Commando Consulting: March 2008 - It's The Ends That Matter Not The Means To Reach Them

Or...

"I don't know what I want but I know how to get it." ~ Anarchy in the UK by Sex Pistols

by Tom "Bald Dog" Varjan, Organisational Provocateur

Summary: In spite of living in the knowledge age for a good few years now, most consulting firms are still using the traditional old-fashioned "resume -> dog-and-pony show interview" "master - slave" hiring practices that are commonly used for hiring manual labourers. And the result is that they end up with pretty low calibre people. They have impressive resumes and fancy certificates. They're just lacking the character to fit into the culture to do an excellent job. Audio Version (MP3): 56 minutes

An interesting observation I've made over the years is that even firms that are struggling to stay alive as a result of no client work, inside the firm I could observe head-spinning busy-ness.

Just about two weeks ago I was discussing a marketing project with a "highly successful" consulting firm in Arizona, and as I was talking about how we create a collaborative relationship to work together, the managing director said to me...

"Let's forget about this collaboration stuff. We want to hire you to generate clients for us but don't bother us with the details. We don't have time to get involved. You're on your own. We're extremely busy, so we don't have time to help you. Good luck.

Of course, I turned the "opportunity" down. As Machiavelli wrote in The Prince...

"Only the prince who himself is wise can be wisely advised."

The whole firm was a comedy. Or a drama, depending where we are watching from. People are running around frantically multitasking, working through their lunch breaks, come in early and leave late... often very very late. Everyone seems to be so bloody busy that no one has time for marketing.

Don't get me wrong. They perform lots activities which they think are about acquiring new clients but somehow the results just don't happen. And then what do they do? They double their efforts and get busier with a positive mental attitude. Now they are truly motivated getting nowhere. And the process is intensifying... intensifying... intensifying... until... crash... arrrrrggggg, booooom and flop, and it's all gone up in smoke.

I believe that every activity performed in a business should somehow relate to profit generation through creating value outside of the firm. First I wanted to use the term "revenue generation", but at the end of the day what matters is what the firms keeps not what it makes. Or as friend and mentor Robin Elliott puts it...

"Revenues are vanity and profits are sanity."

There can be revenues up to the blue sky, but if there is no profit on the revenues, then activities of creating those revenues are roughly as useful as a chiropractic treatment before being hanged.

And firms keep doing the same activities until someone asks them Ed Kless' golden question, "And how is it working out for you?"

At this point a few of them realise that they're going in the wrong direction and change their approaches. But as it commonly is with the majority, they carry on in blissful ignorance. Using George Santayana's words...

"Fanatics are who lose sight of their goals and redouble their efforts."

Our local telephone company, TELUS employs approximately 32,000 employees. The company's 2006 revenue was $8.7 billion (~ $272,000 per person) (an 6.6% increase from 2005). The 2006 net profit was $1,1 billion (~ $31,000 per person), a 60.3% increase from 2005.

So, the $8.7 billion gross revenue is impressive on the surface, but the $272,000 personal revenue is no big deal, considering that the heavily unionised TELUS staff's total annual compensation is well over $100,000.

And we know from various HR studies that the total cost of full-time employees is about 1.7 times of their gross compensation. So, 1/3 of the revenue employees generate is the cost of having them on board. That's not exactly earth-shattering.

But Of Course The Means Matter

We've all heard the phrase that there are many ways to skin a cat. Well, there are many ways to achieve certain ends. So, which means can we use? The means really come down to the values of the firm. These values create a context within which we can use different means to achieve specific ends. It's like driving your car on the motorway. You have the discretion to drive in any which way you want to as long as remain within the boundaries of the law.

Nevertheless, this chronic busy-ness is created by defining means not ends. And this starts with the hiring process, which can be described as...

1. When selecting candidates, select impressive-looking resumes with impressive credentials and ignore real expertise and experience


2. When new people start working, instead of telling them what to achieve, just tell them the smallest steps to take. They don't have to know the context


3. To improve your people, constantly point at their weaknesses and cajole them to improve trying to get from "hopeless" to "pathetic"


4. Set up carrot and stick systems and make bold promises to make people compete for the next promotion

1. What they are doing


2. Why they are doing what they are doing

All they know is small steps and that's dangerous.

Many years ago, to fund my education in England, I was working at a slaughterhouse. Since I'm not squeamish about blood, I ended up on the kill floor. I had two easy steps to perform: Stunning the beasts and bleeding them. Very simple. But I wasn't introduced to the context within which I was doing my work. All I knew was the two little steps which were my contribution to productivity.

Later I ended up on an organic farm where I performed the full slaughtering process from stunning the live beasts to packing the meat. I had a full understanding of the context, including the farm's mission of providing top notch meat for people whose health is top priority.

In the slaughterhouse we churned out mass-produced cheap meat. Every phase of the work was done by unskilled low-paid labourers.

On the farm we produced obscenely expensive top-notch meat. The work was done by highly skilled and experienced (I don't mean certified) professionals who took exceptional pride of working in a team to fulfil the farms mission of serving the greater good.

Every single person had a strong contextual understanding of what they do and why they do it. At the slaughterhouse we had only content knowledge of the only step each of us was expected to perform.

And this is what's missing in many consulting firms. Having talked to many associates at consulting firms over the years and I asked them how familiar they are with the context within which they're doing their work. The result is dismal. Many of them have never been told the core values of the firm, no one has explained to them the firm's culture.

One bright woman with an MBA (earned in part-time while working as a grocery store manager) has told me that on her first day on the job, she was given a massive report with the instruction: "Check it for typos." When she asked about the context within which the report was supposed to work, she was told, "Never mind that. Just do what you're told."

The funny thing was that she was hired because someone thought that her MBA + store manager experience would be valuable for the firm. But after she got hired, she, as the new gal in town, was put on almost permanent proverbial "latrine duty". She was doing the kind of work, juniors of less capability but a few months longer time with the firm refused to do because it was too demeaning for them. Whereas her, the simpleton former 7-11 store manager, was just suitable to do mundane tasks.

So, let's distinguish between...

Hiring For Means Vs. Hiring For Ends

In his book, Management Challenges of the 21st Century, Peter Drucker writes...<.p>

"The most important, and indeed the truly unique, contribution of management in the 20th century was the fifty-fold increase in the productivity of the MANUAL WORKER in manufacturing. The most important contribution management needs to make in the 21st century is similarly to increase the productivity of the KNOWLEDGE WORKER."

This also means that knowledge workers cannot be and must not be hired, managed and compensated the same way as manual workers. Sadly though, in most cases they are. And the results are pretty sad. And let's take a closer look what these obsolete managing approaches have achieved...

A recent Gallup Poll study indicates that some 59% of the workforce is disengaged. These people show up like zombies on the job, go through the motions to mark time and justify their paycheques, and go home.

According to a recent survey by the Insurance Journal, more that 50% of American employees question the morality of their organisations' top leaders, and say their managers regularly mistreat them. Only 29% of them believe that their managers care about advancing employee skills. Less than 15% of workers feel strongly energised and enthused by their work. 42% of workers are struggling with burnout.

I believe that the best starting point of changing this sad statistic is by changing the hiring process.

Here are some criteria I believe have to be implemented in a consulting firm, before hiring the next person...

1. Value-pricing must replace cost-based pricing: Value-pricing establishes what clients are willing to invest to achieve their desired objectives (solving a problem or seizing an opportunity), and consulting firms develop cost-effective solutions based on clients' budgets. In this scenario clients get what they pay for. In cost-based pricing firms establish the cost of their services, mark them up, present it as the fee and hope and pray that clients accept them. Most often they don't and they start haggling.

2. Project management must replace timesheets: Consistently managing the value that's being delivered to clients as opposed to forcing associates to account for their time in six-minute increments.

1. Scope of value: How will the client be better off as a result of achieving the objectives of this initiative? What is the gap, expressed in dollars, between the status quo and the improved condition?


2. Scope of price: What is the client willing to invest in a certain service to achieve the desired new condition?


3. Scope of services: The service(s) must be delivered in the most cost-effective manner, using the least amount of time, money and effort. This can be achieved by playing with the "service level" or the "engagement intensity". Engagement Intensity (EI) = Effort * Discipline * Accountability * Focus * Commitment * Challenge * Resources * Energy * Enthusiasm * Passion * Devotion to Excellence * Responsiveness * Access level * Interest (NOT number of hours of manual labour or poundage of deliverables)

In value-based consulting firms, clients' perceived value in the solutions drives price, not the firm's costs of rendering certain services. Price actually drives costs, so it makes sense to know value and price before we spend even a sausage on rendering services.

3. Cause-based indicators must replace effect-based indicators: Establishing predictive, leading or cause-based indicators, as opposed to performance, lagging or effect-based indicators. The former tracks what's likely to happen, so preventive action can be applied. The latter tracks what's already happened, so only reactive action can be applied. E.g.: If I want to lose weight, I track the number of workout sessions and eating regimen (causes), not my bodyweight (effect).

Also, reactive action is always much more expensive than preventive action. But reactive action is tempting because it gives instant gratification and on the surface seems to be cheaper. E.g.: I can save money by changing oil in the car only at every 20,000 km, instead of the recommended 5,000. I save the price of three oil changes. Great. But at 50,000 the engine burns out and it costs me $10,000 to replace it. But most people don't think so far ahead.

4. Doctor-type diagnosis must replace dog-and-pony show sales presentations: In order to be regarded as a recognised expert not as a dreaded peddler, we have to eliminate traditional sales tactics like overcoming objections or the notorious always be closing sales mantra. We diagnose the client's situation but let the client decide what to do about it. Not making the sale is an acceptable decision.

5. A clearly written Code of Honour must replace bible-thick rulebooks and employee manuals: It's important that knowledge workers have high levels of discretionary latitude to perform their work. The problem is that when you see a knowledge worker sitting back with his feet on his desk and his eyes closed, he may not be goofing off but formulating something in his head that could be the next million dollar idea. But what I've also found that people in a culture of excellence, trust, respect, honour, commitment, accountability and discipline don't goof off. They simply don't. Remember, every person is the extension of the firm's culture.

6. One-person leadership model must replace the dysfunctional multi-partner model: It's time to eliminate the constant and never-ending power-struggle created by the multi-partner model. In today's fast economy where companies must be agile and make decisions pretty quickly, the multi-partner model serves only two purposes: 1) organisational sloth and 2) desperate clinging to the status quo. The issue is no longer about making the firm more successful but protecting the partners' turfs and accumulated wealth. And this also means that the services the firm provides are not about improving the clients' condition, but about playing safe and pile the money for the partners… often at the expense of the rest of the firm and its clients.

7. Inspired salaried professionals must replace micromanaged (through timesheets) hourly-rated wage-slaves: Consulting is knowledge work at every level, thus cannot be equated to the passage of time. Intellectual capital, thus client value, is not dispensed linearly. It's non-linear and not subject to traditional measuring methods of manual workers. The measurement of manual labour requires only a measuring stick, like dispensed time; knowledge work requires judgement, knowledge and discernment. In the professional knowledge firm everyone is a knowledge worker, thus cannot be paid as a manual worker.

8. Before- and after action reviews must replace constant micromanaging: Who is accountable for what and the consequences of not doing it. The benefits of backwards planning (military style), so we can elevate our current resources to reach our visions, as opposed to shrinking our visions to match our current resources, as it's common in forward planning.

9. A clear "consequence system" must replace haphazard punishments: There is one difference. It's not about punishing people for not reaching certain goals. It's about punishing people for breaking the Code of Honour and foregoing the firm values in their work. For every action there must be a consequence. And people must know these reactions. In the US military for instance, there is the Uniform Code Of Military Justice and every soldier knows about it. There are no hidden punishment schemes.

10. Fixed price service agreements must replace itemised menu pricing: How to help clients to stipulate the perceived value of our solution, and peg our fees against this perceived value. The only ethical pricing model in which clients get what they pay for. They literally invest in their own futures. In this model clients see one number and that number includes the full solution within the context of the already accepted scope of services.

11. Collegial "no promotions" environment must replace the traditional competitive environment: People work in their positions because they love it and aspire to become world-class at it, as opposed to merely pursuing the next promotion... and the next again. Hint, as a former farmer I also observed that regardless of good work and good behaviour, no sheep ever got promoted to be the shepherd's dog, and no the shepherd's dog ever got promoted to be the shepherd. We want to hire people who fanatically love what they do.

12. Written change requests must replace whimsical modifications: Handling changes that clients desire once the project started.

13. Chief Value Officer (CVO) must replace self-assessment: Using a CVO who constantly monitors the value clients are receiving. This CVO is NOT part of the engagement team, but is an objective liaison between the client and the firm.

14. Pricing cartel must replace haphazard proposal writing committees: Using a Pricing Cartel to make sure that every component of the client's perceived value is captured and is proportionally charged for.

15. A service guarantee must replace the concept of 100% risk dumped on the client: Using a guarantee to use to remove clients' innate scepticism. I believe a good service guarantee (Not guarantee for results) is part of a premium grade value-based consulting firm. Also, good guarantee justifies premium pricing.

And now the firm has laid the foundation of...

Hiring Talents To Achieve Ends Not Merely Workers To Slog Through Means

Can you see that this approach attract different kind of people? The whole idea is to polarise your hiring process so much so that top-tier talents are attracted to your firm like bears attracted to honey, whereas average folks avoid your firm like the plague.

But when we're hiring for ends in a Results Only Work Environment (ROWE) not means in a busy-ness driven culture, the whole hiring process must differ from the traditional cover letter -> resume -> dog-and-pony show interview. I believe the traditional interview process where the masters (employers) asks a sequence of retarded questions and the slaves (potential employees), having figured out the interview process from free or almost free e-books widely available, offer mechanistic off-the-shelf answers. And at the end of the day whoever puts up the most sophisticated show gets hired. And the result is that 77% of these people get misemployed, that is, they hate their jobs and / or bosses and / or colleagues.

So the interview must become a business dialogue between peers. And I mean the same dialogue that takes place between an economic buyer and independent professional the company considers hiring to help with an issue.

So, they have to discuss the "what" (to achieve on the job) of the position as opposed to the "how" (to get through the day five times a week). The focus must be outcome-centred not activity-centred.

So, this is what I suggest as a first-round screen. These five questions can be part of the career ad itself, and you can collect the responses into a database. That way you can send out announcement emails to every candidate, so no one is left on the lurch. I believe the typical message of "We thank all applicants, but respond only to the ones we're interested in interviewing." is plain scumbaggy.

In my view, while it's legal, this approach demonstrates the highest level of disrespect for people, and is in most cases the sure-fire sign of a low-life bottom-feeder company.

I've tried this four-question approach several times and the success rate has been much better than the traditional resume parade process. Here are four questions I've learnt from Kathy Sierra's blog, "Passion at Work". They check people's passion for the work they do.

I hold passion very high on the importance list because it's passion that inspires people to get better in their professions. Or as the South African author and feminist, Ralph Iron once put it, "Experience teaches us in a millennium what passion teaches us in an hour." So, the questions are...

1. When was the last time you read a professional journal / book, attended an industry conference or took a professional development course related to your work?


2. Name at least two of the key people in your field.


3. This question has just come to mind, so I've put it here: Have you read their books, papers, attended their seminars, seen them speak, etc?


4. If you had to, would you spend your own money to buy tools or other materials that would improve the quality of your work? I would also add to Kathy's original question: "If your answer is yes, make a list of some of these investments". I've just invented this second section but haven't tried it yet.


5. If you did not do this for work, would you still do it (or something related to it) as a hobby?

First question: Some 80% of candidates fail on this puppy. They refuse to invest their own money to advance their own skills.

Second question: This is tricky. People usually know some names but don't know what the owners of those names are all about. And hiring a marketing manager who is not familiar with Jay Abraham's work is really a suicide mission. Would you hire a musical director for your orchestra who's never heard of Mozart? I've just mentioned this because I've seen Jay be referred to as the Mozart of marketing. Or another example... You're hiring a managing director for your consulting firm and the candidate has never heard of David Maister. To me, as a hiring person, this is an instant disqualification.

Third question: Most managers recognise the name of Peter Drucker but have never read any of his many books and have no idea of what Peter's work was all about.

Fourth question: Most people say they would spend their money, so let's ask them to make short list of some of the investments. My experience is that in this respect some of the MBAs are the worst. They learn what they learn in school, but when they graduate their education stop once and for all.

Fifth question: This is another brilliant question. This answer tells you whether this person is in the profession only for the money until something better comes along for more money or because she actually loves what she does and plans to stay in the profession for a long time.

And when you read the answers, there is no formulaic solution that so many points, then you hire, under that you reject. Read all five questions and "read" the person. I guarantee you'll find it more valuable than reading resumes and references.

And here are some other points that new people want to know about your opportunity... this detailed description goes out to candidates who've passed the first screening of the five questions. Here you describe the position in minute details, and give candidates to "ring the bell". Ringing the bell is a sign of quitting in Navy SEAL training.

1. What do you expect of me at work?


2. Will you provide proper tools to do my work?


3. Will you let me do what I do best?


4. Will my contribution be recognised?


5. Will I be recognised as a human being or be treated merely as a means to make the firm rich?


6. Can I expect coaching and mentoring to bring out the best in me?


7. Will I have a say in work matters?


8. Can working at this company make me proud of my career choices?


9. Is everyone dedicated to excellence as much as me?


10. Can I expect instant feedback on my work?


11. Will I have the opportunity to learn and grow during my employment with your company?

They don't ask these questions openly, but they're always on their minds, so you'd better address them during your interaction with new applicants.

It's copywriting 101 that you address prospects' issues in your messages before they put the issues to you.

And after you've hired your new folks, you have three jobs to do...

1. Set expectation, so people always know the next outcome to achieve


2. Motivate people by creating a great environment and leading by example


3. Develop people to become the best they can be in their professions

On Summary

The whole idea is that in this detailed description you can make the position very attractive to some people and very repelling to others. But it's important to polarise your candidates to make sure that only certain people with certain character traits come through.

What you also achieve using this approach is that you hire people who focus on the "what" not merely on the "how". They understand results and outcomes not merely rigid methodologies. Now you have quality people who focus on how to get better in their professions as opposed to chasing the next promotion.

"Dynamic Duo" Mentor Programme... ...has 2 opening for November and 4 for December 2008. Click here to continue to the fiendish details.

Recommended Reading

Measure What Matters to Customers: Using Key Predictive Indicators (KPIs)

by Ron Baker

Imagine there is a windy road high on the mountain, and every now and then cars fly off in the bend and land in the valley, killing everyone. You want to reduce the number of fatalities and try to develop some kind of indicators to track your progress. You can either create leading (cause) indicators to predict the future. Like the speed of the car nearing to the bend. Or you can use trailing (effect) indicators to report what's happened. Like the number of people who have died during the last month.

The problem is that most consulting firms use lagging indicators and waste precious time and money on analysing what has already happened. They are so immersed in dissecting the past that more often than not they run out of time and steam to create a better future.

Ron's book is a brilliant roadmap to design and implement proper leading indicators, so you can think forward instead of lamenting backwards.

Place your order with Amazon.com for Measure What Matters to Customers. You'll be glad you did.

Value Pricing Assault Course... ...has 4 openings for November and 2 for December 2008. Click here to continue to the fiendish details.