We recently held our annual leadership meeting where we debated the future of Firmsconsulting and made some important decisions. We have come a long way since starting as a blog exactly 4.5 years ago. Yet, it seems like we are just getting started.
This is a special and deeply sincere thank you to all our readers who built a tiny blog into a full company operating around the world.
This update discusses the significant changes we will make. Some of these you would have deduced based on the changes to the website, though the others will be new.
All of the studies and shows we discussed in the February update will proceed as planned. There will be no changes to those commitments. The big decisions in this email simply explain what we are doing and why.
Most importantly, we want to be more focused. So when you read everything below, it does not mean we are doing more. We are actually going to do less and focus around just TCO + its spin-off shows and the consulting studies + related training. That is all.
Overall strategy in one word: crowdsourced
We will remain committed to our training objectives. We will remain the firm that teaches strategy, operations and implementation at all levels: from those trying to get into consulting to active consultants to executives. That will be our single goal.
How will we achieve that goal?
First, we will remain focused on finding and nurturing a new generation of consulting leaders. In that regard, all our work on TCO, case interviews and some new productions will continue. We will, in fact, expand the work we do here.
Second, the big change is that we will significantly build out our capabilty to solve significant and complex management consulting studies. In other words, we will be a consulting firm. However, you have to read on to see how we will do this very differently and why we will not be a typical consulting firm. It is more correct to say we are a training firm with consulting capabilities.
Why significant and complex studies you ask? It is simple. Life is too short to get up in the morning and help someone sell sugared water or pulverized potatoes. We want to solve problems that matter. We want to do things that push the world forward. We want to solve fundamental problems.
Values first: Our values have been the central reason for our progress. We want to be more stringent in applying our values. For example, we have not been as effective at promoting younger partners who are female or minorities. We will make changes here this year.
We will do more to find outstanding females and minorities, and offer them roles which develop them into leaders within our firm. Why should our internal policies matter to readers? When readers only see males as senior partners it creates a psychological barrier that this is a male profession. We need to change this.
Training first: Everything we do is done with the objective to record and publish it to train our subscribers. If we cannot publish anything on our website, to benefit subscribers, we will not do it. This is a fundamental principle we will follow.
B2C vs. B2B: We are a B2C firm in that we place the needs of our subscribers first. We will always be a B2C firm. We will not take on consulting clients, for any amount of fees, unless we are allowed to publish the studies on our website. The needs of our B2C clients trump those of B2B clients.
All other consulting firms are B2B firms. Their primary clients are businesses. Our primary clients are subscribers.
In other words, we place the needs of the key stakeholder first. This is crucial distinction, because the key stakeholder is the consumer and our subscribers are consumers. We work for the key stakeholder and not the CEO.
We believe this is a long-term trend where more power passes to the key stakeholder and stakeholders should be the group selecting and vetting consultants. The history of business in the last 100 years is one of increasing power to consumers and stakeholders. We believe this trend will continue and we want to be at the front of it.
As technology increases and stakeholders become more savvy, they will want to be involved in business decisions. This is a long-term bet on technology and the changing nature of corporate governance.
Not billing consulting clients: We will no longer bill consulting clients. We billed LAB and the Power Sector clients for the work done. This will no longer be the case and we have developed an approach which can work and avoid moral hazard.
All the big studies we conduct around the world will now be entirely funded from our subscription revenue.
This change is one reason we are asking readers to pick studies from our shortlist. Stakeholder / subscribers should select the issues that are important to them, and we will conduct the studies by negotiating with the client.
This flexibility gives us enormous advantages.
This is crowd-sourced management consulting. This model allows us to conduct high-end work in poor parts of the world without compromising quality standards. If we selected a non-profit model we would no be able to hire great people and invest in new ideas. Both are expensive to do. In the long-term a non-profit model would always see declining quality standards and that hurts clients.
If we charged the client, many worthy problems could not be fixed since the fees are too high for many clients.
By breaking-up the costs into tiny potions and passing it to subscribers, we can focus on fixing pressing problems for clients who do not have money to pay for consulting fees, but we can do so while maintaining the highest possible standards.
We will soon allow readers to suggest studies and vote on them. The studies with the most votes will be selected, and provided the client agrees to do the study after we approach them, we will undertake the study and publish it here.
Want to do a major study to restructure the economy of a poor but major city in Latin America? Want to undertake a climate study in a poor economy? Want to restructure an inner city hospital? We can now do that since the client need not pay for the study.
Crucially, we can deploy the best skills and invest in research because the client need not cover the costs. The stakeholder / subscriber / consumer does.
This is not to say that all our work will be done in emerging markets. We expect 60% of all studies to be in the US and Canada. The remaining 40% will be split among the BRICS + Turkey, Mexico, Indonesia & Nigeria. FYI – of those 9 countries, studies have already been scheduled in 5 of them.
Full transparency: Every slide, document, excel model and report in every study we undertake will be broken down into training videos and published on this website. We will never undertake a study that cannot be shared with our subscribers.
We will continue to make our entire intellectual base open to any subscriber and client. A great firm does not stay great by hoarding knowledge. It is about attracting and motivating the finest minds to solve business problems in more creative ways.
We are far from being a great firm, but that is what we aspire to be.
Invest ahead of the curve: We no longer want to attain parity with other consulting firms. We no longer want to be as good as they are. We no longer want to merely leverage our skills developed at the consulting firms. We will develop new ideas and analyses techniques in strategy, operations and implementation.
The basis of being competitive is taking an extreme position and investing in it substantially. That is how one becomes productive. You will see us invest in unusual but effective ways of doing things. We are not trying to do things other firms can do.
We will soon be rolling out centers of excellence to support the studies already published. That will be very exciting and we are looking forward to it.
Adhering to our principle of transparency above, we will share all intellectual property and teach you how to replicate exactly what we did.
Competing with McKinsey & BCG: In the LAB study and Power Sector Study we inadvertently “competed” against BCG and McKinsey to earn the right to serve those clients. We where very successful. As we work with important clients, we expect to bump up against these consulting firms often.
We will probably lose more opportunities to them than we win, but we are certainly going to not walk away when we believe our approach is best for the client.
Adhering to our principle of transparency, we will share all intellectual property including proposals, our concepts used and approaches to obtaining the work.
Changing Competitive Advantage: Since we where founded, we built our competitive advantage on the fact that we where ex-partners from the most elite firms.
That worked wonderfully when we where serving clients who could not afford nor had access to McKinsey or BCG. LAB and the Power Sector Studies showed us the stark limitations of that model.
This model fails abysmally for clients who can easily afford and have access to McKinsey. Why would a multi-billion dollar company hire a firm of ex-BCG and McKinsey partners when they could just as easily hire the current BCG and McKinsey partners?
Do you see the problem?
We have not yet developed a solution to this problem. Make no mistake, it is a problem.
Where we will work: Fortune 1,000 private companies like GE and Ford are not yet ready to share all their data in our transparent approach, even though we hide identities very carefully. In time they will get there as stakeholders become more powerful.
Yet, that will take time.
Governments on the other hand must share all data. We will focus on governments for this reason. Note, we do not say the public sector since governments own many large private businesses and this definition is narrower than the public sector. We will rarely do public sector work and currently have none planned.
We will advise businesses owned by governments: Etihad, Emirates, Codelco, USPS, Import-Export Bank etc.
Specializing in any one sector, the financial services sector, for example, drastically narrows our scope to that one sector. Subscribers would not want to see studies from just one sector. Governments, however, operate across sectors.
Governments own companies operating in every single sector in the world: banking, insurance, food, transport, aviation, autos, healthcare etc. Therefore, by focusing on the government we can publish studies across sectors.
This does not mean you will see no work for private companies. We are talking to a Fortune 100 firm to apply our open-approach to management consulting.
Nothing changes from what you have already seen, but this explains our thinking and rationale in far more detail.
We always welcome comments and suggestions.