When to hire a consultant

I became a consultant in 2003, but not without some trepidation about leaving the safety net of the corporate world. It was hard to break away. I had worked in the tech industry for 23 years and, despite my reputation, a surprising number of apparently misguided companies wanted to hire me.

Still, my mind was made up. As one executive recruiter put it, you could put a fork in me; I was done.

So I told John Bourgoin, CEO of MIPS Technologies, that I would love to consult for him, but wasn't interested in joining the company.

John said he wouldn't hire me as a consultant.

When I asked why, he said, "Consultants take up a ridiculous amount of time learning your business so they can hand you a huge report that tells you everything you already know."

"Let me get this straight," I said, perplexed, "You'll hire me to run marketing but not as a consultant?"

"That's right," John said dryly.

"But I'm the same guy."

"Doesn't matter."

John's very open and honest about his feelings. You've got to love that about him.

And who knows, maybe he was right. Maybe leaving the corporate ranks and calling myself a consultant transformed me into a parasite that charges ridiculous rates, wastes precious time, and presents obvious conclusions. Maybe not.

Seriously, I know what John meant. In the past, I'd come across consultants that fit his somewhat jaded description. Nevertheless, I thought MIPS needed a consultant but John didn't. That happens all the time; so does the reverse. Companies often hire consultants for the wrong reasons and fail to hire them when they should. So here's some guidance from someone who has worked both sides of the fence.

First, I'm not talking about outsourcing development or support functions to contractors or companies that do that sort of thing. That's largely a function of cost-effectiveness, whether it's permanently outsourcing a function or using vendors to mitigate highly variable expenses.

Second, these are my views and mine alone. You'd probably get a different answer from McKinsey or one of the other large consulting firms.

In my view, you hire a consultant for 1) expertise, 2) objectivity, 3) credibility, 4) leadership, and 5) time. Here's a hypothetical example:

Let's say a company has been exploiting a leadership position in the marketplace and executing well on its operating goals for a number of years. Now, competition is getting stiffer and the company is suffering from margin pressure. The company has reached an inflection point. That happens from time to time.

The CEO realizes the company may need new strategic direction. It may need to cut some projects and businesses and add others to meet its new direction. Moreover, the company lacks a process for developing and implementing new corporate and product strategy.

Unfortunately, the CEO already has a full-time job--running the company. The same is true of the company's marketing and business heads. In addition, although many of the executives have been through strategic processes before, they lack the expertise to develop the right process for this company in this situation and the credibility to sell it.

Moreover, each executive has his or her own unique perspective; they're all too close to the problem to be objective. No single executive possesses the expertise, leadership, objectivity, time, and credibility to successfully lead the entire team and ultimately the company through the process.

Frankly, most strategic plans do end up collecting dust on a shelf somewhere. John was right about that. Still, the idea of turning over such a critical process to someone without the expertise to ensure a relatively high probability of success is ludicrous. After all, a company wouldn't hire a novice to design its products, would it?

In this hypothetical case, it would be a good idea to bring in a consultant.

As for common pitfalls, aside from the obvious--expertise, track record, chemistry, etc.--remember these three and you'll do fine:

Be careful what you wish for. You can expect a consultant to tell you the truth, not what you want to hear. If you're not prepared to listen and act on what you hear, don't waste everyone's time and money. You'd be amazed how many CEOs get defensive when you tell them the truth about their company's situation.

Garbage in, garbage out. A consultant's success is dependent in no small part on what the company puts into the process. It takes openness, time, and focus. That's right, even with a consultant, it will still take time away from already swamped executives. It's still worth it.

Set up the problem and commit. The project should be well-defined and agreed upon by the company's entire management team and the consultant. This kind of thing is hard enough; if you start with the wrong assumptions and hostile participants, you can expect poor results. The same goes for half-baked, open-ended projects. If you're not committed to doing it right, don't do it at all.

The bottom line: Just like with lawyers and doctors, working with consultants may be distasteful or even painful, but there are times when you need them if you know how to recognize those times. While trying to go it alone sounds noble or courageous, it isn't. It can cost your company big-time.

[labazzo]

I don't know much on consultants but from my experience (my wifes) is that some are a waste of time and money. My wife was working with a consultant in the Boimedical field and the consultant did not say anything about disliking a project ,so when management saw the presentation they had a lot of questions was ready to pull the plug. So My wife's group pulled together a second presentation and got it approved. The consultant at the time management not liking the project made his comment. Sounds like he was just saying anything to look like he was right.

[phillynets]

Sorry, but you didn't say enough to offend McKinsey, etc. While the lead of the article indicated you might have something new to add to the Consultant Debate - you didn't. Ironically, you offered the same trite cr*p consultants offer even as you were espousing your uniqueness. Congratulations.

There is a role for consultants in today's business world, at least in the theoretical sense, but we are all hard-pressed to identify the specific instance when you guys are necessary.

[InnovationConsultant]

Good consultants bring experience from working many projects, across business functions, industries, technology, etc. I've been able to put that experience to use as an independent, 3rd party contributor to recover failed projects in organizations too frozen in their own politics. Many individuals who have trouble working with consultants are protectionist rather than confidently competitive in putting their talents to work for the organization.

[consultantserviceprovider]

Perhaps Consultants need to be willing to provide the services they recomend. I have a consulting company that offers services as well as consulting. I take a more active approach and work with clients on a more personal level getting to know their personalities and offering services and ideas based on who they are individually. It is no use recomending a solution when you know they are not going to apply it. Come up with a solution that works with their personality, you and they are going to be successful., and the client will know you have their best interest at heart and how much you have invested yourself in the process. This approach doesn't work for every company and they are not a good fit for me. Most important to me; their integrity has to match mine. There is a place for consultants but I think the old description of consultant needs some remodeling just like everything else that doesn't seem to work the same as it once did in our current society. You know the old saying: The definition of insanity is expecting a different result from doing the same thing over and over.

[LarryLo]

Wow, you really think so eh Mr. Philly? Thank you for your obviously expert opinion on the role third party experts play in "today's business world"

First off there are many consultant who are merely hour vampires, there is no denying this, in fact I wouldn't call them consultants so much as contractors. They will try to use title 'consultant' to up their hourly rates. A real consultant is someone who is an expert in some field that brings skills and time to his customer projects, is there to finish something and move on to the next project. So lets not get the two confused.

Steve is absolutely right about what you can expect from a real consultant. A really good consultant's can help grow or even save a company from failing, there by keeping all the regular employees gainfully employed (people like you I assume). I saw this first hand, because I am consultant, I've helped many companies accomplish their goals, grow their business, change the way they work, pass an audit etc etc. If they could do it in house, they would have, but they can't, because the skills that are required for those projects usually demand a higher salary than they are willing to spend, and to be frank, they only need them for a particular project anyway.

So keep thinking that real consultants are bad, and you don't need them. Because someone else either within your organization or maybe even your competitors will hire us and reap the rewards.

[busintelguru]

I agree with you InnovationConsultant.

This past year, I have experienced more miscommunication between the client and the consulting firm then ever before. The client wants to fill a gap, however they don't spend the time with the consulting firm or the candidates to confirm the skill set or direction.

Granted there are some great firms that provide quality services for their clients everyday and that is how they stay in business. However, there are a great deal of firms out there with the "let's get the warm body in the door and the figure it out later attitude." The consultant walks into a grid iron of competition between services firms on site to find out they are just another warm body. This in itself is what is hurting consulting services these days. Some firms no longer consultant from an education perspective anymore. It seems to be more about volume of consultants in the door then skill set and deliverables. The result; waste of time and dollars for the placed consultant and the organization.

The best consultants and services firms are the ones that listen to the client's requirements and deliver without getting involved in the games of their competition or the politics of the organizaiton.

[ITSMconsultant]

There are a number of reasons why using a consultant makes sense over hiring a permanent employee. When an organization is going through a one time activity, such as designing and implementing a CMDB for example, it makes sense to leverage someone who has gone through that activity a number of times. It also makes sense to utilize a consultants external objectivity. Consultants can hasten adoption of new processes and cultures because they are perceived as neutral parties. They also can share insight into how the adoption of the new behavior has worked for others. Consultants can also act as honest brokers of information between the vendor community and the enterprise. It is sometimes difficult to find out what a solution doesn't do from the vendor when you are engaged in the sales process.

In terms of providing the services that they recommend, or providing solutions, or implementing solutions, the obvious problem is the complete loss of objectivity. A consultant that offers solution or service A will always come up with that recommendation. This is often the difficulty in contracting for services with a technology vendor as they will tell you how to change their business to fit their tools, instead of telling what tools are needed to fit your business.

[djf13]

I have worked as an IT consultant for several of the largest constulting firms. Companies often bring in our consultants for short-term projects to provide greater experience with a product or technology. It does not always make financial sense for a company to hire someone with many years of experience; instead, they bring in a few higher-paid consultants and have them work with and train their in-house staff.

Additionally, working in public services for the US Government has shown me that many government agencies depend on their consultants for talent because of the red tape involved in hiring skilled people from the private sector. We have the flexibility to pay market value for individuals that the government cannot directly hire because of their rigid GS level system.

I can assure you that reputable consulting services firms are very concerned about client satisfaction. Eighty percent of my company?s business is with existing clients who bring us on based on past successes.

[jvbroker]

anyone here own their own JV firm? I'd like to speak with you on the business.