The Executive's Guide to Consultants: How to Find, Hire and Get Great Results from Outside Experts

The Executive's Guide to Consultants: How to Find, Hire and Get Great Results from Outside Experts

by David Fields


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Product Details

ISBN-13: 9780071801928
Publisher: McGraw-Hill Professional Publishing
Publication date: 11/16/2012
Pages: 256
Sales rank: 1,071,518
Product dimensions: 6.30(w) x 9.10(h) x 1.00(d)

About the Author

David A. Fields is the founder and managing director of The Ascendant Consortium, a unique organization specializing in maximizing the ROI from consulting engagements. He writes a monthly column for IndustryWeek, and his commentary has appeared in USA Today, CNN Money, Investor's Business Daily, Advertising Age, BusinessWeek, SmartMoney, and other publications.

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The McGraw-Hill Companies, Inc.

Copyright © 2013David A. Fields
All rights reserved.
ISBN: 978-0-07-180193-5



Why Bother?

Estimating the Value of Doing Any Project

In This Chapter

In this chapter you step back and ask whether your project is even worth doing and, if so, what value you can reasonably expect from it. You will walk through a real-life example that illustrates how to get a better handle on your initiatives. After all, why bring in a super guru if the project will generate low return? Conversely, if an initiative is enormously valuable for your company, isn't it worth bringing in the best resources available to make sure it goes well? As you go through the chapter, you will encounter suggestions that increase your valuation of a project as well as some that decrease the estimate. The point is to help you to help develop an accurate picture that can guide your decisions on consultants.

Key concepts in Chapter 1 include the following:

* "Why bother?"

* Contribution, scale, duration, and frequency

* Underestimation error

* Egocentricity error

* Multiplier effect

"Why Bother?"

On September 15, 2004, a division administrator in the Federal Highway Administration approved a project to build a bridge. This particular span, which would stand taller than the Brooklyn Bridge and stretch nearly as far as the Golden Gate Bridge, would improve access to an international airport. It's hard to argue against the Golden Gate and the Brooklyn Bridges as valuable additions to our national landscape, and improving access to an international airport seems like a worthwhile endeavor, right?

Wrong. The new bridge was a pet project of a powerful person with parochial interests, the airport serves fewer passengers in an entire year than fly through JFK International Airport in a single day, and the home of this airport has a total of 50 residents. In February 2005 a small, nonprofit organization based in our nation's capital issued a scathing report on the project titled, "$315 Million Bridge to Nowhere," and eventually the project was scrapped.

As an executive thinking about hiring an outside expert, your first task is to make sure you're not building a Bridge to Nowhere! Everything else in this book will be for naught if you shouldn't be doing the project in the first place. The question that, if it had been answered correctly, would have stopped the Bridge to Nowhere before the first contractor showed up on the snowy shores of Ketchikan, Alaska, is "Why bother?"

"Why bother?" is the first question the very best consultants ask. They (and the very best clients) always begin the discussion of a project by taking a serious, second look at the value.

In fact, the answer to "Why bother?" is critical whether or not you turn to outside resources. A lot of the initiatives that companies hire consultants to take on are not worth doing, period; not with a world-class expert, not with the unemployed bloke down the street, and certainly not with your own people. They are Bridges to Nowhere—simply not a good use of time and money.

Before you skip this section under the assumption that you already know that your reasons for pursuing your project are sound, remember that the Bridge to Nowhere had advocates and that the document approving the project was a dry, 38- page report chock full of supporting statistics and compelling rationale.

In my examination of hundreds of potential consulting projects, I have found that over 95 percent of the conversations start without a rigorously developed response to "Why bother?" Precious few executives could say that the risk- adjusted value they expect from their project is $725,000 based on seven assumptions, or some similar statement. This is as true of multimillion-dollar projects for blue-chip companies as it is of ten-thousand dollar projects for the local liquor store owner.

"Why Bother?" in Action—A Real-Life Example

Take a look at this conversation between a consultant and a senior officer of a global manufacturing firm. Other than editing it slightly to make it shorter and to cut out identifying information, this is exactly how the discussion went. At the point we pick this conversation up, the client has related just a bit of background about why he called.

Consultant: So, if I'm hearing you right, you are hiring a well-known consultant to help you develop a global digital platform and roll it out across your organization. Is that right?

Client: Yes. That's essentially what we're doing.

Consultant: And since this is looking like it will be an expensive proposition which will affect a lot of people in your company, you would like me to work my magic so that the resulting value is higher and the risk is lower. Yes?

Client: Yes, if you think you can do that.

Consultant: Well, let me ask you a question first. Why bother?

Client: What?

Consultant: Why bother to do this? Why bother to bring me in, and if you don't mind my asking, why are you even bothering to do this digital platform project?

Client: Well, we have no standard process for our digital efforts, and every country is doing it differently, so it's haphazard and inefficient.

Consultant: Okay, so what real difference will it make if you are standardized globally rather than how it works now? What measurable, beneficial impact will it have on your customers, your business, or your employees?

Client: Uhmm, right now we don't have a consistent way to get our message out. There's a lot of inefficiency. This project should reduce our inefficiency.

Consultant: So you're a bit inefficient? What does that matter? Will it make a material impact on your customers, your business, or your employees if you're more efficient in this area?

Client: Yes. If we're more efficient and more consistent, we believe it will materially improve our digital efforts worldwide. They will be more effective.

Consultant: Why bother being more effective? Seriously, how much of a difference will it make being more effective at your digital efforts?

Client: Uhmm ... well ... we don't have that totally modeled out, but we have some estimates of how much incremental business we can capture if we improve our digital efforts.

Consultant: Fine. Let's start there. How much business do you think you can gain?

Client: Probably around $65 million worldwide if we do this right and execute it well. This is a significant effort, which is why we're bringing in a big consulting firm.

Let's break down what has happened so far. Probably very few consultants have pushed back on your projects that hard, which is why you need to do it yourself. While the consultant may not realize it, you are both better off if you are working on a project that creates the most possible value for you. A Bridge to Nowhere may be fun and lucrative while you are building it, but it definitely won't serve anyone's best interests in the long run.

You should use two questions to start establishing value:

1. Why bother?

2. What is the real, measurable impact on your customers, your business, or your employees?

When I ask these questions, clients will often launch into exhaustive, eloquent explanations of why the project is so important and what the strategic thinking is behind it. That's well and good, but it dances around the point. What is the measurable difference versus what you are doing now? Soft benefits are fine; however, the projects you pursue should add measurable value. (See Figure 1-1.)

Virtually anything

Excerpted from THE EXECUTIVE'S GUIDE TO CONSULTANTS by DAVID A. FIELDS. Copyright © 2013 by David A. Fields. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Foreword x

Acknowledgments xii

Introduction xiv

Part I Choosing High-Value Projects

Chapter 1 Why Bother?

Estimating the Value of Doing Any Project 3

Chapter 2 Can We? Should We?

When to Use Employees and When to Use Third-Party Help 25

Chapter 3 What's the Context?

Become the Perfect Client Before You Call the Consultant 45

Part II Finding and Choosing the Right Consultant

Chapter 4 Who's Our Partner?

Finding and Selecting Great Consultants 69

Chapter 5 Big or Small?

The Surprising Value of Independent Consultants 96

Part III Risk, Fees, and Contracts

Chapter 6 What Could Go Wrong?

Reducing Risk 119

Chapter 7 What Are Our Options?

Value Wizardry and Sophisticated Contract Negotiation 144

Chapter 8 What's the Deal?

Fees and Contracts for Consultants 167

Part IV Successful Implementation

Chapter 9 How Do We Prep for Success?

Readying Your Company Before the Project Starts 193

Chapter 10 How Do We Run a Great Project?

Deriving Outstanding Value from Your Consultant 216

Chapter 11 How Do We Lock in Value?

Making Change Stick After the Consultant Leaves 235

Easy Reference Guide 253

Notes 260

Index 262

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