Module: Consultancy Practice

Unit: Why organisations use consultants

Lesson: Identifying the best approach for the organisation

Identifying the best approach for the organisation

Introduction
There are different levels of intervention in consultancy projects. Where a consultant starts depends
on the consultant's view on the nature of the customer's problem. So the first step is to establish the
situational context. Once you have established the situational context you can use your capabilities
to apply the most appropriate level of intervention for the customer's problems.
In this lesson we shall consider why it is important for the consultancy firmto have knowledge of the
customer domain. We then go on to examine what is meant by situational knowledge and gaining
situational fluency. We conclude by looking at the different levels of intervention.

Customer Domain
In consulting it is vital for staff fromthe consulting firmto be able to quickly establish the customer's
situational context and appreciate the nature of the problemfaced by the client. To do this
effectively, it is necessary for the consulting firmto have knowledge of the customer domain - that is
knowledge and experience in the particular business domain or industry sector in which the client
operates. It is for this reason that consulting engagements are generally awarded to consulting firms
who already have a track record of working in the client's industry sector, whether that be banking,
retail or energy.
If you are an experienced consultant who has undertaken a variety of engagements across
different industry settings, why is experience in the customer's specific customer domain so
important?
Let us consider an example. A potential client, a company operating in the petroleumexploration
sector, is looking for expert advice in the area of data mining to improve decision making. Your
firmhas a number of consultants experienced in this area and collectively you have applied your
expertise across many industries including pharmaceutical, financial and retailing. You have also
accumulated a lot of experience in utilising data mining techniques to improve business
intelligence for many of your clients. However, if your prospect is operating in the oil industry (an
industry in which data mining has many applications); it is unlikely that the client will take you
seriously unless you demonstrate knowledge of the industry, and its unique and particular
challenges. Unless you have customer domain knowledge you cannot credibly present the benefits
of your consulting expertise. Although expertise fromother industries will enhance the consulting
project, it will be seen as an additional 'nice to have' and not a replacement for customer domain
knowledge. Customer domain knowledge is essential, especially in technical consulting, so as to
be able to appreciate the unique challenges of that sector and establish situational context.
In the example we considered, the customer domain or business domain is the petroleumsector
(and may, in fact, be a specialist discipline within that sector). When selling to a research chemist
developing new drugs, the customer domain is the pharmaceutical sector, and so on.
The depth of customer domain knowledge required of the consultancy firmwould depend on the
industry sector in which the client operates. In many technically-oriented sectors (e.g.
telecommunications, pharmaceutical, petroleum, defence) fairly deep domain knowledge is
required of the consultancy firm. Thus you will find that on such consulting engagements at least one
or two consultants assigned to the project will have a technical background and may have first
worked in a technical capacity in these industries. In other industries, e.g. financial services or
insurance, the domain knowledge can be more easily acquired whilst on the engagement (by
reading industry publications, learning about customer workflow, talking to the customer etc).
Although knowledge and experience gained fromother sectors is valuable and can be re-used, a
'one-size fits all' approach is inappropriate in consulting. Clients are looking for consultants to work
collaboratively with themto help solve their business problem. To present a credible approach, the
consulting firmmust therefore have experience in the customer domain. Business knowledge is
vital. Only in this way can consultants engage effectively with people fromthe client organisation's
business and win their confidence.
You have no doubt heard the names of the major consulting firms. However, do you know what they
specialise in?
Visit the following website which lists the Top 50 Consulting Firms.
http://www.stormscape.com/insp iration/website-lists/consulti ng-firms/
You can use the list as it is or reorder it by location, size, alphabetical order etc.
Visit the websites of at least 5 of the companies (these are all included in the second column) and
find out fromthe website the "domains" within which they work.
As well as looking at the larger companies do the small one have a much smaller number of
niches in which they operate?
Is there a correlation between size and domains?
If so, how will you select a consulting company next time you need one?

Situational Knowledge
We have noted that knowledge of the customer domain is crucial to gain the confidence of the
client, and to be able to effectively establish situational context. But what else is required to
establish situational context?
Gaining situational knowledge requires an understanding of the precise circumstances, the state
and environment in which the customer currently operates. It requires the consultant to appreciate
the customer pains and empathise with the customer predicament, as well as objectives and goals
for the future. By pains we are referring to the customer's problems, difficulties or dissatisfaction
with the existing situation.
It should be noted that gaining situational knowledge of the customer is not necessarily through one
consultant. On complex engagements, situational knowledge will be established through a teamof
consultants - all possessing different knowledge, skills and experience.
Situational knowledge cannot be established without the consulting team possessing domain
knowledge.

Establishing Situational Knowledge
Establishing situational knowledge is a critical skill not just in consulting but also in solution selling.
The unique characteristic of a solution is that it is driven by a business need and is designed to
meet the full customer requirement, not just a part of it. The boundaries between consulting and
solution selling are often blurred, and usually solution selling is led by a consulting engagement.
Bosworth, M(1995) an authority on solution selling, states that situational knowledge is established
fromthe following:
Customer domain 1.
Specific business need(s) that the customer is meeting through its market offerings. The
business need may be an internal need or an external need.
2.
Existing products/services that make up their current solution. 3.
People in the client organisation that performthe tasks relating to the business workflow. 4.
Customer problems/issues (ascertained by talking to people identified in point 4) 5.
Customer pains (ascertained by talking to people identified in point 4) 6.
Customer vision (if one exists) 7.
7.
So, how do consulting forms gain situational knowledge? Engaging the best graduates, MBA's
and experienced professionals will buy in a certain amount of knowledge, understanding and
experience. Return to the list of consulting firms we used earlier and this time look for the "tabs" on
the menus of the websites regarding "careers", "vacancies" or opportunities in their organisations.
http://www.stormscape.com/insp iration/website-lists/consulti ng-firms/
What are the common themes mentioned about what they offer their consultants?

We don't know exactly what you have found however it will probably bear some resemblance to the
following which is fromthe McKinsey website
Collaborative environment: Great people get even better when they work together
We have a fundamental belief that small, purposeful teams of individuals with different
backgrounds and stylessupported by our worldwide expertswill have the greatest success when it
comes to our clients' most complex problems. At whatever level you join uswith a newly-minted
undergraduate degree, or with an MD, MBA, or PhD, or after being in another career or industry
for several yearsyou will work in this exciting environmentto gain insights, move organizations, and
make an impact. Our teams are non-hierarchical. Business analysts engage freely with partners,
and partners participate without the weight of titles.
We believe in training. We invest more than $100 million a year in it. But as essential as it is in
providing critical knowledge frameworks, the real learning and growing happens on the job. Small
and nimble teams. You'll work with a small, fast-moving teamof consultants, ranging frombusiness
analyst to partners; the client will usually be part of the team. Everyone is a full-fledged member,
with responsibility for a distinct part of the effort.
Your understanding of different industries and functions will grow exponentially as your teammates
share their expertise. You'll receive coaching and feedback throughout the engagement. In fact,
consultants often find life-long mentorsand friendshipsin their senior colleagues.
Impact by immersion, not detachment. Teams typically spend 3 to 4 days a week at a client's
location. Working alongside the leaders who own the problems has tremendous value. You'll learn
how to build trust and work with clients as a peer and adviser. And just as the relationships formed
with your colleagues extend past your final meetings, so will your client relationships.
An unparalleled support system. Our teammembers have access to the approximately 1,500
knowledge professionals and leading-edge experts who "consult to the consultants" by providing
rapid access to specialized expertise and business information. This is unique to McKinsey.
Also supporting you and your team are graphic designers, travel assistants, team assistants, and
practice managers. We want you focused on what matters, not worrying about copies for the
meeting, or staying out of a middle seat.
The focus is often on teamwork, support and training. Many consulting firms also provide a
contract which allows for an amount of "non-chargeable" time which is normally time in the working
week when they do not have to be engaged with clients. This time can be used for personal
development.

From Situational Knowledge to Situational Fluency
Situational fluency is essential when selling solutions and in consulting engagements. Situational
fluency is much more than gaining situational knowledge. Situational fluency is a combination of
knowledge and skills, including situational knowledge. Bosworth, M (1995) identifies four areas of
focus to gain situational fluency:
Situation knowledge 1.
Capability knowledge 2.
People skills 3.
Selling skills 4.
In the above list, we have already established what situation knowledge means. Capability
knowledge is the ability of the salesperson to integrate and map the knowledge of their
product/solution capabilities on to the customer's situational context. The definition of people skills
and selling skills is self-explanatory. However, on people skills it is worth highlighting that, however
complex the product, people buy from people. As such, establishing sincerity and relationship
building skills are crucial.

Situational Knowledge
Gaining situational knowledge requires an understanding of the precise circumstances, the state
and environment in which the customer currently operates. It requires the consultant to appreciate
the customer pains and empathise with the customer predicament, as well as understand the
customer vision (if one exists).
Capability Knowledge
Capability knowledge is the ability of the Consultant(s) to integrate and map the knowledge of
their capabilities on to the customer's situational context.
People Skills
The definition of people skills is self-explanatory. However, in the context of consulting it is
important to highlight that consulting is all about selling expertise; your expertise. And people buy
from people. So relationship building, establishing rapport, building trust and confidence, and
establishing sincerity are all crucial.
Selling Skills
Every consultant must possess persuasive selling skills. This is not just required at the beginning
to win the consulting contract, but throughout the consulting assignment. At every stage you will be
required to persuade, convince and sell the merits of your approach. Having clarified and defined
the customer problem, the task of "selling" the customer viewpoint and vision back to the client
organisation should not be underestimated.
A teamundertaking a consulting engagement must possess the following knowledge and skills:
Customer domain knowledge
Developing situational fluency (understanding the customer situation, customer pains)
Technical competence (certainly on technical consulting, but also on most business
consulting projects)
Vision
Collaborative skills
Persuasive selling

From Customer Pain to Vision
The termcustomer pain is used frequently in the context of consulting and solution selling. Customer
pain is when the customer experiences (and recognises that he is experiencing) problems,
difficulties or dissatisfaction with the existing situation. The customer knows they have a problem,
but does not know how to solve it. It is at this stage that they decide they need external help and
make the move to engage a consultant.
Imagine you are a consultant and have been engaged to advise on a solution for a more effective
management reporting systemfor a client. You are in discussion with various employees in the
organisation and have recorded various statements they have made along the way. Identify which
of these statements are pain statements and which are vision statements:
'
Poor quality is causing me problems'
'
1.
We are unhappy with our current system'
'
2.
I'd like to be able to see precisely which projects are behind schedule'
'
3.
My work requires me to make last-minute changes. The biggest problemI have is in making
these changes reliably.'
'
4.
The systemgoes down frequently and you often lose data'
'
5.
It would be great if I could have a one-page summary of the troubled projects, which I can
glance before going to my management meeting'
'
6.
Maintenance updates on the systemare rare, and we often carry out workarounds ourselves' 7.
7.
Pain 1.
Pain 2.
Vision 3.
Pain 4.
Pain 5.
Vision 6.
Pain 7.
It is important to distinguish pain statements fromvision statements in establishing the nature of
the customer's problem. Only after establishing customer pains can you:
Diagnose reasons
Explore impacts
Visualise capabilities
...
. and help the customer envision a solution to their problem.

Levels of Intervention
Having established the situational context and formed a view on the nature of the client's problem,
you are now in a position to decide how you might help the client. Markham, C (2001) suggests that
the consultant might intervene at any of four different levels depending on the situational context:
Level 1 - Purposes: Providing expertise on defining purposes; the aims and strategic
objectives that the client has in mind and are very loosely defined.
Level 2 - Issues: Identifying the problemareas that must be addressed if the purposes are to
be achieved.
Level 3 - Solutions: Helping the client envision the solution to their problem
Level 4 - Implementation: The plans and activities that must be undertaken to resolve the
problems by means of the chosen solution.
The four levels should not be seen as distinct and separate levels. They should be viewed as a
continuum, with the levels overlapping. An issue may start off as a loosely defined problem, but the
more precisely a problem becomes defined and understood, the closer you get to a solution.

Spanning the Continuum
A consultancy firmwill have preferences about where it wants to start a project. This bias will be
influenced by the type of consultancy it is, and its speciality. For example a firmof strategy
consultants will want to focus on level 1. A management consultancy firm, on the other hand, would
prefer to focus on the issues (level 2) and make recommendations on how to resolve it (level 3).
Whilst, technical consultants would prefer to help the customer with defining the precise solution
(level 3) and then implementing it (level 4).
It is natural for consultants to have a bias on the basis of their particular expertise. But froma
customer's viewpoint it is important for you to realise that they often welcome the breadth of
expertise that covers levels 1 - 4. It is for this reason that many large companies such as IBMhave
success in the consulting marketplace as they span the continuumand cover strategy to vision to
solution to implementation.
Successive levels of intervention should be treated as different phases of a consultancy project.
Pitching the level of intervention should be done sensitively by the consultancy firmand taking into
account the customer's viewpoint. The consultancy firmshould not be seen as attempting to extend
the scope of the assignment for its own gains. There must be a purpose for intervening at a
particular level (or at a number of levels), and you should be able to articulate this clearly to the
customer.

Convincing the Client
Having identified the need within the organisation for a consultancy approach and having worked
with the client to establish the best intervention for that need there comes a point where you need to
now convince the client that you are the best for the job; this is where we now look at one of the most
important skills for a consultant to both have and to demonstrate.
The consultant must now look to ask the right question at the right time. It does sound simple,
doesn't it? The most simple questions put to the client can now help you. After all you've asked them
to tell you about their pain!
The techniques that you will use in your questioning will allow you to surface your prospective clients
most important issues, the underlying needs that they have and the things that are most important
for themto solve.
Stephen Covey in his best selling book The Seven Habits of Highly Effective People says that we
should "seek first to understand; then to be understood". And that is now an important habit for you
to get into. So before you start asking take some time to ... well, listen first!
If you listen actively to your client setting out what the starting point for a successful consultancy
project is then you can respond more appropriately. On the other hand if you ignore or dismiss what
you client is telling you about their business problemand how you could help themyou will have no
way of identifying the best solution to meet their needs.
So listening first will then allow you to craft some questions that will establish your authority in this
area, build your creditability and demonstrate your personal values to show how you can do the job
right.
There are many questions that you could ask your clients. Which one you select will often depend on
the situation that you are in. The following examples are the type of questions which you should NOT
ask;
" Could you tell me something about your organisation and its business?"
Why is this the type of question that you should NOT ask? Think about it for a few moments, put
yourself in the client's shoes and consider it fromtheir point of view. Then note down your
comments.

This question signals "inexperience' and is the type of question which will often be asked by
inexperience consultants.
Why? The most important feature of your actions in following up on a potential consultancy
intervention is to show you understand your client. Because you are a professional you have
already taken the time to undertake some background research about the organisation and that
you understand your potential clients marketplace.
The right type of question will probably start with you stating some facts about your prospective
clients marketplace or business environment. Take the time to demonstrate that you are familiar
with and do understand something of their industry and have that you have undertaken some
research on it regardless of how basic that research is.
Now you can ask a really incisive question like "I see that companies in your market are currently
facing issues with X; do you also find this to be a challenge? Perhaps you have another maybe
more immediate issue that you need to deal with?
" Who is your target market?"
Why is this the type of question that you should NOT ask? Think about it for a few moments, put
yourself in the client's shoes and consider it fromtheir point of view. Then note down your
comments.
This simple, straightforward question might seem innocuous at first sight yet in the desire to keep
things simple you may well elicit a response fromthe client that has little detail too it. In effect your
simple question gets a simple a reply! Instead what ask the type of question that will get a better
understanding of the client so as to uncover as much as possible about their current issues.
A more appropriate question that will get the necessary detail will be. "Can you set out for me who
your ideal customer is? What are their features? How big are they? Where are they located? What
issues or difficulties may they have? How might you solve their problems?
The response to this question will provide much more valuable provide you with much more
information to act on and use than just the general response you'll get with the initial question.
"What is your budget for this project?"
Why is this the type of question that you should NOT ask? Think about it for a few moments, put
yourself in the client's shoes and consider it fromtheir point of view. Then note down your
comments.
Questions about price or cost can be difficult to handle on both sides. It does assume that your
prospective client has considered the amount of many that they will make available to this project.
It also assumes that you know how much the work will involve and that you can put a price on your
time and expertise.
A better question to ask would link the cost of the project to the new business that your client would
get as result of the money they spent on your project. Conversely there would be a relationship
between the amount of money you would save themand that they would pay you.
So ask them, "What is the value of a new customer to you?". If a new client is worth 75,000 to
your client then your discussion can link your fee to the amount of new business they will get from
their new client.

Getting to the Right Question
So if the section above was the type of questions NOT to ask then what should you do? The
following are examples of the type of professional and focussed questions that will allow your client
to see you as their trusted consultant.
"What is the number one priority for your business in the next financial?" Here you are asking
for their number one priority and in doing so you can help clarify if this should be the case. Then
use it to help themwork towards that priority and also you can monitor and evaluate to keep
your client focussed on achieving this objective.
1.
"What area(s) of your business should be improved to help you achieve your priority? This
question is designed to help you to identify weakness in your clients organisation. By
encouraging your client to speak frankly to you about this issue you are equipped to help them
respond to the challenge.
2.
"What ideas have you had to deal with this?" If they have had ideas and tried them
unsuccessfully there is no point in you suggesting them. Look for something that they have not
considered that will be successful.
3.
"What are you or any of your employees doing that may hinder success in this area? Clients
can sometimes be doing things directly or through their people that are not helping. By
focussing your client on this and encouraging an openness about this you can look to remove
any barriers that are in the way.
4.
"In what way(s) are you different fromyour competitors?" Responses such as "We've been in
business for over 25 years" or "We provide great products" or "We are the best at quality" may
make the client feel good about their business but may not give your client any competitive
advantage over the competition. Work with your client to generate their unique selling point
(USP).
5.
"Why did you particularly want to meet with me/us? Questions like this heighten the level of
engagement by your prospective client in the discussion so they tell you why they wanted to
meet with you. Then use this to remind themregularly about why you are meeting and how you
can help themto meet their needs.
6.
"Who is the decision maker in this project and who will lead the project?" You want to make
sure you are discussing the project with the person making the decision. Ask this early on in
the process and ensure that you treat this meeting as an exploratory one before going on to
meet the decision maker.
7.
As you ask these questions, do challenge your client when you feel it necessary. Explore below the
surface at the underlying issues.

Bringing it all Together
What would be really helpful now is to reflect on what we have covered in this Lesson and place it
into a Framework of questions that we can ask at each stage of the consultancy process.
Have a read through of the following article which provides a well known model of the consultancy
intervention;
http://certifications.bcs.org/ upload/pdf/consultancy-cp-mgt- consulting.pdf
Notice in the left hand column on the first page there are some bullet points of things to be doing at
this stage. Fromthe sections about domains, situational knowledge, fluency etc. Identify the "right
question" and place theminto the model for you to create a check sheet for your next consultancy
project.
Good luck!
Knowledge Checks
Knowledge Checks - Solutions