Kendall Consulting Group - Hot Topic Overview - Creating Internal and External Consulting Groups

HOT TOPIC OVERVIEW -
Creating Internal and External Consulting Groups

Overview

Many years ago a magazine in the seat pocket of some airline flight I was on proclaimed that all you needed to become a consultant were business cards, letterhead paper, and a briefcase. Unfortunately, many individuals still think this is all there is to consulting. Witness that practically everyone I know who has lost their job suddenly declares they are consultants (with business cards, etc.). As a result, their resumes will show no break in employment.

Consulting of any kind is much more than the business card, letterhead, and other outward symbols. Of the books and articles that we find on the subject, few address the actual establishment and operation of a consulting business - particularly consulting businesses dealing with strategy, process or change management. Thus, we have started to assemble on this web site some of our writings on the subject to help executives of consulting groups (or companies considering establishing such groups) and consultants expand their thinking on consulting business and practice. These articles are based on our extensive experience as consultants, heads of consulting businesses, and as leaders of programs to develop consulting practices.

Kendall Consulting Group has worked with over a dozen major companies to establish either an internal consulting practice or a new external consulting business, or both. Our own firm is over a decade old and including prior jobs we have worked in this industry for most of our careers. Thus, we have a superb vantage point to write and comment on the industry. One observation is that more companies are creating in-house or internal consulting groups. We thus looked at how some companies are creating and using internal consultants to leverage their scarce resources. One of our recent articles touches on some of what we observe in the area of I.T. groups becoming internal consultants. (Click here)

In our articles we explore the consulting industry and practices, particularly in the areas relevant to strategy, process and change management consultants. Major changes have happened in the industry due to 9/11, the recession, and the inter-linked collapse of both Arthur Andersen and Enron - to name just a few major change factors. One colleague who has had his own business for over a decade observed that marketing consulting services is now more expensive, takes longer, and has fewer sales than two years ago. At a recent reunion of alumni from a major national consulting firm, the many independent consultants were almost uniformly "under employed" in their endeavors; all were looking for work. A newly written article explores the trends in the consulting industry and some look ahead projections about where the industry is going. (Click here) Further, our friend Jim McGee gave us some further thoughts on consulting trends; read his note (Click here).

With the tremendous downward pressures on service industries during the past two years, there has been heightened interest in successful consulting marketing and sales practices. One of our recent articles explores some of the successful marketing practices we have participated in that helped consulting and service firms successfully win business. (Click here) We believe some of these marketing practices can be adopted by other consulting businesses and client industries with equal success.

Many of our clients become fascinated with the "consultative approach" and how it can be used to improve results in all business functions or work - particularly those that interact with the customer. To help clarify the meaning of this term, we wrote a short essay on the subject. (Click here)

We continue to receive many resumes and requests to work with us as consultants or interns. Over the past twenty-five years we have slowly built up a competency model of what makes a good consultant. Conversely, when we see individuals with career problems in this industry, we can usually trace the problems back to deficient skills in one or more of the key competencies required to be a success in this business. Whether you are an internal or an external consultant or a manager of consultants does not matter. Thus, in one of our articles, we review the skills or competencies that individuals entering this profession would be wise to develop. (Click here)

Finally, several short case studies are presented where Kendall Consulting Group was able to help an organization in this area. (Click here).

The Focus is on the Customer

We have a bias that comes out in our marketing, consulting and writing. It is that good consultants are fanatics about adding value to their clients. Our thesis is that if you do this, business and profits will flow to you. So far we have not been proven wrong. This does not mean that you shouldn't manage the consulting business, but it is a matter of emphasis about where you put your energy: generating profits or generating value. Value will always win out for you.

Creating Internal and External Consulting Groups

Some companies, especially large ones, have created a standing cadre of internal staff to serve as roving "experts" to improve company operations and systems - internal consultants. Some of the largest companies we have seen do this include AT&T, Xerox and IBM. Recently, we have seen smaller companies do this too. There are a number of benefits to using internal consultants. First and foremost, internal consultants have successfully contributed to improving business operations and systems. Additionally, creating such a group entails a relatively low cost, assuming some existing employees are reassigned to the new group. Subsequent consulting work uses these people and leverages their company knowledge. Further, expertise developed during these consulting projects remains within the company after each job.

Other companies we worked with have decided that to further support their customers and improve customer satisfaction, they need to offer consulting services. They opt to add the skills of external consultants to their existing set of products and services. Thus, they build a consulting services group and provide its services to their customers for fee, barter or just goodwill. Usually consulting work generates fees to cover the costs of the people doing the work. Some companies that have done this include Toshiba, IBM, and Carrier Corporation. The benefits to this approach are greater than those provided by only an internal consulting group. Customer relationships can be strengthened through the new services and the understanding the consultants develop about the customers. That knowledge remains in the company after each engagement, and may result in increased sales of other products and services. Costs again are relatively low if existing staff is reassigned to the external consulting group. Usually, however, some training or staff development should be undertaken before putting newly anointed "consultants" in front of one's customers, especially if their skills are predominantly technical.

When companies create their own internal or external consultants, they should also be aware of some of the liabilities to using them on various engagements. Company staff may be too inbred and plugged into the company culture to be objective and appropriately critical of internal operations or customer operations. Consultants must be able to see new operating paradigms for their clients and be highly objective. Managers within the company may be skeptical about the ability of their internal consultants to create the type of change and value add they really need; thus, creating an image as a group that can add real value is critical from an internal consultancy. Skill sets assigned to the consulting group may be too narrow to fill the needs of some project engagements. (One way to circumvent this is for the consulting groups to "partner" with formally established external consultants to supplement their skill sets.) One area we have especially seen newly formed groups struggle with is the area of change management; we have been partners to several internal groups in this area.Other upsides or downsides to these groups depend on the company or market situation.

Where to Next?

We raise the distinction between the two company-formed consulting groups here to briefly illustrate the two directions companies appear to move in establishing consulting groups. The articles on the subject expand these concepts in more detail. Figure 1 shows an even broader landscape for project management and consulting, and positions some of the articles you'll find on this web site in terms of their primary focus.

Figure 1 - Landscape of consulting and articles at this web site

Kendall Consulting Group would be pleased to discuss your ideas and operations with you. The idea of adding a consulting group (with either internal or external focus) is only one option to improve performance. For example, we have also worked with companies to structure, select and help manage external consultants for very large institutional projects -helping to integrate results across multiple firms. Also, we have worked with many firms to help establish and train newly appointed consulting staff. Please contact us or send us an e-mail if you think you'd like to do something for your company in this area.

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HOT TOPIC ARTICLES AND CASES

Articles directly related to starting and running a consulting practice

Read the Hot Topic Overview!! (You Are Here!!)

• Measures of Success for Internal Consulting Orgs (NEW!)
• Consultative Selling (New)
• Trends in Consulting
• Commentary on Trends in Consulting
• Marketing of Consulting Services
• Skills and Competencies of Successful Consultants
• Consulting Skills Development Experience
• Grow Your Own Consultants
• Internal Consultants and a Consultative Approach
• Effective Uses of I.T. Staff as Internal Consultants

• Case study: Creating New External Consulting Group
• Case study: Internal Consulting Group Methodology and Skill Development

More coming soon!!!

Kendall Consulting Group is an international general management consulting firm specializing in strategy execution, change management, and executive education. We invite you to contact us for how we might help you and your company grow and prosper.

You may reference and use the material from any of the articles provided that full written credit is given to the company and authors in your work.

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