Is now an excellent time to hire consultants?

Key Takeaways

The value created during a project can be technical or political. And most projects are actually a mix of both. There is not a one-fits-all rule for when to hire consultants. It depends on the company culture, its market, and its economic situation.

Transcript

Hello, and welcome to episode 18 of a podcast, smart consulting sourcing the podcast about consulting procurement. My name is Hélène, and I’ll be your host today. Each week. I’ll give you the keys to better use manage and source consulting services.

This week, I have invited my co-author Laurent Thomas to discuss about what’s the right time to work with consultants. Last week, I share my views on how the consulting industry is evolving, and we saw that there are many new opportunities for client organizations to create more value from consulting.

But let’s start with the beginning and look at how consultants create value for the clients today. I welcome Laurent Thomas who is EVP Oil and Gas at Solvay Novecare and a co-author of smart consulting sourcing. Hi Laurent.

LAURENT: Hi Hélène. Hi everyone.

So what type of value do consultants bring to the client?

LAURENT: So the value that consultants are bringing can come in various shapes and forms. but the way I tend to look at this is by saying that you can have technical value or political value when using consultants.

So when it comes to the technical value, you could use consultants because they bring outside knowledge. If you want to make a market study, if you want to have an outside-in perspective, take advantage of the consultants being in contact and in touch with a lot of people in industries that are beyond your network.

This is something that the consultants are very good at. Looking at “OK. What do we really need to do? By when? What are the actions? How do they fit together? What are the interdependencies?”

This is very often quite useful I did that in my past, looking at how you can accelerate the design of aircraft moving from eight years to six years. This is something that you can do with some external help. If you wanna have support in the execution they can come and bring an extra pair of hands or take care of the project management office.

So what about the political value?

LAURENT: So the political value is very often what creates some challenges for consultants, but as managers, this has some value.

You can see consultants being used to providing some legitimacy on some decisions because they come with some benchmarks showing that what you are saying in terms of sizing the organization actually makes sense because all of those are doing it.

You want to be careful that you are not in a race to the bottom with everyone following someone on a destructive path. But that’s something that tends to be useful. They can also help if you want to create some convergence and some alignment within a team, interviewing all the team members, listening to all perspectives, and finding common grounds is something that an external party can do.

Some companies are doing it with HR, but HR is also part of the equation. So having an external party on this can also be extremely valuable. Another point is also where you can see some consultants being used is what we call the trusted advisor or the sounding board. It’s quite lonely at the top.

So if you are the CEO or the president of a division, sometimes there are topics that you cannot directly discuss with your team. And having someone you can exchange with bouncing some ideas, testing some options, and looking at how to move forward with some of the changes that you wanna implement is something that is also very valuable for the executives.

HELENE: So we saw a few months ago, during you know, the governor Cuomo, the governor of New York state, he was making his briefings every day and he was showing slides, and on the slide, you could see the logo of one of the major consulting firms. Is it what you call political value? When using that company to legitimate the projections that they’re making for the impact of the virus. Is it what it is about?

LAURENT: I would think so. I dunno what were the terms of the deal they had with that company. Option 1, they want to have political value, because they say “hey, you see, it is McKinsey or BCG that have supported the analysis, so it’s not only me, it is also a reknown consulting firm” or maybe they got a discount for displaying on the logo.

Yeah and in France a couple of years ago, they tried to use, I think that was Mars, I’m not sure, apologies if it wasn’t, to implement some KPIs for all the French ministers and this ended up as totally failed PR operation because nobody knew the consulting firm and everybody started criticizing implementing KPIs in politics. So I would say at first sight, I would say yes, but…

HELENE: You never know <laugh> yeah. OK.

So as an executive, in what situation did you hire consultants in the last couple of years?

LAURENT: So when it comes to my personal experience, in Solvay, I had two different jobs in the recent years. One was as head of Strategy for a Business Unit leading the transformation and the M&A and the other one was as head of the Oil & Gas business.

In the strategy role, we used consultants for various activities. Sometimes for screening potential acquisitions, sometimes for helping us to benchmark the performance of all our plants and helping to facilitate some cost optimization across all the plants by using internal benchmarks.

Because you always get the feedback when you come up with an external benchmark that the business model is not the same. But if you start comparing the assets that you have within the company with each other then you cannot argue that the business is not the same.

So it becomes much more powerful and having someone external helped us to do it in two months. It’s probably something that we would have accomplished in one year, otherwise with just one guy part-time.

As Oil & Gas, we have been working on a pretty intense situation over the last two years and we have been working on some strategic topics, but also on designing the transformation plan for the business ranging from activities at the commercial & marketing level to activities on the supply chain side to optimize the cost of our supply chain and finding ways to be more efficient for our customers.

So on those projects, why did you work with external consultants and not with your in-house resources?

LAURENT: It depends on the project, but for instance, if you want to screen potential acquisitions, usually in a business, you have maybe one head of marketing or strategic marketing, maybe with one analyst, and you don’t have access to databases that the consultants have.

If you wanna perform the same analysis, maybe you could come up with the same methodology, the same logic, because in the end very often it is common sense. So be able to analyze what are the companies, what is the fit with our strategy, and what are the economics. You can also dig into the financial reports.

You can do it, but you don’t necessarily have the resources, and the resources that you have are not necessarily savvy to do this kind of things. You can have someone that’s very good at operational marketing that doesn’t mean they are very good at analyzing the financial report of a company.

Because that’s not what they do on a daily basis. So then you have two options, you hire a guy to do this, but then what does he do 3 months later, or you can use external resources and that’s the option that we chose.

HELENE: It’s a little bit like you’re saying if you need to accelerate the execution of a project, then looking at external resources can be a good option. Because it’s focused because they’re external, they’re not kind of linked to the internal power struggle, et cetera.

They might be more independent and be able to kind of focus and go through well, and that’s kind of an advantage in certain cases, but in other cases, it’s not. And then maybe you should look at internal, but there’s not a kinda one fits all.

LAURENT: It’s a mix. Speed is a combination of firepower- how many resources you have and what expertise those resources have. And maybe you have two junior guys, but you will not have in your team the expertise that the partner will bring to the party.

And also the risk, if you do this kind of strategic review only with internal resources, is to rehash what you already know and to come up with a confirmation of the strategy that you had when you enter the study, which is not necessarily what you were looking for.

Is it relevant to hire consultants in the middle of a crisis?

HELENE: What you were looking for. Right. You know, let’s go to something a little bit timely. In your opinion, is it relevant to work with consultants right now in the middle of a crisis?

LAURENT: You know the saying, you know, it’s a good job, if you can get it. I would say that consulting is creating value if you can afford it. There are some companies that despite the crisis are still at a pretty good level of profitability and cash flow.

In a cash-constrained situation, then you’ll look twice before engaging. And maybe you will look only at projects that are self-funded or that can have a very, very, very fast return on investment. So you look at projects like pricing optimization, cost optimization, and how to consolidate your purchasing base.

You will look at things that will have a direct impact on the bottom line. At some point, you will have to think about what’s the world of tomorrow and how we need to maybe change or update a little bit your strategy. But the first order of priority is survival.

HELENE: It’s a little bit the idea of there is no reason to stop completely working with consultants, but there is no reason to kinda throw yourself into working with consultants. That depends on what situation you’re in, what’s your market, what’s your industry and what’s your cash at hand, and your ability to invest.

In conclusion

So we see that there are many times when working can bring value to a client organization and the value created can be technical or political, and actually most projects bring a mix of both values. But what is more important is being able to measure this value mostly through client feedback and satisfaction.

That’s it for today. Next time I’ll discuss how to measure the performance of a consulting project.

In the meantime, if you have any questions or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com.

You can also have a look at our website, smartconsultingsoucing.com, where you can find free templates and guides.

Bye, and see you next week. Au revoir.

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