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MODULE2

Drucker

What is the Logic of Business?

The Logic of Business Has Not Changed


Evolution of human needs
Transaction to Selling to Marketing And now from Marketing to Relationships and Partnerships! The emergence of institutions of business The ability to customize solutions Increased complexity and competitiveness Enhanced coupling of national economies with each other

Technology Movement of goods and people. Movement of Information!

Some Issues That Have Emerged


To be competitive globally even if you may be acting locally

To harvest and use business intelligence


To remain proactive A concern for the environment

A concern for the society..

The changes in the dynamics of business and the challenges that have emerged are not always manageable by all business organizations internally

Consulting Vs. Counseling


We know consulting.. To Consult.. Whom.. Someone who we think can give advise that will work!
Consultancy can be about strategy, processes, hardware, software. Counseling is.. Professional guidance in resolving personal conflicts and emotional problems

According to Dictionary.com.
Counsel
Advice, opinion or
instruction given in directing the judgment or conduct of another
A meeting for deliberation, discussion or a decision

Consultation
The act of consulting or conference

Does it (it should) tell you that counseling is done to improve the productivity or morale of the human resources

Performance Counseling
The process of improving employee performance and productivity by providing the employee with feedback regarding areas where he or she is doing well and areas that may require improvement

The Definition Should Tell You.


Performance counseling & personal counseling are different.. Performance counseling is a step in a process to keep the human resources fine tuned and performing optimally

Performance counseling is based on systematic performance evaluation and not on subjective assessments
It is then obvious that to be able to use performance counseling, companies need to have systematic HR policies & practices

Accountability in Consulting
ActivityBased Consulting

No business need for the consulting intervention No assessment of performance issues No specific, measurable objectives for implementation and business impact No effort to prepare stakeholders/participants to achieve results No effort to prepare the work environment to support implementation

Result-Based Consulting Intervention linked to specific business needs Assessment of performance effectiveness Specific objectives for implementation and business impact Results/expectations communicated to stakeholders/participants Environment prepared to support implementation

Accountability in Consulting
ActivityBased Consulting

Result-Based Consulting

No efforts to build partnerships with key managers


No measurement of results or cost benefit analysis Planning and reporting on consulting intervention is focused on input

Partnerships established with key managers and clients


Measurement of results and cost-benefit analysis Planning and reporting on consulting interventions are focused on output

Consulting Proposals
How do I as a consultant identify, suspects, qualify the prospects, how do I approach them, do you negotiate, how are consulting deals closed, how do you maintain an ongoing relationship?

Writing Consulting Proposals


For Institutions/Organizations

For SMEs/Individuals

They will give you the format


They will provide background info They will expect a well researched proposal

Deliverables, Timelines and Costing are key

Every proposal will be tailor made, so no pre determined formats Explain and clarify Dont sound patronising! Deliverables & costing are obviously imp. but Stress ROI! Most dont, but make effort to show ROI or how you can provide value

Business Problem Solving The Process


1. 2. 3. 4. 5. 6. Define and Identify the Problem Analyze the Problem Identifying Possible Solutions Selecting the Best Solutions Evaluating Solutions Develop an Action Plan

7.

Implement the Solution

But When Does a Problem Become So?


A problem becomes known when a discrepancy is observed between the way things are and the way things ought to be. Problems can be identified through:
Comparative/benchmarking studies Performance reporting - assessment of current performance against goals and objectives SWOT Analysis assessment of strengths, weaknesses, opportunities, and threats Complaints Surveys

Step 1 Define & Identify the


Problem
Go beyond the obvious, try to differentiate between problems and their noticed effects Jumping to Conclusions Vs. Digging for Facts

Hard Data.. Sales data, financial statements, profitability data etc. Hard facts
Soft Data Feelings, hearsay, grapevine, opinions, conflicts, behaviour etc. Research Methods, Market Research etc.

Step 1 Define & Identify the Problem


Once the hard and soft data is in hand, sit with the client and brainstorm till you are able to: A. Develop a Problem Statement: A statement that clearly describes the current condition your group wishes to change B. State the Goal: Stating the goals achieves congruence between your thought processes and the clients. So effort is focussed

But it is Not That Simple!!!

Analytical Thinking
in Addition to

Domain Knowledge
Will be Needed!

Analytical Thinking = Scientific Thinking

What is Scientific Thinking?


My Son is Unable to Score in His Maths Exams.. What do I do?
1. Talk to him, discuss with the teacher and find out what could be wrong and ask him to practice more. 2. Take him to an astrologer and make him wear the gem the astrologer suggests. 3. Take him to a temple, get Jhaad Phoonk done and to be doubly sure.. Maybe sacrifice a goat.

The Scientific Approach to Thinking

Problem

Solution

Hypothesis

Analysis

Facts

Step 1 Ask Yourself


Is the problem stated objectively using facts?
Is the scope of the problem limited enough for you to handle? Will all who read it understand the same meaning of the problem? Has the "desired state" been described in measurable terms?

Step 1 Caution!
Listen to the client! You may be right, but the customer is never wrong! His business philosophy may not match yours but please remember.. It is not your business! In meetings, be very careful how you

Successful Completion of Step 1 is 90% of the Work Done!

Step 2 Analyze the Problem


In your syllabus, this is written as, Finding Leading to Solution Development and Implementation!!! Please dont assume! Meet people up and down stream Talk to people at all levels. Ask a lot of questions.

Step 2 Analyze the Problem Ask


When was the problem first recognised or felt? What are the causes of the problem? What are the effects of the problem? What are the symptoms of the problem?

How was the client dealing with the problem?


What were the clients limitations in dealing with the problem?

Step 2 Analyze the Problem


Thoughts
Usually, in India at least hiring a consultant by an SME is a step taken late Too late most of the times!!

They probably knew it, but were reluctant to change!


If the problem arose due to a lack of vision, they will find it difficult to see it when you present it to them too! Can your systematic, rational, cut and dried

Step 3: Identifying Possible Solutions


Find optional solutions than the solution

Shortlist solutions and arrive at a list of two or three most optimum solutions or the one that seems best.
Shortlist or finalize in close consultations with the client

Ask Before Finalizing a Solution.


Is the solution workable in relation to the problem?

Are there any limits that the solution presents?


When looking at the advantages and disadvantages, which are there more of? Does the chosen idea live up to the

Step 4: Develop an Action Plan


An action plan is a chart that lists the tasks that need to be done and identifies who will be responsible for each, when and what action is necessary, where to start, and how.

Divide the Solution Into Sequential Tasks

Step 5: Implement the Solution


Are you presenting solutions only or implementing them too?

Control is the key. Develop monitoring systems and keep an eye on deviations. Be flexible and keep strategy responsive

Lets Recall Pricing of Services

Three Methods
Demand Based

Competition Based

Cost Based

Issues in Pricing
PROBLEMS:
1. Small firms may charge too little to be viable 2. Heterogeneity of services limits comparability 3. Prices may not reflect customer value

PROBLEMS:
1. Costs difficult to trace 2. Labor more difficult to price than materials 3. Costs may not equal value

PROBLEMS:
1. Monetary price must be adjusted to reflect the value of non-monetary costs 2. Information on service costs less available to customers, hence price may not be a central factor

What is Value for Your Value is Everything Value is Low Price Client? I Want in a Service
Discounting Odd Pricing Penetration Pricing
Prestige Pricing Skimming Pricing

Value is the Quality I Get for the Price I Pay


Value Pricing Market Segmentation

Value is All that I Get for All that I Give


Price Framing Price Bundling Complementary

Pricing

Pricing
Results-based Pricing

As Consultancy Services are essentially


services, the principles of pricing services will apply here

Three Common Pricing Methods


Per Hour: Usually new or IT guys tend to prefer this

Project Pricing: This method involves quoting a total figure for the whole budget and then arriving at a mutually agreed pattern of payments. Usually research projects, strategy based consultancy involving big clients etc

Calculating Your Hourly Rate Profit + Labour Costs + Overhead = Daily Fee Revenue

How Much Should I be Earning???


Decide upon a target in come per year. Let us say Rs. 10 Lac

A typical consulting year will have around 300 workable days.. Subtract festivals, matches, vacations. 250
So.. You should be earning 1000000/250... Rs. 4000 a

AContingency client complained that he Pricing couldnt afford a consultants hourly fee. Instead of doing the job on a time and material basis, Im willing to do it for a contingency fee, responded the consultant. What is contingency fee? asked the client. Its very simple. If I dont deliver what I promised, Ill be left with no money at all, explained the consultant What if you do deliver what you promised? persisted the client. Then youll be left with no money at all, said the consultant.

Talent. Skill.. What is the


difference??

Consulting Training Research

As Consultants You Will Do. What talents and skills will an


MBA need to be good at these? How can we develop such skills and talents? What can an MBA student do to develop such skills and talents if the college is not doing anything that can help?

Most Times You Will Be Doing


Data Collection & Analysis

Documentation of the outcomes Knowledge Transfer or Implementation

What Will it take to be a Consultant?


Conceptual knowledge Knowledge and exposure to analytical tools & approaches Knowledge of various business scenarios Knowledge of elements of the internal and external environment

Skills
People Skills

Scientific Thinking
Problem Solving Diplomatic Nature