PRODUCT DEFINITION

The basic activities involved in consultancy (the topics covered in this book) vary very little. To this extent, consultancy products offer the same old wine in new bottles. Skills in issue analysis, data collection, diagnosis and creating change within a client environment, will be common to many consultancy offerings. In the same way that a cabinetmaker may change his or her designs to suit current fashion but continue to use the same skills, management consultants focus their perennial skills on organizational matters of current concern - for example, on cost reduction in a recession, on growth strategies in a boom.

Product definition in consultancy is best described as the packaging of experience, which is then communicated by marketing and selling. Experience may be imported with a new recruit, or it may derive from experience in carrying out a consultancy assignment for a client; either way, if it is to be sold, it has then to be packaged into a consultancy service - something that can be replicated.

Wherever it is positioned, the consultancy service has to be communicable. In the same way that a cabinetmaker would find it easier to describe his or her craft in terms of the products he or she makes, so too consultants need to describe their services in terms of the processes used and the benefits arising from them. For example, in the mid-1980s a consultancy employed an expert in knowledge engineering for the first time - the only specialist of his kind within the firm. He had no previous experience of consultancy and the consultancy was not quite clear what he had on offer. The results were that his specialist experience was never sold because it had not been packaged as a communicable offering.

There are other similarities between the consultant and the cabinetmaker. The job that the cabinetmaker does, for example, depends on the customer's specification. Similarly, the job done by the consultant consists of harnessing his or her skills to meet the requirements of the terms of reference as agreed. A difference, however, is that whereas the cabinetmaker can point to other items of furniture he or she may have created, it is less easy for the consultant to do so because the product is intangible. This is commonly dealt with by using references from previous clients or citing previous experiences, which can refer to the activities involved and results achieved.

Even when a consultancy has had some success in carrying out assignments in a particular area, there is some merit in 'packaging' this experience. If a consultancy had developed an approach that helped employers to reduce levels of absenteeism by half, this would be of great interest to large organizations. Few buyers, however, would have sufficient confidence to commission a consultancy project simply because the consultants asserted this was possible. Buyers would want to know how these results were achieved; they might want to talk to other clients for whom the consultants had done a similar job in the past. All these are steps that serve to reduce the sense of risk and increase confidence. Ultimately, all that a client gets when he or she buys a consultancy assignment is a promise. Packaging a consultancy product increases the client's confidence that the promise can be kept. A packaged consultancy product consists of:

• A name. At best, this can become a brand (for example, 'the X job evaluation system') or at the least make reference to it simple (for example, 'activity-based costing').

• An explanation of its purpose and the methodology used in carrying it out.

• Descriptions of situations in which it might be of use and the benefits of so doing.

• Information on previous applications of the technique and the benefits obtained.

Often a consultancy will publish a brochure describing the product; in this case, to the above list would be added information to meet the criteria set out in the section on 'Marketing objectives' below. Finally, if consultancy salespeople are to promote the product, they will need 'golden nuggets': stories illustrating the benefits of introducing the consultancy product, together with some indication of the likely costs of consultancy help. I have often found it useful to test out new product concepts with friendly clients. Although not necessarily prospective purchasers of the product, they can be an invaluable source of feedback from a client's point of view.

There are some who, with some justification, claim that consultancy is a fashion business. The list of 'fashionable' products is extensive: process re-engineering, quality circles, overhead value analysis, management by objectives, total quality management, were all popular in their time. And all have delivered value to their users, but may now be out of fashion. There is therefore a need for consultancies - as with any other business - to maintain a flow of new products to meet the needs of their customers. Fashion may not be rational; but ignoring fashion in consultancy is like telling a couturier that the only purpose of clothing is to keep the rain off! And, to be fair, the delivery of 'old fashioned' products can be improved with increasing experience, and then repackaged and relaunched.

Joint Ventures and Strategic Alliances

In many respects, consultancy product development has characteristics similar to cookery. A skilled chef, working from a small range of ingredients, can create a wide variety of appealing dishes. In a similar way, consultants put together capabilities to create offerings attractive to clients. In Chapter 1, we saw that consultants associate for this purpose, but often the capabilities required do not lie within a single firm of consultants and so they engage in joint ventures. 'Capabilities' in this context may not simply mean technical abilities - it might mean access to a market, or a depth of resource. For example, in entering a foreign market a consultancy might seek a joint venture partner.

Although it may not be involved in a strategic alliance, a large consultancy will need to become accustomed to forming consortia to bid for major projects. Resources required for projects in these circumstances will be drawn from subcontractors and joint ventures, working within a framework of the consultancy's own methodologies.

Having defined the consultancy product, the firm now needs to decide how best to project it to its target market sectors.

Branding in Consultancy

Within any business, you need to decide what you want to be famous for. Branding is the aggregation of these attributes. Figure 3.2 shows how consultancy offerings relate to the type of branding.

Figure 3.2: The branding of consultancy offerings

At one end of the spectrum in Figure 3.2 the offering is shown as being about services. These are methodologies that are predefined, although their application may be tailored to the needs of a client. A good example is a proprietary job evaluation system, whose principles of operation and method of introduction to a business will be standardized, although the details will be varied according to each client's requirements. Such an offering is solution related - that is, the problem has already been defined. Under these circumstances, the product should be branded - for example, the XYZ job evaluation system.

At the other end of the spectrum, the offering is shown as being about capabilities. Practices in this position may offer an embracing methodology for working with clients in dealing with problems of a particular type. This is an approach to conducting assignments rather than being related to a particular area of service. In these circumstances, Figure 3.2 suggests that the practice should be branded.

The difference between product and practice branding can be illustrated by an example from retail. Imagine that your aunt has been invited to a special event for which she needs a new outfit. She might say, 'I've no idea what to wear; I'll go along to Harrods to see if they have any ideas.' This is the equivalent of practice branding; she is going to Harrods because of its reputation, but with no specific purchase in mind. Alternatively, she might say, 'I think I need a beige dress in classic style - I'll visit Oxford Street to see if I can find one.' This case is equivalent to product branding - she knows what she wants, and has to find someone to provide it.

In the context of consultancy, a firm may promote itself as 'specialists in managing change'. They have not said what kind of change they are involved in, and so are seeking to brand their practice. By contrast, another consultancy firm may offer a service called 'Office Move', dealing with all aspects of helping a business relocate. Businesses will be more attracted to 'Office Move' if they have decided that relocation is what is required.

There is some strategic advantage in branding the firm rather than the service. The prospective client may not be able to see the link between the service and the problem with which he or she is confronted (although the consultancy's promotional literature will seek to make this clear!). Unless the client can be persuaded to see the service as addressing the problem, then they may reject the consultancies offering these, instead preferring to go straight to those practices that specialize in the sort of problems confronting them. The providers of solutions are like - say - a Chinese restaurant: if you want Chinese food, the ideal place to go, but not otherwise.

A further advantage for firms branded as dealing with problems is that they will usually have to start with some diagnosis. This positions them well for follow-on work in creating and implementing solutions to the problems, as well as extending the size of their market. By contrast, the client will have done much of the diagnosis for those offering solutions. For example, if approaching a recruitment consultant, a client will have already diagnosed the need for a recruit.

Given the advantages for the branded firm, consultancy firms will often have the strategic aim of moving from product branding to practice branding. The risk for those who are the providers of solutions only in doing this is that the results of their studies will always be the same - whatever the starting conditions, the same solution is prescribed. Like Henry Ford, they offer 'any colour, as long as it's black'.