This evening we had dinner with the founders of a boutique firm of management consultants. As former colleagues we were interested to know how they were doing. Invariably the question of growth came up and the question above was posed. It is an intriguing and very common question. If you are starting a new firm by yourself this question would also come up, or like my former colleagues, if you are growing and need to break into new areas this also comes up. To win new work you cannot mislead clients since that goes against the core of management consulting ethics. So you need to find a way which works but does not misrepresent yourself. This is what we would recommend you do.
Conduct a mini-study.
In our own experience this works really well. It does not always work, but it definitely positions you well for future work. Let’s use an example to explain how you could do this.
Imagine you knew that Toyota was interested in reviewing their dealer network in the US and wanted to appoint a consulting firm to do the work. You have never done dealer strategy work, never done work in the automotive sector and your only chance of getting the work is due to the client awarding the work who knows of you and is willing to meet you.
First, read the general stories about dealer networks and their problems. Read about problems across brands and across price segments. From reading these stories and over a long enough time period, you can pick up the common themes in the sector. Read broadly and across publication of quality; such as the New York Times and the Wall Street Journal.
Second, visit the sites of firms which have strong automotive practices. Roland Berger, Oliver Wyman and AT Kearney are particularly strong here. Read their reports which are free on their sites, or possibly on this site, summarise the key issues they have identified and the frameworks they have used. As a result of this process you can speak about the subject with some authority, learn the language and start building a list of potential problems in your mind.
Third, from this research develop a set of hypotheses that you think may be the problem with Toyota’s dealerships. Come up with no more than 5 or 6 good hypotheses. Write them down, think about them and improve them. All these hypotheses must collectively help you answer ONE fundamental problem in Toyota’s dealer network. This one fundamental problem is likely the key question in the minds of Toyota executives, the reason they are doing the study. Remember, Toyota would not be doing the review unless they felt something could be done better or needed to change. You need to think about that key reason why they want to do the study. What is the problem they are trying to solve? Do not worry if your key question or hypotheses are wrong at this stage – no one knows the answer, that’s why Toyota is doing the review! This process is meant to make you start thinking about the right problem. Make sure your hypotheses are collectively exhaustive (they cover every part of the key question) and are mutually exhaustive (the hypotheses do not overlap). Below are some examples.
(Remember, your key question is based on all your research thus far)
Hypotheses 1: Dealerships incur higher costs since they have full-time staff throughout the year rather than the peak periods.
Hypotheses 2: The dealerships have lower margins since their scale and inventory does not qualify them for lower rates from commercial banks, thereby forcing them to take on more expensive financing at smaller banks.
You get the picture?
One thing to note about hypotheses; always write the hypotheses out in the following format:
What is the event or action examined? H2 – cost of financing
What caused the event or action? H2 – lack of scale of the dealership or lack of a guarantee
What is the result of the event or action? – H2 – higher credit costs and lower profits which results in the dealership raising support service fees to recover lost earnings
This is a very powerful way to write the hypotheses. It focuses you on finding the right data and allows you to quickly eliminate problems which may turn out to be no problem at all.
Fourth, armed with your background knowledge, key question and hypotheses you need to find a way to speak to a few Toyota dealerships to test your thinking. If you do this for several dealership and offer to share the full results without divulging the identities of the participants, very, very few companies would say no. It is a simple and powerful way to share ideas and test your thinking.
So let’s recap what you have:
1. Broad list of the themes affecting US car dealerships
2. List of problems/solutions/frameworks from other consulting firms
3. Potential key questions and hypotheses for Toyota
4. Verified (or discredited) hypotheses based on your discussions with focus interviews
5. Information from the focus interviews
Overall, that is quiet a powerful list.
Based on this list you could easily assemble a very compelling 10 slide presentation with the following:
Slide 1: Themes in US car dealerships
Slide 2: Similar problems faced by other dealerships around the world (Notice how you turned someone else’s experience into your advantage. You should not take credit for the information, but mention the details.)
Slide 3: How they handled it (Notice again how you turned someone else’s experience into your advantage. You should not take credit for the information, but mention the details.)
Slide 4 – 8: Present the key information from your focus interviews with the dealers. (Text is boring. Use bar charts, graphs and other data to make your case. Present discredited or disproved ideas since these are also very useful)
What were the main problems the dealerships listed?
How many listed them?
Do they think they need help?
What were the quick wins they outlined?
Slide 9: Based on all your work, write down your final draft of the key question to be answered and hypotheses. (You need to share this with the client so you can ensure you are both on the same page)
Slide 10: How you would go about helping them with the problem (Present your approach at a high level)
We have done this before many, many times so we know it works. Notice how it deflects attention away from your lack of prior experience and forces you to prepare a well thought-out document which shows you have attempted to understand the problem. Such an approach is a good basis to get a small project, which should you manage well, could turn into a major project. You cannot always succeed in this way, but at the very least:
1. You have shown the client you understand his/her problems,
2. You can think through business problems,
3. Likely created a reason for him/her to invite you for future work,
4. Your focus interviews may have opened up more potential work, and
5. You now have a study which you can take to potential clients or share in the media.
This approach forces you to create high quality material which can be reproduced. This can all be easily done in 2 weeks.