that I would cover as a generalist partner at McKinsey.

Michael: So why did you, how did you end up in McKinsey? Did you go straight to MicKsney, from a PhD to McKinsey?

Bill: I did but in a rather backward manner. So, in 1999, I was out on the market. I was so ABD on with dissertation. I had my data.. wasn’t done yet, I was looking for teaching jobs. And in The Chronicle of Higher Education there was an ad there for an academic fellowship with McKinsey in Boston. But then their org design practice.

I sent my CV to them. And I had a pretty good run of publishing, you know, as a PhD student so I was feeling uh.. you know, pretty buoyant about my prospects. They responded and said “Hey, that’s really nice but we were actually looking for like.. a full professor who has a reputation. But Uh.. we liked your resume so we hope you don’t mind we sent it to our colleagues in London who are hiring.”

Michael: Yeah.

Bill: And they rang me up and then the.. our normal.. our normal cycle was what six-nine months maybe for recruiting. Mine was about six weeks.

Michael: Wow.

Bill: You know, two trips to London. A seemingly endless string of interviews and I joined the org practice in London August 1st 2000.

Atypical growth to McKinsey Partnership: From Specialist to Generalist

Michael: So, that’s interesting. You’re the only person I’ve ever met from McKinsey who starts off by saying they have a atypical background where you don’t have.. I think the words were to use is an elite background. I’m not sure if I remember correctly. Most people will be the opposite.. And then you do interviews with you.. You apply in the United States.. but they send you to London. You get the role and then you start working in London as a generalist? Or do you go straight in the org practice.

Bill: That’s especially no. It’s not. Again. Here’s something atypical. I started as a specialist.

Michael: You started as a specialist?

Bill: I started as a specialist but was elected as a generalist.

Michael: Because most people, they usually start as a generalist and then they end up maybe specializing later. Well, you have to at a certain point. Dealing with a certain group of clients.

Bill: Yes yes.

Michael: But you started as a specialist. And then you could have picked up generalist skills as you went along.

Bill: Yes, yeah. Exactly right.

Michael: Very unusual. You must have had some really good mentors making sure you..

Bill: Well, I really did. I mean, the guy who.. the guy who would run the practice for.. I don’t know eight years. I had just joined the year before and you know he.. he had an MPhil in psychology. He was really interested in us bringing more rigor to our organization work. Less interested, as we like to say, “less interested in making things up.“

Michael: Yeah.

Bill: And more interested in being grounded. And so, it was a nice.. it was good timing and if you look across my 19 years probably every person you would ask about me would say uh I’ve been fixated on leaving the world of hand waving, and bringing good theory and good science to what we do, not as an academic exercise.

Michael: I like what you are doing.

Bill: ..to improve our problem-solving.

Michael: So, you’ve only done interesting based on the work I’ve seen org design change work in some places they call it transformation and so and most of this was global or out of based in London?

Bill: Or so.. let’s see.. first 4 years were in London and then I moved back to the States, and then I helped open the Philly office in 2005.

Michael: So you have helped open the Philadelphia office.

Bill: There was 12 of us.. Yeah. Initially, That’s right.

Michael: Oh wow. That’s different.. a different hat you were wearing.

Bill: Dramatically different. I mean, I went from London which was the second-largest office in the firm and at that point the seat for our managing director, Ian Davis, to an office that had a fraction of a floor and twelve people sitting around at one table for lunch. So that was a little different.

Michael: So, what was the reason to leave London, because London is a good office? Why would you leave?

Bill: Exactly. Spectacular office.. And, to this day, it’s my favorite office.

Michael: It’s amazing. Just the city of London is amazing.

Bill: I loved it. I lived at the ones with bridge, right next to the ship and..

Michael: Yeah?

Bill: And you know.. Peter Hain.. the guy who was the …you know.. in charge of the House of Commons, he lived above me.

Michael: Yeah.

Bill: And I had a glorious life there with the wife and a young child. So my then wife, her father got sick and I really wanted my son to be able to spend some time with his grandfather before he passed.

Michael: That is the reason to move.

Bill: I probably would not have left if that had not happened.

Michael: Wow. And what’s your favorite English food?

Bill: You know.. I really like.. I really like.. pies. Honest.

Michael: Oh.. pies.. steak and kidney, chicken and mushroom.

Bill: Yeah. Yeah. I think they’re great. But, you know, if you’ve really pressed me I’d probably say a Sunday morning fry up.

Michael: Yeah. So you.. have you taken a partial liking to drinking warm beer?

Bill: I don’t mind it. I mean.. I do this youngsbury was a mile away and so the special and triple ‘x’ were always insanely fresh and pulled on an engine.. (not clear) and it is just really good. In fact.. I reject.. funny enough that you say that.. I reject Guinness cold.

Michael: Really? So now you have been completely converted! (chuckles).

Bill: Completely! in fact my daughter.. my daughter who just turned 11. Gets really irritated with me when I say “Hey, where’s the loo?”

Michael: (chuckles).

Bill: “Dad! You’re in the US.”

Michael: You never hear that in an American.

Bill: No. No … So anyway.. Atypical.. But you know what’s interesting.. you picked up immediately that I joined as a specialist.

Michael: Yes.

Bill: At that period of time.. you know.. there were some differences in social rights. If you were a specialist versus a generalist. That was not lost on me. And I recognized that, you know, when we immediately went into a downturn I was never ever gonna be on the beach because whether you’re cutting cost or trying to grow, whether you’re trying to change culture or trying to improve talent, you always need to address the org stuff.

Michael: That’s true.

Bill: All I had to do is be good at org and I could do that anywhere.

Michael: You know.. but.. that’s interesting because what you said.. you are a specialist who became a partner.

Bill: As a generalist partner, yeah.

Michael: That is a very unusual path. I mean, most people when you speak to them they try to avoid the specialist path because they think it can never be a route to the partnership.

Bill: Yeah. Exactly right. I mean.. it was my ticket to play.. in case my core situations were right up. I ended doing a ton of Operations work in refineries and chemical plants because.. you know.. mistakes happen usually when there’s a bad mix between people and machines.

Michael: Yeah.

Bill: Culture matters quite a bit in safety, reliability, quality and making money, funny enough.

Michael: So, you do all these refinery work from Pittsburg?

Bill: Well, initially from London because we were doing it there. And then when I moved to Philadelphia. I lived north of Philadelphia, east side of Pennsylvania. I flew to Houston, flew to San Francisco. I mean I got my first million miles on Continental.

Michael: Yeah.

Bill: Because I would I would go.. I would go where the.. the plants were.

Michael: So you moved to the US just to travel even more, basically.

Bill: Yes. Well.. During that period of time, in fairness, we hadn’t yet bought our house. It took about six months. So, I was avoiding living with my in-laws, so there was the motivation.

Michael: (chuckles). That’s Funny.. Funny and true. So you rent Pittsburgh. You were building the office. You obviously found a.. I wouldn’t say a niche. I know people have referred to organizational work as a niche. To me it’s not a niche.

Bill: Yeah. I think it’s ubiquitous.

Change management challenges

Michael: Yeah, I mean you know, every company is trying to figure out how to .. an organization is not just about where you place people, which is what a lot of people think it’s about all org and design and org planning. To me it’s about people how people interact.

Bill: Exactly right. I mean.. we take the broadest sense of it. You know we’re the Warner Berg (12.42) org system kind of thinking. You know.. I studied under a guy named Achilles Armenakis.. who have really broad and expansive view of change and the whole org system.

You know, so the people, the structure, the processes and how you make decisions, how allocate the talent, who you pick.. so you know.. the instrument we wrote, the organizational health index, that was a colleague and I wrote that in 2002, from the get-go we were determined to be able to model the whole system, right? Not just the.. not just an impact on the employee.

Michael: Wow, so you were building the Pittsburgh office. Obviously building all capability in Pittsburgh as well. So what happens there.. from there. How does your career develop?

Bill: So I moved.. I moved to open Philly because it was next to Wharton in to end of 2004.

Michael: Yeah.

Bill: But when I was still in London, we had the downturn. Right, because of dot-com crash. And.. we were looking back at some of the things we’d written and said “oh boy, we really picked some doozies here.” You know..

Michael: Yeah.

Bill: And that led to some soul-searching around the idea of what did we get wrong? So we went back to In Search of Excellence.

Michael: Can you give me some examples of some of the things that could have been done better?

Bill: Well, let’s just.. let’s just look at.. If you can look at these books. We wrote two books at the end of the 90’s – “Creative Destruction” and “War for Talent. ” Good books. Destruction was… [about] dynamic allocation of capital. And War for Talent.. was a really good treatment of how to.. how to handle talent like we do. So if you lined up and you were a talented knowledge core company like we are. It was perfect. If you weren’t that – challenging. There is a common company in terms of cases in both those books – that was Enron.

Michael: Yes.

Bill: Right and uh.

Michael: As a common case around 2000. That’s true.

Bill: Yeah, it was common. And so then, you know, when we went back and looked at In Search of Excellence. There was an interesting case highlighted there and it was more than one.. you know.. they had several.. one of them was Atari.

Michael: Yes.

Bill: 6 months after the book came out they were burying games in the desert.

Michael: Wow. So that sparked your thinking then maybe you need to think about it a little bit differently.

Bill: A little bit.. I mean, we were pretty sure we were getting it wrong. We weren’t the only ones, you know.. the FT, Forbes, Fortune, Wall Street Journal. Everybody had fallen in love with the “we never missed a quarter” kind of thinking.

Michael: I think Enron was on the cover of Fortune 6 times or something..

Bill: Ugh Yeah. It’s remarkable, right? And obviously we had ties because of the legacy of our alumnus who were there.. you know.. I’ll tell you what was interesting.. was.. when we got to the point in that era most children know that when you have a positive times a positive that it is a positive, but when you have a positive times a negative it’s a negative. And during that era you had a positive multiple times a negative profit number and it came out still positive in terms of valuation. That is some unusual math.

Michael: Yes. It’s unusual. It’s frothy (not clear) math as they would say.

Bill: I mean.. we all.. we all deluded ourselves there, right. So anyway, that led to us saying “let’s have another look.” So, we went back to the list from “In search of excellence” and then we looked at the list that Jim Collins and Jerry Porras had.. you know.. in the first Collin’s book and just cuz the math is gonna work out right, we’ll say there was 51 companies total. When we rolled it for until 2001. We said what happened.. Well a third of them didn’t exist and a third of them were really struggling, and a third were doing great. And you look at the basic difference between the ones that were still thriving or “excellent” as everyone’s calling them and the ones that went away, it was one really simple thing. The ones that went away got caught in the trap of myopically focusing on quarterly performance.

Michael: Yes.

Bill: The ones that thrived said they performance matters to us too. But we’re gonna really pay attention also to how we get that performance. How we run the place. And that was what we would later label “managing for performance and health,” which was the essence of the first book.. you know.. landing this idea that truly long-term sustainable competitive advantage comes from putting equal emphasis on performance and health.

Michael: Now that’s interesting that you bring that up. Because I have read your book “Beyond Performance 2.0” that you wrote with Scott Keller who I believe he’s a colleague from Mckinsey as well, right?

Bill: Yes.

Michael: What’s interesting in that book.. is that the entire premise of it is that you have to balance health and performance to be truly sustainable if you want to be successful.

Bill: Yeah.

Flipping the odds of success (change management)

Michael: Now do you not feel that there’s an absolute obsession today with performance at the expense of health. Because if I just pull up Bloomberg now and I look at all of the headlines, just talk about performance. It’s almost as if the entire investment community, while they want sustainability, they seem to reward performance.

Bill: Well, I think we’re in the waning days of that, honestly. I mean you know.. if you go back to like 2005 when you first started seeing the rise of long term capitalism, long term investing. you know.. our then managing director, Ian Davis, initiated this idea of organizational health. you know.. We’ve been talking to him about it. We’re increasingly seeing investors who recognize that they’re not gonna.. you know.. the multiple they’re paying when they buy now means they actually have to improve the company and if you’re gonna have to improve the company, you’re gonna have to change how you run the place. I mean..

That’s the essence of it right? The first book really was landing that idea, the second book 2.0 was ten years on. We had clients saying “hey, we buy this idea” of.. you manage for performance and health, or in plain language, you manage for “how you’re gonna make money” and “how you run the place.” But this change in “how you run the place stuff”. It’s actually really hard. So spend a little more time on that please, like.. how do you actually change how you run the place. So that was really the impetus for the second one, right? It was a real double click on we’re gonna remind you a little bit about performance and health. But really, we’re gonna spend a lot of time on “how do you actually change it?”

Michael: So, the message is the same, but it’s about getting people to see how to do it.

Bill: Yes, because most people.. fail miserably.

Michael: I heard statistics in the book and I’ve heard the statistic before that something like thirty percent of change effort works.

Bill: Yeah, that’s right and it’s been stubbornly stuck at that. I mean you know in the.. the Kotter and Heskett book in the early 90s you know.. they had reported only it seemed like about thirty percent actually delivered on what they were supposed to. Then you saw a series of other similar explorations stubbornly stuck around thirty, including like three of ours. We’ve noticed in the last several years that if it involves a restructuring, the numbers probably.. actually in the lower 20s at the end of restructuring. So you know.. one of the big insights for us was after we produced the first book we started tracking clients who were following the recipe of the prescription. And those who weren’t.. And when we finally got the data back we’re like “oh boy! okay well.. let’s A) make sure that we remind everyone we’re not being self-serving. We’re not playing funny math. We’re reporting the facts.” People who follow the prescription, their likelihood is success is 79% on 30, so it’s better than flipped the odds.

Michael: But if all companies worrying about performance.. wouldn’t it mean.. that focus on performance as a competitive advantage will eventually erode?

Bill: Well, monolithically on performance. It goes away because you’re not paying attention to things like.. are you keeping the entire place aligned on what you’re asking them to do and why they’re doing what they’re doing. You know.. are you really honing in on the right way, the right balance of controls and the right balance of focus and executio?. And are you actually making sure that you’re not just doing a different version of yesterday? You know.. you have your eyes on your customers and competitors, and you’re in your partners in your ecosystem and.. can you actually change on the fly. I mean.. There is an underlying premise here with these leaders that are going to be successful now – don’t just run the place, they’re also capable of changing the place while they’re running the place. Nobody gets to call timeout.

Michael: Right yeah.

Bill: Well.. you gotta be able to do both.

Michael: I mean.. I can’t think of any company today that can just say “we’ve developed our plan, we have a strategy, we’ve made the changes we need, let’s just sit back for the next 2 years.” Change is continuous. It has always have been ever-changing.

Bill: I mean, look, you’re picking up on one of the basic mindset shifts which is stop treating it as an event.

Michael: Exactly. It’s the normal course of business.

Bill: In fact we’ve gone now when we talk about establishing what the value agenda is.. when we’re trying to figure out critical roles, we break it up into four chunks. If you were going to change anything in the business.. business as usual how do you disaggregate value. Now let’s look at all the things you’re doing to improve or change the business. Okay. Let’s add those up. Now what would be net new in the next three years. It’s not there today but you’re counting on it being there. And then what are the roles that actually protect you and.. where it may not be a direct line on P&L but its direct line to risk mitigation. And then we add those up so that we can get to the critical roles. That’s proven to be a really critical.. really critical move here which is.. don’t try to do everything for every role. But do know the roles that portion risk and value (not clear). (21.16)

Michael: And so I say things have changed in consulting recently but isn’t that very hard to sell today? Well maybe it’s not to get clients to bind to the idea of change being a continuous capability they need to have.. for lack of a better word.

Bill: You know.. I think it depends on whether or not they’re in going assumption is it’s something to endure or it’s something that’s going to be liberating in a natural part of what of their evolution.

Michael: That’s good. That’s true. And you think some clients today buying into the fact that this is just the way it has to be.

Bill: I think those that view it as an aspiration and they’re working towards an aspiration except that it’s going to be. Those that view it as a deficit. They have to avoid going out of business. They have to fight off, you know.. an attacker or whatever they’re looking for it to end. Particularly cost programs.

Michael: Yeah do you find that differences between change programs in the US, Europe, emerging markets or do you find that it doesn’t matter that the themes are roughly the same everywhere.

Bill: It’s a mix of both. Right. I mean.. the human condition of accepting change in workplace is actually pretty consistent.

Michael: Yes, there’s a lot of resistance. I think we can start there.(chuckles).

Bill: Well at the bar.. the bar.. is there.. The bar is there for the leaders to hit on why anyone should do anything different and it’s up to the leaders to create those conditions.

Michael: I was reading your book and one thing that struck me is a lot of change books you read.. when they talk about change as if it is a company-wide epic event led by the CEO – which is true. But what you’ve done is.. you have brought it down to a series of interactions between individuals and what you say is that when a company is going through a change it cannot leave its employees behind. It needs to work with them, talk to them and that’s really unusual because most books teach change as a set of management practices that you need to implement as opposed to a set of discussions you need to have with the employees and try to figure out where there are and how you are going to take them along. (23.11)

Bill: We like.. we like.. you know tools and assets and ways of thinking about things same as the next person but that doesn’t get it done. That’s just a way to help problem solving. I mean here’s the thing… we’ve you know how people will humanize their pets, right?

Michael: Yes. Yes.

Bill: Okay, we like to humanize organizations. It says if the organization has purpose.

Michael: I like the analogy a lot. I’ve never heard about that before.

Bill: It’s a construct. It’s a group of people that that organization isn’t going to change if the people don’t change. People are individuals that’s why you have to go to the eye level. So yes you can write a plan for the whole thing that broadly guide it. Setting the aspiration for performance in health but at the end of the day if the people don’t change. How they think and behave doesn’t… it just doesn’t work.

Michael: Now that is so obviously intuitively correct but why do so many executives not see. Is there a reason? Are they under pressure?

Bill: Well, I mean.. what do many people do with things that they find unpleasant or they’re .. they’re afraid of a being unpleasant?

Michael: Okay. Don’t do it basically.

Bill: They don’t do it. Or they just assume that they can shout louder and people are just gonna behave.

Michael: Yes..

Bill: Plus.. let’s think about the opening.. the opening things that we’re suggesting people do. You don’t start with the deficits. Start with the aspiration. What would be really exciting on the performance front and how do you want to run the place. Then take an honest cold hard look say.. “All right, how are we really doing” and then “okay so what does that require – that requires leaders to have humility” and say “I know oh we’re not good enough we got us in this position” and then it requires courage to put down tried-and-true patterns of behavior – habits. Things that make them uncomfortable say “I’m gonna have to be something different” because that clearly isn’t working. (24.49)

Change management: organizational and cultural change implementation

Michael: So.. going back to the first time you and your team, I’m sure quite a few people contribute to this thinking, the first time when you started rolling this way of approaching change out at clients. What was the experience? Was it easy to do?

Bill: In the early days.. people wanted to treat health as if it was cereal. So you did performance first? Then you got around to thinking about health. Which meant it never happened or we don’t have time for that. We can’t staff resources against it. “Yeah Yeah Yeah. But we gotta get the cost out”. The biggest thing in the early days was.. we were so enamored with landing the idea of performance and health. We missed the opportunity to say you know.. the way you work on performance is actually working on health. If you just change the language to say “you know, when you’re trying to improve performance, you are running the place. So surely, we can change how we run the place while we’re changing how we make money”. It’s when you combine them, your pursuit of a new approach to procurement, your pursuit of a new approach to pricing, implementing a different way of running your equipment if you are bringing lean. That requires setting direction, making sure individuals know what they’re on the hook for, motivating them, tracking how it is going.. you know your operating measures, managing risk. You’re doing it anyway. so why not put them together and say “the way we pursue performance improvement is how we’re gonna run the place and that’s how we’re gonna change it”. We are not gonna treat it like this thing on the side.

Michael: So the big shift is.. company is ..doing this anyway. They have to do it anyway, so rather than saying it’s something we have to do six months from now let’s find a way to combine it. Because you have to do it anyway.(26.17)

Bill: A hundred percent and you know what that does. it stops making it an HR issue. Keep it separate. It’s over in the culture ghetto.

Michael: You raise an excellent point. Why do people think change is an HR issue in the first place?

Bill: Oh because it’s a HR’s job to deal with everybody’s crap.

Michael: Employees to be more productive, more fullfilled, more innovative, more engaged, sounds like something that the line management and executive..

Bill: Good thing.. I mean the single most remember we talked about my dissertation. Right? The single most important relationship at work is between you and your boss.

Michael: Exactly.

Bill: It’s the insane amount of variability in performance. So aren’t you the one who’s running the place? So you should be the one changing.

Michael: So.. there are some good examples of companies that have rolled this out well.. that you are allowed to talk about.

Bill: I can give you examples of it without naming them.

Michael: Yeah, that’s fine.

Bill: Look I’ve got a nice run of really interesting organizations you know.. a global mining company, global refiner, power.. you know.. a federally owned power utility. You know.. really interesting places. The common denominator.. and all of them.. was.. it was high stakes you know..

Michael: Mhm.

Bill: Either you know one of them had declared force majeure on their commodity product. One of them had an environmental disaster – flooded a valley with you know.. stuff coming out of one of their power plants. Bad things right or one of them was actually frankly close to going out of business. So in all cases, they were at a pivot point. A point where they could no longer ignore it and they can no longer think they’re doing what they did yesterday by just trying harder how’s gonna get it done. At that moment.. at that moment they were also able to say and.. you know.. we.. we can’t just do it like we did do it.. we have to do something else and that something else was both (1) How they prioritized their effort and their capital towards performance but also (2) how they prioritize their most important capital, human capital and reallocated the team.

Michael: It’s a burning platform for the lack for the better word.

Bill: Well, you know.. it’s interesting. great point. That has been the mantra for a long time. We’re increasingly seeing that even in situations where the place is going out of business if you get them to fixate on what it would be like when it’s great it works dramatically better. We learned this from medicine by people who have had heart conditions. (28.34)

Michael: Yes.

Bill: All you do is say to them ”if you don’t stop smoking, you’re gonna die” they go back to smoking. If you say to them fixate on what you’d really like to do, “I’d like to walk my daughter down the aisle. I’d like to see my son graduate”. dramatically higher stickiness of the behavioral change.

Michael: Oh so.. moving away from the deficit mode to.. a more aspirational positions.

Bill: A hundred percent. A hundred percent, right?. And so.. you.. you don’t stop them. So as long as you’re working towards the aspiration you can keep going. If you’re in the deficit model as soon as the dragon is no longer coming to eat you ou’re like.. ”this is over now right?”.

Michael: Right.

Bill: And two years later you’re back doing the same thing.

Michael: It’s also scary to have a deficit model. Nobody wants to be part of this. It’s not fulfilling. It’s not uplifting.

Bill: No, I think we confuse love of the hero in an actual crisis like coming back from a natural disaster or a fire or something like that. We like that because it’s said.. it’s this stuff.. that’s galvanizing and story-telling.. That’s not a business model. It’s a reaction to a crisis you know.

Michael: Well, that’s true. That’s a very good point. When you let emotions dictate things.

Bill: Uh huh. A hundred percent.. it is well.. it’s.. listen it that’s why it’s psychology.

Michael: Yes okay. So.. so clearly there has to be this aspirational, powerful messaging that needs to be, I’m guessing, driven by the CEO in his board.

Bill: Necessary but not sufficient. You need you.. need them the started.

Michael: Yeah.

Bill: But increasingly you can see that the cascade doesn’t work. And then in an environment where the social network is dramatically faster and dramatically more fluid than the formal network. You need to know who the opinion leaders are on the organization and start having them be the conduit. You can’t count on the cascade anymore. (30.14)

Michael: So give me an example of it. How would that work? Is that something that.. that way that works best or is it just something that..

Bill: They’re not. It’s really interesting you can take one question and randomly send it around to the whole company and saying “hey, when someone’s going on – you don’t understand. Who do you pick up the phone to call?” and say “hey what do you think is going on here?” Also known as whose opinion do you trust or value. Give us up the ten names – every time a new name comes in, that person gets the question. If a name comes in that you already seen it, they get a tick mark. We leave it open for ten days and woola~ you’ve mapped the watercooler. You know.. people go to.. to figure out what’s going on. Some people are dramatically more important to the water cooler.. than others. You need to know who they are because they are most certainly talking about you. It’d probably be better to those people you to talk to about.

Michael: So those are the ones you focusing on those influence. For the lack of a better word. (31.01)

Bill: Yes.. so yes the CEO needs a well-constructed message. Yes, increasingly in today’s environment needs to be multi-stakeholder. Yes, he has to be super consistent. He or she excuse me, super consistent and their direct reports super consistent. But it does not penetrate deep into the soul of the organization without the people who actually control the cafeteria. Who actually control the water cooler. They’re the ones that you need talking about.

Michael: Yeah, so the CEO needs to craft the message but the people need to be reinforce the message need to go all the way down the organization.

Bill: 100 percent. A 100 percent. And we talked about five sources of meaning in the book and that say “Hey, don’t just give somebody that the corporate story. Talk about how it impacts the customers. Talk about how it impacts the employees. Their team’s, their businesses, the communities you work in. Be human about it. Acknowledge that people are going to have different sources of meaning. Different motivations. If all you do is give them the stock price or the profit story, you’re going to lose 80%.

Michael: Okay so that’s one.. So let’s get it a message and bringing it down the organization in the human way that’s relevant to the person.

Bill: Plug it.. plug it into the broad.. plug it into the broad coalition.

Michael: Okay so that’s one. So is it anything else that’s common to be successful change models?

Bill: Yeah early on.. early on the CEO figures out that he actually needs a small army. Ahh.. so he involves people in the planning. It’s not a small group or just one or two with the consultants.

Michael: Yes.

Bill: I mean there is a basic.. there is a basic.. phenomenon here that you know.. if I build a lego model and give it to you you may look at and say oh it’s nice but.. if it drops.. it drops so what its not my model.  if I give you a Lego kit and you build it, you’re way more interested in keeping that thing together.

Michael: I remember in the book you had an example of Indra Nooyi, that the head of Pepsi, writing personal notes to the spouses of the executive team because she realized that made people more bonded. I have never heard of a CEO writing messages to the spouses of the executive team. (32.56)

Bill: I think good ones do.. the good ones do have personal touches. I mean you know.. there was a while where we were encouraging a CEO that in the course of like their ELT meeting it’s something truly exceptional came up.. they would FaceTime the employee live from the room.

Michael: That’s impressive because you know most executives want to be scripted and prepared but to FaceTime live that’s..

Bill: That’s great right it’s authentic that’s like raw footage is it’s so much better than the super polished stuff. If you’re trying to create intimacy.

Michael: The polish things don’t always work because there’s no sense of vulnerability. You know the CEO you are talking things that.. things that are not working very well but you want to deliver the message, people believe that a man actually took the time to do this or a woman has took the time to do this.

Bill: I think there’s something around the humility point.

Michael: Yes.

Bill: Which is being willing to say to people. “you know what? I don’t actually have all the answers”. I know. This is what we know. We’re aspiring to do.. that we’re working out right now. How we’re gonna get to it we’re gonna keep involving it review”. But then you also have to say to the employees “now you have a choice. If you only ever want me to bring you all the information it means you will never be involved. But if you’re willing to accept some ambiguity. We can involve you because by the time when you start getting involved, we’re not gonna have all the answers. That’s what we need your help for”.

Michael: I think it also inspires employees when they know that the people they look up to also don’t have the answers, right?

Bill: Well you’d hope, you’d hope, right. (34.18)

When you start change management programs you need to think about how you going to tell the story

Michael: Well that is true. Well, I remember.. I think its page 132 of your book. I like.. I like the way you broke down the components of a great story that a CEO and his team and the people below him need to tell because I feel that.. is part that is almost missing when people start these change programs. They forget that you need to think of how you’re gonna tell the story.

Bill: Well, it is a story right. I mean, you know, we had something called a placemat which we use for the logic, the structure.

Michael: And I also saw that. That was very clever to just bring it all onto one page because if you can’t get it onto one page you probably don’t know what you are doing anyway. (34.55)

Bill: 100%. I mean literally, this was this was.. I was.. I was with a.. an aluminum company in the Pacific. And you know.. we had it for the whole company and then each plant had one and we were sitting at dinner with a guy who I had served as a refinery manager in Gulf Coast and he was hired by this place. I said “hey, you got it. you got to spend more time with your crew.. and by the way if.. you can’t flip this place and explain what the hell you’re doing. It’s too complicated. I mean come on man.. you’re like up near Papua New Guinea. You got people who live in a company town. This is their life you better make it simple. You’re just gonna freak them out.” That was the logic and in this story was the humanizing part of it. You know.

Michael: Yeah I mean.. the page is a very clever page because I think that a lot of times we forget the importance of a story. The other thing I realize is that you.. know there’s a game that teenagers play whereby you whisper a word in someone’s ear you keep on whispering into them.

Bill: Pass it down the alley.

Michael: Yeah. Exactly. I feel when you’re developing the message as a CEO. You’re gonna remember there’s gonna be a lot of room for misinterpretation. You’ve got to build that in and make sure that it’s very clear what you’re trying to do.

Bill: Again, you don’t trust the cascade. You assume they’re gonna get it wrong.

Michael: Yeah exactly.

Bill: That’s why and that’s why.. you need the influencers.

Michael: Yeah, but you know that’s the part that’s always missing whereby a lot of executives just assume that the organization is going to get it. If they say it enough times. (36.17)

Bill: Yeah. I mean how arrogant is that. You’ve been thinking about something for months. You say it one time and of course, you’re so brilliant in your composition that another person if he hears it for the just 30 seconds ago should immediately be jumping up and down and genuflecting and tell you how great you are. (36.35)

Michael: Exactly. You know.. even if employees. Even if it’s not even the message is clear. I mean there is example you have in the book about the monkeys.

Bill: Oh yeah. yeah. It’s a bit of a parable actually. But yeah.. social imprinting is a real thing.

Michael: There’s a first time. I think is it.. I forget who.. you quote. Was it Ram Charan?

Bill: Yeah. It’s a parable taken from a book that’s intended to highlight this idea of social imprinting.

Michael: I thought it’s a great example because it’s exactly the way humans behave if you condition a group of humans to behave in a certain way, they’re gonna act that way no matter what else you do until you recondition them.

Bill: Yeah that’s right. I mean, it’s like Pavlovian on the psychosocial level. You know.. which is even if you take away the stimulus, they’re still gonna assume it’s there.

Michael: Exactly because they… it’s like shock therapy, right? If you keep on shocking someone they going to be afraid, right?

Bill: Right. It’s corporate flinching. They’re gonna think.. they’re gonna think the punch is coming.

Michael: Exactly, this is the thing.. is that because of all these pressures and shareholder demand and investor demand and so on, a lot of companies forget that if you just invest in making sure the message is heard and the message is understood. The return is much bigger than ignoring this because a lot of companies from what I’ve seen change management there as what it is called is just a number of promotional emails they send off. A few videos they put together and then it’s a kind of a tick the box model when they say we sent five emails about this we’ve done change management, right?

Bill: Yeah, unfortunately. (38.10)

Michael: But it.. for me change management is have the employee behaviors changed. and if the answer is no then you haven’t done any change management.

Bill: Yeah. I mean look. I would even say it’s one step further which is have the employees changed how they think and behave.

Michael: Yeah, exactly. Think and behave so that they are not just doing something because you told them to do it but because they understand that a new way, new mindset that is required.

Bill: I mean.. the real test is when you stop watching..

Michael: Yes.

Bill: And they keep doing it.

Michael: Yeah, I mean when a company talks about culture. I always.. My personal view is that forget about what they say on their website. Just look at the way they pay people. Because if they incentivize people to do things that are different from what they want them to do then that is going to be the default. They’re going to what they are incentivized to do.

Bill: Well, that’s even if you’re even hoping that the incentives are coherent.

Michael: Which is usually is not, right?

Bill: It’s usually not. I mean the rise of the.. rise of the balanced scorecard and you know.. many KPIs meant that usually there’s a lack of coherence actually.

Michael: So you feel that even today because a balanced scorecard is old. We are talking about on early nineties. I think. Even if you have a ..a balanced scorecard. You still feel that.. I’ve seen it but are you saying that right now companies are still getting their incentive structures..

Bill: Well .yeah. Most.. most confused.. incentive pay is supposed to be for behavior and performance above and beyond what is expected. Your salary is for delivering what is expected.

Michael: You know this is something I preached so often. You don’t get an incentive for what you’re expected to do.

Bill: Exactly right that’s.. that’s what you’re.. so that’s why you know when people talk about oh they.. they build in the budget for incentive. Well then just make that their base pay. I mean that’s like calling it it’s like calling a cost-of-living increase a merit increase. It’s not merit. It’s not based on merit at all. It’s based on being alive. (39.56)

Balancing performance and health

Michael: Yes. Exactly. That is true. That is true. But let me circle back to health and performance because it is the most important concept. Everything else is built on this, right? You use an analogy.. that we also use.. whereby we talk about an athlete who may be performing very well. Pumping great speeds but it’s not quietly chugging away cigarettes and drinking a couple of bottles of whiskey at night. So that it doesn’t impact the performance immediately but down the line the health is going to deteriorate.

Bill: Yeah.

Michael: So the analogy you’re using is.. Health is the lead indicator for performance? Right?

Bill: Right, yes the math backs that up.

Michael: So now a brilliant analogy. I think it’s probably the best analogy using these medical terms. But how do you feel organizations are able to track their health?

Bill: You know, it’s not that hard actually. Yeah.. really.. isn’t.. I mean.. that was you know.. when we wrote the organizational health index in 2002. It was to measure just that. It was to measure that you know..

Michael: Now – consulting tools have developed so far that it’s easy. Give an example. So if you’ve been going to an organization. What are the top three or four things you would look for to see if they were a healthy organization? (41.05)

Bill: Well.. I mean.. one I do actually like to look at the results of the survey.. Okay. So I do run that but if I’m looking for indicators, right? Things that like evidence.. you know.. you might walk around. I would get a sense of their employer brand. Get a sense of their customer brand.. get a sense of the relationship between their appraisal rating and pay. And I’d get a sense of whether or not whether or not.. they.. when they leadership team gets together whether they’re spending time talking oh they’re spending time.. deciding

Michael: But don’t you think you need control. You need to run here.. because what I’ve seen it especially.. in tech for example, right. When a tech company is doing really well even if it’s got corrosive leadership, if people are getting paid well, it’s growing a lot, people seem to say things are going well but when the stock tanks and growth stalls, seems that company changes viewpoint. Isn’t that something.  (42.00)

Bill: So that’s.. that’s what you’re highlighting.. is a reason against the small.. small surveys. You might look like the twelve question types. As a general inflation bias or general depression based on how it’s going in general.. is a problem there. you know.. Ours is just under a hundred questions and covers a thirty seven different practices.

Michael: Right.

Bill: So they don’t.. they aren’t impacted that way. That’s the beauty of the measurement. There are some things that you’re just you know.. the question is so narrowly constrained. It is just.. Do you see this happening or not.. Now there are questions- general questions around quality of decision-making that you could say “yeah okay that one.. that one you don’t might bleed in a bit.” But we ask specifically questions at the end like “hey, over the last year is it the worst, same or better. And when you answered that “what were you thinking about?” So because we both prime the pump for responses by grouping like items together. And we give the person the opportunity to give that.. sort of.. overall assessment.. I feel pretty good about teasing out the halo that you’re describing.

Michael: In the book you used the example of Jim Cayne when he left Bear Stearns. he saw tears in the eyes of people. I remember reading an article.. where actually quoted that ..where actually said that.. but then when you interview people who watched him leave, they had a completely different reaction. That’s an example of the bias you are talking about.

Bill: Yeah. Yeah.. and look one of the things is sometimes the actual score isn’t nearly as important as the variability underneath the score and the patterns of this score.

Michael: Or the rough direction of where they are going.

Bill: Uh ya. We spend time asking is it working. You know.. the nine boxes, the outcomes which are agreement questions. But two-thirds of the survey is the management practices. It’s just behavior. “Do you see this behavior or not. That’s way more telling. I give you an example. It’s a human example. So I wrestled my whole life.

Michael: You wrestle?

Bill: I through and including through college. .

Michael: Yeah.

Bill: Like collegiate wrestling right.

Michael: Okay. Okay.

Bill: Like Olympic wrestling. Right. Not professional wrestling. And so I’m a little over six foot two but in my freshman year college, I would wrestle at 177 pounds. Most days I would walk around around 190-192. So my rule of thumb was, if I was 12 pounds away from the weight three days out, I was okay. I could get down and make weight. I was solving for making weight and I was good enough to be there not great.

Michael: Yeah.

Bill: But if I ever ran against an opponent who was around my ability but never let his weight get more than three pounds over. He always won cuz he was in way.. way better shape when we actually walked up a mat. That person was solving for the match. I was solving for making the weight. And so I would do these feast and famine things. You know.. up and down and I do think.. I do think you know.. this idea that the perception and what matters.. what it was. I would go, it was great. I am.. I’m not wishing weights gets going okay. Where the real thing is – no it’s the match. It’s what’s actually going on, right? That’s what.. that’s what matters. The people who are able to change their mindset about what matters and what’s important. (44.48)

Michael: The change and depth of function.

Bill: A 100%.

Michael: ..while optimizing.

Bill: Think about all the places who track behave.. they track activity.

Michael: Yeah.

Bill: Not the result. And tell they have a system. Wouldn’t it be useful to know both the result and how you got there? Like people who tell you they made their maintenance budget, but don’t bother tell you that they deferred a bunch of maintenance.

Michael: Yeah, an example of this is the rankings for things.. you know. Rankings of universities and so on. They track the inputs but they don’t retract the outputs as well and I.. and I see what you’re saying. It’s about figuring out what it is you want to measure and measuring the right thing. But do you think it’s easy to get companies today to do this? I mean.. It’s been hard forever. When I was there. It was hard. It’s easy to get a company around the table and say ”you know what.. we need to focus on..” I’m gonna use this term loosely because that’s the term people understand. On all these soft stuff items. Is there today a greater appreciation for the soft stuff items?

Bill: You know I think the environment right now, where you’ve seen the extra emphasis on purpose and broad stakeholder and the emphasis around the differences in the generations. Millennials and the ones behind them. I think in a minimum it’s more present in the consciousness.

Michael: Okay, so that at least company or employees amenable to its importance.

Bill: Yes. yes. I do think there’s more of a sentiment awareness. Now, whether or not they accept how much work it takes. like.. you know.. going to the gym once doesn’t make you Hercules.

Michael: Yes.

Bill: You know. I.. do you think there’s a little bit of a laziness sometimes and why can’t just.. why can’t they just be done? You know sometimes, right because it’s a little uncomfortable. You’re forced to actually talk with people about things that might feel a little difficult like.. how you are in control and influence but.. but if you know.. I mean.. the data is the data. If you’re willing to take it on and willing to stick with it. And really work it.. it’s gonna work but it is hard work. There’s no shortcut.

Michael: Yeah. And it’s really difficult to change the culture of the company. I mean.. It’s one of the most difficult things that you could ever do right?

Bill: Absolutely. Well look.. people want the shortcut right? They’ll say.. oh.. we can only focus on one or two things. Okay.. something as complicated as tens of thousands of employees working around the world who would otherwise be doing what they want to do. Do you really think one or two things is going to change the place?

Michael: Yeah.

Bill: Like it makes belief.

Michael: In the book, you use a good example of I think it was East Timor whereby one of your colleagues.. I think.. was driving through East Timor and they saw a lot of rusted earth moving equipment that was donated by and.. I think it was.. the Chinese government, but even though.. the right tools that have arrived. the country didn’t have the capability to actually do something with that.

Bill: You have to be able to use it right? (47.29)

Michael: Yeah so.. what I’ve seen in consulting is a lot of obsession with getting tools because you can measure, you know.. you can say that “well today we taught employees five tools” but there’s less emphasis on whether the tools are being used.. and being used correctly.

Bill: Well and used correctly right? you know. I mean I was.. I was at a chemical plant where one of the plants, the.. the outside operator first one has to check gauges.. has to wear a hood and you know.. because they need to be able to have clean air to breathe.

Michael: Yes.

Bill: And their their rounds were moved on to a handheld device.

Michael: Yeah.

Bill: So that all the data was available to the engineers back in the headquarters. All seeming to make perfect sense. So when we were looking at it, we noticed.. we noticed that all the submission of the data was coming in at exactly the same time which meant that the operators are filling it in.. in the shed, not out at the face where they were taking the readings because.. you know.. you’d walk from thing to thing they’re big.. they’re big gap, right. So we said “hey guys what’s going on here? We just spent like 40 million on this system” like.. “oh yeah yeah yeah.. let me.. let me show you about that.. so here’s the handheld. hold it. I’ll go ahead and put the hood on. Someone in procurement got polarized lenses for the hood. And they didn’t bother to talk to the people who actually did the work.. and let them try it out.. so they hid their KPI of getting a price reduction and they bought it… It bore no resemblance to whether or not the outside operators could actually use it.  .

Michael: The checking of KPI is the overall goal right?

Bill: If you allow people to do it, they’re gonna solve for themselves. .. you have to have an aspiration that has meaning to enough people that they were suborn their own needs in pursuit of something bigger.

Michael: It come back on the earlier point we are discussing. They’re probably being remunerated whether they hit or not based on their KPI only.

Bill: Wellm even if it’s not remuneration sometimes it’s just ease and identity. I’m gonna do it my way.

Michael: Absolutely. A lot of times people do things that because of maliciousness but because it’s just easy for them to do it right?

Bill: Uh yeah. It’s a concern.

Michael: And we always assume that oh this employee has done this something evil but people are busy.. they’re tired. Just want to get home at five o’clock and live a normal life.

Bill: Absolutely right.

Bill: You know, we spent time there in Chapter two. you know.. on assessing you say.. like why wouldn’t otherwise a well intended person not be doing what seems obvious. 

Michael: Yeah. Because its not obvious to them, right?

Bill: Yeah and sometime in their minds like I have a good reason. I’m not allowed. I can’t. I won’t. If it’s I’m not allowed, they believe it’s not their job or they believe that they’re about to violate a social norm. It’s like that’s not how we do it around here which feels too risky. you know.. If they’re saying they can’t and they’re saying “hey I don’t have the time or I don’t have the resources” what they’re really telling you is “your list is not the same as my list and unless I’m forced to. I’m gonna keep working my list, Thanks.”

Michael: Yeah, i remember.. Back when i was doing all these things I remember speaking to these employees in a state-owned bank and the bank had brought in their sixth CEO and something like five years and he had launched another change program. And I remember asking his employees. you know why are they not excited about this? right? and then they said “well it’s the sixth program in the last five years”, right? We don’t know what will happen. It’s hard to get motivated about something that changes every few months. And that is one thing that consultants but also executives tend to forget is that employees have been there a long time. They don’t know whether this is anything new.

Bill: Absolutely right. It may be new to you. It’s not new to them.

Change management and motivation

Michael: Exactly so.. so.. you come in there as an executive you probably have a great career but if you completely  fail someone’s gonna hire you and give you a golden parachute. As the.. as Joe Smith who has got three kids and he’s saving for their education I mean he’s just got to survive the day versus trying to.. throw his hat into something. And I think that’s always a difficult disconnect. How do you motivate people who have been through this for so many times?

Bill: Well you could start by acknowledging that stuff didn’t work in the past. We are back to the humility thing again. Don’t act like people don’t have memories, you know.

Michael: Yeah.

Bill: How much it didn’t work. If you want people to believe that this has a chance at least start with acknowledging what didn’t work before and how this is different.

Michael: Yes. I like that. Do it without throwing everyone under the bus.

Bill: Hey we gave it a go. We thought what’s gonna work. It didn’t but we’ve learned from it. We gotta do different.

Michael: Yeah it’s also about listening to employees about what they think needs to be done differently right?

Bill: 100 percent! yeah exactly.. exactly right.. I mean.. It is the whole idea of listening. It’s a really interesting thing right. If you’re just waiting your turn to speak, you’re going in with an assumption that you have something to tell as opposed to something to ask and learn.

Michael: Yeah, you know. It’s interesting how you’ve talked about listening. I’ve only done one implementation engagemenet in my entire life and that one thing that struck me about implementation is that.. you’ve got to talk to people at least seven times to get them to change their behavior. So it’s not an engagement where you go in there, you do it the analysis, you present to the executive team and then you’re done. In implementation, you got a seat there, you gotta keep your door open, talk to the ‘person A’ the first time. Follow up with them, delivering the same message in a different way, a second time, a third time, a fourth time and a fifth time and only then do they trust you and start changing.

Bill: Well that’s even the trial, right?

Michael: That’s right. They may not even..

Bill: We delude ourselves a little. You know.. there was some academics named Meyer and Alan.

Michael: Yeah.

Bill: Through ahh.. in the 90s we’re writing on commitment and said hey not all commitments created equal. You know we’re often.. you know we want people to think this is the next best thing since sliced bread. For some people it’s just continuance commitment, they’re doing it because they need the job. On others do its just because all their peers are doing it, right? It’s like a normative thing. Very very few out of the gate are like.. oh my God this is so amazing.. I do it even nobody was watching.

Michael: Yeah.

Bill: We act like people should be there to start. You’re just trying to get adoption. Just try it and with the belief that if it works and they get reinforcements and recognition and you’re making it easy to do it then they’ll start grouping into it. But we have a completely delusional sense of what people are going to adopt and how quickly. (53.30)

Michael: Yeah.. I mean..  how tiring it was to talk to so many people. it’s.. it’s really tiring to just talk and try to convince someone.. and that’s when you’re doing it one-on-one, right I mean.. Imagine an executive who is relying on his team to implement things. But he doesn’t the ability to talk to everyone 1 on 1. It’s incredibly difficult, you have to be creative and you’ve gotta understand it’s gonna take a long time just to ..you know.

Bill: Let’s talk to everybody.. but the people who control the water cooler.. talk to everybody.

Michael: Yeah but even for them. It’s hard.

Bill: Of course it is. You need to give tools .It’s just.. It’s a reinforcement, right? I mean why.. why when you see a product online, you may not even give it a second glance but when you see that it says that five people that you know who your Facebook friends have reviewed it. You’re like six times more likely to buy it.

Michael: Yeah. The power of referral from someone you trust.

Bill: Exactly, right.

Michael: It’s basically what you’re saying. You basically want management’s idea to be referred by an ‘influencer’ what you call watercooler.

Bill: A 100 percent. Reinforced and suggested.

Michael: Now that makes sense to anyone.. but if you read a lot of management literature there’s a lot of emphasis on change being driven top-down versus this concept of cultivating these influencers.

Bill: Well the people who are buying a lot of those books are in fact in the senior roles and so there’s a.. there’s a bias to talk about the primacy of those roles. Like I said they’re.. they’re necessary, they’re not sufficient.

Michael: That’s a very very good point to bring up because one of the things I notice about the book which I really liked is that, it’s written in a very practical way.. whereby you talk about just about.. Every article in Harvard Business Review and so on. It’s written for senior executives on how he develops a plan. But your book straddles that plan into how do you actually get this to be rolled out, right?

Bill: Well. That was the intent, right? I mean it’s a pretty accessible guide to successfully changing how you run the place.

Michael: Yeah because you know, I can imagine a senior manager or even a middle manager reading your book and saying.. you know.. I can actually do some of these things because they’re not too theoretical, there are actual steps here. I made some notes here, a page 132, for example, there’s a great way I can break down the story. There’s one way and how you.. lock-in influences and so on.

Bill: Yeah.

Mass Personalization that will encourage Behavioral Change through Technology

Michael: And I think it achieves that. So.. let’s just circle back here, right. So you.. in Philadelphia, you obviously no longer are you still running the office or you’re now fully involved now in building the organizational practice.

Bill: Oh yah. I was just one of the people who opened it. I wasn’t.. wasn’t running it and I’ve always played more of the organization practice. you know.. leading that..

Michael: Okay and so what’s the next steps in these thinking and the organizational practice. Where are you going with this now? Obviously, there’s much more to be done.

Bill: Yeah.

Michael: What do you see as the next frontier?

Bill: I think.. you know.. I think there’s something really interesting coming out what we’re calling mass personalization to change. So how we can create a personalized and customized and configured experience of change for every individual.

Michael: That sounds difficult. How would you do that?

Bill: Well. We’ve been talking about performance and health, right? Yeah so if you were to draw a 2×2 grid and across the top it said TNH and on the left you put an O and I for an organization and individual. The upper left is where most people spend their time, how are we going to make money? The upper right health and organization, how are we going to run the place? It’s we.. it’s.. it’s you know.. it’s for the monolith. It’s overall, right? treating the average as representative of everyone. But how do you bring that to life well then how we’re going to make money disaggregates in the roles and people occupy those roles. So, what if we just make sure that every person knew what their jobs to be done were. What were the critical five or six things that they need to do to really nail the value? What if they were really clear on their spot in that placemat that we talked about. That they had a personalized placemat.

Michael: MMhhmm.

Bill: Now you’d know that all of their activity was focused on what mattered and, over on the lower right – how do I have to think and behave to bring this to life? That whole thing that you’re saying about how you’re gonna run place different? It always requires people’s thinking and behaving differently so can we get super specific? So we’ve built an app to help bring this to life for every employee and then we asked them “Hey, this thing that you’re being asked to do seems pretty straightforward why aren’t you doing it?” and when we get a handle on “not allowed”, “can’t” or “won’t”. You know the blocking mindset so then we can match the behavior we want them to do with the blocking mindset they have and actually give them a really good nudge. Not an act. Not a reminder email. A nudge.

Michael: I mean we assume that they are using your app, doesn’t it?

Bill: You can we can track.. you know.. what is great about apps.. you know when its on, you know it’s running, you know when they’ve opened it and then we can measure all the people around you telling us whether or not you’re changing your behavior. it is remarkable..

Michael: Let’s say it’s an organization. Let’s say sixty thousand people.. I mean.. it’s gonna be hard to get.. I mean.. I’m guessing it’s gotta be hard to get a high adoption for the app.

Bill: Yeah. I’m not sure. I mean most people read emails on their phone now. You know I mean could be.. you know when there’s structural things like shift work, people who don’t have company phones things like that. That can be a little harder you know.

Michael: The goal is not to get everyone to use it but enough people.

Bill: I would love – out of the gate to start with everyone who’s in a critical role. Everyone who’s involved in all the transformation and all the influencers. I would start with them and then work my way around.

Michael: That makes sense to me because then that’s easier to manage. If you need to.. to make contact with someone, you can do that. Yeah that makes sense.

Bill: I mean.. we just added a couple weeks ago a social wall. So someone say “hey I’m working on bottom-up innovation. I’m having a hard time. Who tried anything?” people can throw it up and say that they’re not and people can like it.. you know.. kind of recommend it and broadcast it. And it’s interesting how recognition from your peers is unbelievably reinforcing. I mean we can see that when somebody gets recognized by one of their peers. Their likelihood of a jump in behavior the next week goes through the roof. (59.20)

Michael: So now all this app work that’s currently being done within the firm?

Bill: Yeah.

Michael: So, this is merging of all the digital analytics were concern being brought to be an organizational design organization. (not clear)

Bill: That’s right. design work. digital work. capability building and any or.. or org psychology.

Michael: You know it makes sense and you bring the best of the phone from different places together to solve.

Bill: That’s the intent anyway, yeah.

Michael: Well it seems to be working and in this particular example. It seems to be working.. It makes sense as well because a lot of times when you see  firms talk about building apps. It’s.. as if the app is the goal but here, the app is a subordinate. It’s there to help people. They’re engaged.

Bill: It’s merely a conduit merely. A conduit. That’s all.

Michael: Yeah but it makes sense right because then you can push notifications to people. I mean if you’ve got the right..

Bill: So this.. this is really interesting. One of the features is the person gets to set when they receive their push – Sunday night, Monday morning, Tuesday at lunch. Well, the analogy I use because I just turned fifty right. So I’m old enough to remember these things. When Netscape had communicator and navigator they were the dominant browsers before. One of the things that was always cool was when the next version came out you downloaded. It you’d sit there for a half hour and configure it. Where which pane is gonna be your email, which PSNR gonna be a calendar, where’s your ICQ feed gonna commit. the minute you configure something to your liking, you are a multiple time or likely to keep using it.

Michael: That makes it interesting.

Bill: That’s why we make this thing configurable.

Michael: So now you are collecting all these data which means that – collecting all these data and you obviously bring this all into McKinsey which gives you more granular ways to cut and see what people are doing. Like a circle.. reinforcing circle here.

Bill: That’s the hope.

Michael: Well it’s a good start, right?

Bill: I mean the OHI has over six million people are taking it and closing in on three thousand companies. That’s a nice base of feeling comfortable that when we assert something about how.. how you run the place, impact performance we know that.. It’s not a belief. It’s not an assertion it’s not marketing. We know it. We’re hoping to do now in the individual level is at a similar level of understanding in depth around how different approaches to nudges impact people based on their own personality.

Michael: And I love the way you use the word naturally because it’s exactly what it is you’re trying to nudge people to modify their behavior.

Bill: That’s right it’s not a nag. it’s not a reminder email.

Michael: Yeah. I forget what economists call it but you’ve got to find a way to get people to change their behavior without making it you know.. obvious. You trying to get them to change their behavior because then they.. you throw them off balance (not clear).

Bill: Well, they might actually react really badly to it right. I mean.. people who are normative and have a high sense of social responsibility. The last thing they want to see is a league table.

Michael: Yes.

Bill: That’s gonna turn them off It’s competitive. But if you say to them “hey, you know seven.. seven of your colleagues have already done this. You know you’re gonna be able to finish it up” they will immediately be mortified but they’re letting their colleagues down.

Michael: Yes. Yeah that’s – it’s almost a gamification kind of model.

Bill: It’s just matching. It’s matching your interaction with the person to whom that person actually is and not assuming the average works for everyone. It doesn’t.

Michael: Yes it’s.. it’s like the way banks used to do microfinance. If you land money to six friends and one of the friends knows that the other five is paying on time, they want to also pay on time, right?

Bill: Yeah they don’t wanna be the odd one.

Michael: They don’t want to be the odd one out. It’s not shaming them. But it’s making them aware.

Bill: Well it’s pride. I mean you are directly going after pride there.

Michael: Yes, but you’re not doing it in an abrasive.

Bill: No! No. no. no. You’re tapping into the person’s motivation.

Michael: Exactly you are figuring out what.. do they want to be known for and nobody wants to be the one who’s not doing well.

Bill: That’s right.

Michael: I mean. You’re showing them where they actually. You are doing in a good way. Our discussion, we’ve never spoken once about organizational structures which I think is good because whenever people talk about org design they always go to organizational structures or organograms and so on which is really out, I mean you need those things but it’s not what drives a healthy organization..

Bill: Yeah I don’t think so. Look. I think it’s.. It’s an interesting. it’s an interesting tactic to group together activities and try to get one up you know an economies of scale.. skill or scope (not clear).

Michael: Yeah. Yeah. Organograms is more like a financial statement it is the snapshot in time and it doesn’t tell you how to pull your resources and allocate capital and so on.

Bill: No. right. I mean you really do need to understand how you’re gonna make money before you allocate the two kinds of capital, financial and human. And that’s an interesting aside I know where I know we’re coming close to time here. But as an interesting aside, all of our governance systems are set up to monitor the capital that we’re long on – and which is money. The capital we are short on – people, we ignore. And we can barely get people to pay attention to it. That makes no sense.

Michael: Yes, in terms of time. I do have additional time where I’m touching a few more points. How are you doing the time?

Bill: I have.. Hold on. I want to understand what time it is. I want to make sure I understand.. where will we go to? where we going to.. that half past.

Michael: Yeah. How does that sound?

Bill: Yeah yeah. If we can go a little shorter fine. But yeah.. that’s fine.

Change management and motivational core of individuals

Michael: I got few more points that we’re quite interesting and make sure that the audience is aware of it. Okay. So good. We are talking about organizational structures, you know it’s a snapshot. It doesn’t talk about allocation of capital. You talked about them. you know.. One of the most important assets we have which is ..I don’t want to use the word human capital- it’s too obvious.. but let’s just say it’s people, right? So motivating them and so on.. you then see.. you.. in the way you’ve written about organizational thinking. it’s… it’s very much tied in to the original work you did for your PhD and your first work which is about motivating people and getting the most part out of it. I mean that’s the way I’ve seen you interpret organizational thinking.

Bill: Well – I mean at its core you are trying to get people who otherwise would do what they want to do what you want them to do given the way you want them to do it when you want them to do it. I mean.. if that’s not calling for motivation. I don’t know what is.

Michael: I mean what you doing.. going what you’re doing.. is you’re going back to why an organizational team was put together in the companies.. to get the most out of employees right? The job was not to put organograms and then build something.. (1.05)

Bill: That’s right the belief said – is these people working together in concert to a common end will accomplish something.

Michael: MM..

Bill: That’s the intent.

Michael: Yeah I mean.. that’s you know.. that’s the right way to do it. so.. other area that I like the book talked a little bit about how this kind of thinking can be used to motivate countries and the reason I want touch on that is we have a lot of listeners in emerging markets who sit on boards of state-owned companies and so on. Is there any particular insights you’ve seen.. around how this applies to state-owned companies or so?

Bill: Sure. yeah. I’ve served them. I’ve served them.

Michael: Good.

Bill: I think you know.. let’s say you may be constrained by the extent to which you can differentiate through incentives or you may be constrained in terms of formal consequence management but you know it’s still there. Influence, power, recognition, working on work that matters. Working with people you like, right? You know all that.. all that kind of stuff is still there. People when they get up in the morning regardless whether they’re going to a government entity, a state-owned enterprise, a private, or a public enterprise. No one gets up in the morning says ..well I’m gonna be really horrible today. That’s not how it works. We spend too much time at work. No one wants hassle. so the game you’re playing is.. how can you get people lined up on doing what you’d like them to do and get to at least some kind of a common agreement about how much effort it takes? You know a standard, right? Well that’s but that’s the essence of it, right. That’s why you’re trying to create an environment. That’s the whole point of the influence model. .

Michael: A government entity, a state-owned enterprise, a private, or a public enterprise.  It’s still a business and serve fundamental things.. all things is required.

Bill: You’re trying to have an impact. You have a budget. You have a bunch of people allocated against it. Your financial capital against it. It’s the same idea.

Michael: It doesn’t matter whether you’ve got a boss who just happens to be.

Bill: It just changes how you keep score that’s all.

Michael: Yeah so what you saying is that the way to motivate humans is going to differ by culture and region but the principle that you have to motivate the employees is still the underlying premise.

Bill: 100 percent. A 100 percent.

Michael: And those tools and principles are broadly the same, right. You gotta identify what people know what they need, know what they want, to find a way to give that to them.. in a way that’s beneficial to the company.

Bill: I mean right.. I mean.. the beauty of this.. is it holds true everywhere.

Michael: Mm.

Bill: Say where you’re going to go and make sure it’s really attractive. Take a really honest look about where you are.

Michael: Which is basically capitalism, right?

Bill: Right figure out what skill.. what skill you need to close that gap and figure out how people have to think differently to help close that gap. Structure set of activities to make sure you make the environment really conducive to them changing. Pay attention once you hit go whether or not the darn thing is working. So you can course correct along the way and then while you’re doing it as soon as you find something that works. Change the formal system don’t make this the event make it how.. you run the place. Repeat.

Michael: I think that’s a good summary. Bill, thank you so much. I really, really enjoyed speaking to you. I enjoyed the book as well and..

Bill: Well thank you. I really had a good time. I’m glad.. I’m glad we did this.

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Cheers, Kris

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“To each there comes in their lifetime a special moment when they are figuratively tapped on the shoulder and offered the chance to do a very special thing, unique to them and fitted to their talents. What a tragedy if that moment finds them unprepared or unqualified for that which could have been
their finest hour.”

Winston Churchill


VIP level (6 months + additional access/deep dive one on one coaching). Special price (conditions apply) $14,995: Apply for VIP Now

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Installment options are available (outlined below).

Unfortunately, many professionals are ignored, miss out on promotions, or feel they are on the wrong path and not living up to their potential. This results in feeling frustrated and under-appreciated. We have tested strategy tools and blueprints that allow our clients to stop being ignored, get promoted or start their own business, and find a greater career and personal fulfillment, and a higher level of contribution.

The MasterPlan Coaching Program is a group-mentoring program where we work personally with you to help you develop and start implementing YOUR MasterPlan. This coaching program is designed to help clients with the guided implementation of our most popular Insider program, the MasterPlan program. In the MasterPlan program, we cover the critical skills and strategies we developed for our most successful executive coaching clients and give you a blueprint to significantly alter your career.

Imagine the power of getting personalized guidance and coaching aligned with your unique situation, as you are developing your MasterPlan and start guided implementation.

We are putting together a small cohort of group coaching clients. This program makes coaching with us accessible to a broader group of clients.

As one client recently said:

If Michael had been my mentor from high school, I would be a President by now. Click To Tweet

What makes this program different?

How did we train Andrew to go from senior manager to senior equity partner in 3 years? How did we help Fei outperform her peers at a major PE firm? How did we coach CEOs of multi-billion dollar companies? How do we simultaneously manage so many studies to such high quality of insights? Why do we take on such punishing work?

In the span of few years, on top of everything else we are doing as part of FIRMSconsulting’s core priorities, we also have co-founded an electric car start-up in China, a luxury brands business in Europe, a news business, and we also co-own a precious metals mine.

These ventures are core to our mission of teaching business strategy in a compelling manner. Because we meticulously track the development, tactics, strategies, meetings, finances, and trials and tribulations of every single business, to produce detailed training programs.

I get asked this question a lot: How do we achieve so much and to such high levels of quality while remaining so energized? This program answers these questions. We will help you build YOUR master plan.

We designed this program to completely reinvent and revive your career. This is a program about doing big things. Things that you would not believe were possible.

We have condensed all the key lessons from our most popular programs and, based on member feedback, provide more advanced tools and techniques.

Productivity is not about how much you can do to a high level of quality. That is a myth that harms your career. To be successful in life you should not build a career around your competitive advantages in life. That may lead to very average career. Too much planning may paralyze you. Too much education may paralyze you.

You need to know when is enough and move forward.

You do not need a fancy degree, or any degree, to be successful in business. You just need to be in a career or pursuing an idea. Success comes from doing a few things consistently well.

Tatiana had a Wharton MBA and struggled to get her business moving until we completely changed the way she managed herself, then her team, and finally her business.

This coaching program will be hard but if you stick to it your results should be no different from that of the clients above.

This program explains how we keep our performance high and how we help clients keep their performance high, and it is based on us having personally advised CEOs of multi-billion dollar companies.

Maintaining a high level of performance is NOT about simply having the problem-solving skills of a McKinsey, BCG et al. partner. It is about MORE than communication and leadership skills. If you want to operate at our level, and the level of our most successful executive clients like Andrew, Richard, Fei, Chetan, and Tatiana, and CEO clients, then you should try to get in and be a part of this rare opportunity to not only watch The MasterPlan Program but to personally work with creators of the MasterPlan program and get individualized guidance and coaching applicable to your personal situation.

It can literally change your life.

Objectives of the program:

  • More clarity on the Massive Transformation Purpose (MTP aka vision)
  • Develop a MasterPlan/the critical path/blueprint for your career and life
  • Start a guided implementation of your MasterPlan with our coaching
  • 6 months (VIP)/3 months (Elite) challenge towards the result YOU want to accomplish, with milestones and accountability
  • Identifying your assets (competitive advantage vs. comparative advantage)
  • Help you understand and break down limiting beliefs, limited mindsets, old patterns, and bad habits that may be holding you stuck
  • Dealing with personal circumstances and how to have a balance between career/business growth and personal life/taking care of your health/family/community
  • Getting results
  • A support system and an opportunity to establish a life-long network, and potentially friendships with other accomplished professionals in a deliberately small select peer group

It’s an opportunity for an elevation in your position, getting consistent guidance and support on your journey, gaining clarity on the vision, learning from other accomplished professionals.

This program was co-designed with some of our closest clients. Here are paraphrased descriptions of this program from our clients that you may find helpful. However, please don’t allow those descriptions to limit what this program can do for you …

  • “It’s a group of people that want to create some very large change in their life. They either do know what it is or don’t know what it is. They don’t want to waste tons of time figuring out things without guidance and mentorship. There’s a bunch of learnings that are out there and coaching that can help them avoid making the wrong moves for them. And then once they are somewhat clear on where they want to head towards, of course, there’ll be nuances they go about learning, helping them avoid the pitfalls that often they would have fallen into along that change.”
  • “It’s not going to be a program for too junior of a person… Looking at our career as if it’s four quarters of a sports game. And starting at the age 25 to 35, that’s the first quarter. And age 35 to 45, that’s the second quarter. 45 is halftime… and 55 is the end of the 3rd quarter and 65 is game over. Now, that sounds a little harsh, but just looking over 10-year spans, this is probably a program for somebody who’s approaching that halftime. Still has a third quarter, fourth quarter. How we can use the experience gained from the first half of the game to be able to really create a high magnitude impact in the 3rd and 4th quarters of the game.”
  • “A way to get structure, encouragement, and action towards your big life’s goals.”
  • “Learn and apply MasterPlan Program tools to launch something big in the next decade. You’ll identify your purpose; pick your unique 10 filters to evaluate every opportunity; identify your role models; and make big progress in your Phase 1. Plus you’ll get support from FC partners and motivated, mid-career Insiders who are also launching something big.”

Step 1: Read the full details below.
Step 2: Apply for VIP level (6 months + deep dive one-on-one coaching). Apply for Elite (3 months).

A unique 4-part structure

THANK YOU to our FC Insiders for Your Feedback!

You asked to introduce a focused career coaching program. You asked for mentorship opportunities.

We listened.

Here’s the 4-part structure we’re going to use to make the MasterPlan coaching even BETTER than any one-on-one program we ever offered …


  • We also call these results clinics.
  • Exclusively for MPC Members.
  • Guaranteed personalized attention from Michael/Kris.
  • Interactive SPG/touch-point with Michael/Kris, giving individual feedback to participants as they progress through the critical path outlined in the training program, with a goal of progressing towards their goal.
    • You will complete steps of the critical path leading to your goal.
    • We review your progress/material submitted/your questions during the 1st, 2nd and 3rd week of the month, and provide personalized feedback.
    • You have an opportunity to get your individual questions answered during the 1st, 2nd and 3rd week of the month.
    • Have a decision to make? You can get our perspective to help you make the decision. If you are stuck with not knowing the best approach to follow, you can get guidance in the SPG.
    • You can call in from a hotel room, airport lounge, or your home office. We will select a time that is the best compromise for the whole group.
    • Regular SPG calls allow you to have consistent feedback as you are progressing through the critical path outlined in the training program.
  • Can’t attend some sessions live? Submit your questions to review, we’ll answer it during the results clinic session and you’ll get our feedback in the VIDEO REPLAY.
  • Watch us mentor other participants, and learn from them and alongside them.
    • You will see the feedback we offer them and see the progress they make.
    • You are not just learning from your feedback, but from all the members on the call – shorten your learning curve.
    • This is of greater value than you may realize and real breakthroughs often come from an idea triggered by listening to feedback for another participant.
  • Troubleshoot your most pressing career issues and goals.
  • Ensuring participants do not get stuck or stagnate. Clients said they need bi-weekly or at least monthly interaction with us to use our formidable tools and methodologies to help them maximize the results they can achieve. The duration of the sessions depends on what participants need. We schedule 1 hour but it is not uncommon for sessions to be around 1.5 to 2 hours long. Our longest results clinic was 4 hours and 48 minutes for Speak Without Limits program (initially scheduled for 1.5 hours).

What are the Dates?

You tell US!

Vote on time and day of the week options. Approximately Saturday or Sunday 10am PST on most weeks,

so you can take the call in private and without stress. We will pick the best compromise time for everyone, including Michael.

$36,000 VALUE for VIP and $18,000 VALUE for Elite. Tuition fee for this program? See below


  • Career transformation critical path taught as training lessons.
    • This career approach/method/steps can be applied to all careers from strategy to operations, to digital, to start-ups, to government. While we are known for helping clients become senior rainmakers in consulting, our executive coaching clients very successfully applied our approaches outside of consulting.
  • A clear outcome. Designing YOUR unique MasterPlan and critical path and starting guided implementation so you can start gaining momentum.
  • Complete your work for each step and use small private group coaching sessions (career clinics) to accelerate your progress and results.
  • Additional 12 months access to the training series and replays of all small private group coaching sessions after the coaching program ends, in case you need a refresher.

$7,000. VALUE. Tuition fee for this program? See below


  • Elite: 55 minutes strategy session with Kris.
  • VIP: monthly 55 minutes deep dive strategy call with Kris (6 strategy sessions during the duration of the program).

$6,000 VALUE for VIP and $1,000 VALUE for Elite. Tuition fee for this program? See below


  • Critical path downloadable resources to help you work through the program effectively.

$3,000. VALUE. Tuition fee for this program? See below


180 Days (VIP)/90 Days (Elite) of Personal Mentorship with Michael/Kris to help you transform your career.



(3) ONE-ON-ONE STRATEGY SESSION(S) WITH KRIS (monthly 55 minutes deep dive strategy call for VIPs/one 55 minutes session for Elite)


Like-Minded Community & Support

… To help you get even Bigger Results and Faster Results…


Small Private Group Coaching Sessions/Results Clinics ($36,000 VIP/$18,000 Elite)

Training Program of the Entire Career Transformation Process ($7,000)

One-on-one strategy session(s) with Kris ($6,000 – six 55 minutes strategy sessions – VIP)/$1,000 – one 55 minutes strategy session – Elite)


Exclusive Community (Priceless! At least $2,000)

Downloadable Resources ($3,000)


$54,000/$31,000.00. Tuition fee for this program? See below

We are creating 2 levels to make the program more accessible. Pricing:

Apply for VIP: 6 months of access to coaching and guidance plus deep dive one-on-one coaching (monthly 55 minutes deep dive strategy call during the duration of the program). We are offering a special price for clients who are willing to support us with a video testimonial if they find the program valuable. And if you pay upfront there are additional savings. The upfront price under this special condition for VIP is $14,995. However installment option is also available (below). Apply Now.

Installment options for VIP:

Option 1:

Payment of $4,995 this week.


6 payments of $1,995 by 10th of each month during 6 months period.

Option 2:

Payment of $2,995 this week.


6 payments of $2,450 by 10th of each month during 6 months period.

To apply for VIP with an installment plan complete the application here and then once you are on the payment page use the link above to make a payment using an installment option of your choice.

Apply for Elite: 3 months of access to coaching and guidance as described above. We are offering a special price for clients who are willing to support us with a video testimonial if they find the program valuable. And if you pay upfront there are additional savings. The upfront price under this special condition for Elite is $5,995. However installment option is also available (below). Apply Now.

Installment option for Elite:

Option 1:

Payment of $1,995 this week.


3 payments of $1,650 by 10th of each month during 3 months period.

To apply for Elite with an installment plan complete the application here and then once you are on the payment page use the link above to make a payment using an installment option.

We are filling in the seats now. If you are inclined to embark on this journey apply above. If you have any questions email [email protected]

Terms and conditions apply. If for any reason the seat can’t be allocated, we will initiate the refund within 3 business days.