Building Your Trusted Advisor Reputation: A Research Proposal

In my last post, I talked about how your sales approach could be hurting your bottom line, and discussed a few ways to address this issue.  One of the recommendations I made was to mine your company's historical bid vs. actuals data to help ensure that you're not underbidding on projects.  Today, I want to look more closely at what this research would entail.

The Sample
While this research would be especially fun if you could get your hands on data across multiple firms, it's more realistic to assume this would be an intra-company study.  Start by selecting which segment(s) of your business you want to study.  You could do it by monetary size, industry, software type, etc.  For this example, let's say we're going to look at all ERP implementations.

Gathering the Data
Once you have selected the projects you want to study, you can begin to gather data.  For each project, you would gather the following data twice.  First, you would gather it based on the bid.  Second, you would gather it based on the completed project actuals.

1. Budget
1. Overall project budget
2. Budget by team
3. Budget by customization
4. Contingency
5. Initial bid vs. final negotiated bid
2. Timeline
1. Overall timeline
2. Timeline for each project phase
3. Major milestone dates
4. Adjustments to timeline based on client request
3. Resources
1. Total number of resources
2. Number of resources per team
3. Number of client vs. consultant resources
4. Proposed level of each resource

The Findings
So, what do I expect to find using this data?

1. Budget
1. Looking at the bid vs. actuals for the overall project budget, you will be able to see how accurate your bids are to what the projects actually cost.  Are you off by 5%?  20%?  50%?  This will give you an idea of how much your future bids will need to change.
1. To set the new baseline for future bids, you can look at the aggregated results of your actual data to determine what would be a more accurate bid that will save your client from potential budget overruns.
2. Comparing bid and actual amounts for budget by team and budget by customization will also help you pinpoint if there are certain areas where your sales team is really having a hard time coming up with accurate figures.  You can use this data to adjust your pricing model.
1. For example, you might find that you are always running way over budget on form customizations.  Armed with this knowledge, you can work with the developers to determine what you should really be bidding for customized forms based on their level of difficulty.
3. Are you using up all of your contingency?  How early in the project do you need to tap it?  Many clients are uneasy about the concept of contingency, but having data can help support your argument for including it in your bid.
4. Finally, looking at your initial bid vs. what you finally agreed to after negotiations will help you determine if clients are consistently haggling you down from an appropriate bid to a budget that won't cover the full cost of the project.  This data should help your sales team adjust their negotiating tactics.
2. Timeline
1. In my experience, clients always want the project done faster.  Use your overall timeline comparison to show them how long it truly takes to complete the type of project they want to implement.  This will set realistic expectations.
2. Breaking your timeline data down by phase and milestone will also help you determine if there are certain parts of the projects that are taking longer than conventional wisdom would suggest.  Your methodology might say the test phase should take a month, but if it consistently takes two months, it's best to bid based on the actual time required.
3. Resources
1. Clients often see cutting resources (and by resources, I'm talking people) as a quick way to save on costs.  You don't really need 3 people to develop training, do you?  Use the data on actual number of resource per project by team as a baseline for how many people you need to complete the project on time.
2. This data should also help you find the right resource mix.  Look at the projects that came in closest to their timeline and budget.  What allocation of client vs. consultant, junior vs. senior, on shore vs. off shore did they use?  Find the winning combination, then replicate it as appropriate.

Using the Data
So, how does all of this data actually help you during the sales pitch?  Imagine being able to walk into a client and saying, "I know our bid is 10% higher than everyone else's.  We have the data, though, that shows that our budget and timeline are accurate for this type of project.  Not only does this mean that we are most likely to come in on time and on budget, but this also means that three months from now, you won't be standing in front of the steering committee asking for more money and a schedule extension.  Instead, you'll be standing in front of them each month with a status report that shows the project on track."

This helps move your people from being just a sales team to becoming trusted advisors.  And as word spreads that your company provides accurate bids that save companies from overruns, and individuals from embarrassing meetings with Executives, more and more clients should see the benefit of a higher up-front cost versus lots of hidden surprise costs along the way.

Caveats
The one main caveat I want to include here is that if your consulting firm has a culture of ghosting hours, your actuals will be off.  The research is still worth doing, and should still improve your bid process, but don't be surprised if your bids are still lower than the reality.


Let Me Know: Do you know of any firms that have done this kind of research?  How has it improved their bidding process?

How Your Sales Approach is Hurting Your Business

Every consultant has experienced it: You walk onto a client site, and within minutes you can tell.  The project was underbid.  There aren't enough people, the timeline is too short, and you have about 2/3 of the budget you need to do the work properly.

Now, I understand that sometimes companies purposely underbid on a project just to get their foot in the door.  It's part of a strategic plan where they assume that the money they lose on the initial project will be made up for on future projects that they will surely win once the client sees what an outstanding job they can do.  As long as the consulting firm is willing to provide the necessary resources to do the job right and write off the loss, I'm fine with this approach.

Where I see a major problem is when consulting firms consistently underbid work as their main sales strategy.  They go in with a good feeling of what the client is willing to spend on a project.  Even if this budget isn't enough to cover the work the firm is proposing, the sales team will still enter a bid that fits the budget just to win the work.  The rationale I often hear is that this lets them get on the ground.  Then, once they've started the project, they'll work with the client to adjust the budget, resources, and timeline to be more realistic.

The Consequences

1. First, and foremost, this approach decimates client trust.  Many clients start large-scale projects without any idea of what they entail.  They are relying on the consultants they hire to provide them with advice and guidance.  When the very first interaction between the client and the consulting firm is based on underbidding that will lead to delays, budget overruns, and upset bosses, any future advice will be viewed with caution.  Consider, as well, the long-term trust implications.  If word begins to spread that your firm consistently underbids, you stand a good chance of losing future clients. 
2. Another consequence is the development of a major rift between your salespeople and your consultants.  Often, once the sales team has sold a project, they have nothing else to do with it.  This means that by the time your consultants are on the ground and in the throes of suffering through an underbid project, the sales team has already moved on.  These situations can quickly lead to an "us" vs. "them" mentality, which can cause a divide in your workforce.
3. The last main consequence I want to talk about is consultant burnout.  When a project is underbid, the firm has three options.  They can ask the client for more time, money, and resources.  They can eat the lost cost.  Or, they can work their consultants harder to get more work done in less time with less people.  When the firm chooses the third option, they burn out their consultants, leading to poor work quality, disgruntled employees, and high turnover.

All of these consequences of rampant underbidding can directly impact your firm's bottom line, as well as its ability to win new work, and obtain and retain top-rate consultants.

Practical Steps to Take
Even if underbidding is already a part of your selling culture, you can still take steps to change it.

1. Adjust your compensation model: A lot of salespeople I have met receive their pay when the work is sold.  What if, instead, they only received a portion of their pay at this time?  Consider a phased approach that would have a second payout when the consulting team hit the ground and verified that the budget, resources, and timeline that were sold are appropriate for the project.  It could even be possible to have a third payout partway through the project, when the consultants are achieving successful results.  This model gives the sales team some skin in the game.  I can already hear the argument, "What if the consulting team doesn't do a good job and that's why they don't meet deadlines or need more money?  Why should the sales team have to risk their pay based on whether the consultants do a good job?"  But consider that this is already what the consultants are doing.  Every time they walk onto a project, they are risking their reputations based on how well the sales team bid the work.  These two groups need to become a cohesive team.  Which leads me to my second point...
2. Involve consultants in the sales process: I'm not talking here about having them just show up at orals to give a presentation and answer some questions.  Rather, when drawing up the bid, ask the functional experts how long it will take to do blueprint based on the scope of the project.  Ask the technical people how difficult it will be to code the customizations the client is requesting.  Making the consultants an intimate part of the sales process should drastically increase the accuracy of the bid.  Leading us to...
3. Stay facts based:  Every firm should be able to look at historical data for comparable projects to use as a baseline when bidding on new projects.  If past projects of similar scope cost $5 million, but this client says they only have a $3 million budget, instead of bidding $3 million just to win the work, consider having a serious conversation with the client to ensure they understand what they're getting into and the risks they're facing by not setting aside enough budget.  If they really want to do the work right, they should thank you for the honest discussion.  Which brings me to my final recommendation...
4. Become a trusted advisor: I was always taught that the main goal of anyone in the consulting industry is to become a trusted advisor to the client.  By taking the opportunity during the sales process to have the hard conversations with the client; by choosing long-term success over short-term payouts; and by becoming known as a best-in-class team that delivers spot-on bids that reduce schedule and budget overruns, your team has the ability to change from being a sales team to being trusted advisors.  And when they're the first impression a client has of your firm, isn't that goal even more important?

Research Proposal
In my third recommendation, I suggest that firms stay facts based in the sales process.  This has led me to thinking about the type of research that could really help the sales team provide accurate bids every time.  In my next post, I'll lay out a research proposal that can mine data you already have to increase your future success at both sales and becoming a trusted advisor.

Let Me Know: How does your company handle the sales process?  How does the approach impact the every day project work?

Keep it Simple: The Art of Making Difficult Concepts Easy to Understand

Recently, I heard of a web-based tool called The Up-Goer Five Text Editor.  It is designed to help you turn difficult concepts into easy-to-understand language.  Basically, you type a sentence into the editor, and the tool compares each word to its list of the one thousand most used words in the English language.  Any word that is not on the list is underlined in red.  It's then up to you to find a substitute word.

It sounds easy.

It is very, very hard.

I decided to try it out on Change Management.  I started by using the definition of Change Management, as defined by ProSci on their website.  It reads:

Change management is the application of a structured process and tools to enable individuals or groups to transition from a current state to a future state, such that a desired outcome is achieved.

There are 33 words in that definition.  Thirteen of them did not make the cut.  That meant I had to find a way to change 42% of the words in order to meet the tool's criteria, without substantially changing the definition.  This was going to be especially difficult given that the word "management" isn't on the list.

The definition I came up with is below.  Before you read it, though, I challenge you to go to the site and try to come up with your own version of the definition.

My Definition
Try as I might, I just couldn't get rid of the word "tools."  That said, here is the revised definition I created:

The business of the Change team is to use a carefully considered set of steps and tools to help people or groups to change from the present state to a new state, such that a wanted end state is realized.

Let me know:  Did you use the tool to create your own version of the definition?  Share it by posting it in the comments section.

My attempt at using The Up-Goer Five Text Editor to simplify the definition of Change Management.

Who Moved My Cheese: A Practical Application for Change Managers

As I read through Dr. Spencer Johnson's book, Who Moved My Cheese?, I understood why people either seem to love it or hate it.  Depending on your reasons for picking up this book, it can hold all of the answers you're looking for, or it can seem as if it doesn't address any of your questions.

Today I want to look at how we can take some of the concepts in Who Moved My Cheese? and apply them in a practical manner to the development and execution of a Change Management program in a corporate setting.

Below are five key lessons we can take away from the book, as well as a response to the one major question Dr. Johnson left unanswered.

Know your Stakeholders
Who Moved My Cheese? focuses on four main characters.  There are two mice, Sniff and Scurry.  "Sniff would smell out the general direction of the cheese...and Scurry would race ahead." (p. 27)  There were also two littlepeople.  Haw eventually learns to move with the cheese, while Hem remains locked in the old way of doing things, waiting fruitlessly for his cheese to be returned to him.

While these four characters in no way illustrate the full range of "change personalities" you will meet during a corporate change, they do highlight the fact that in order to build a successful Change Management program, you have to know and understand your stakeholders.

The methods that will help a "Haw" adopt a change are very different from the methods that will help a "Hem" make the adjustment.  If you walk blindly onto a project and put together a Change program based solely on a standard methodology or research, without first analyzing the personalities of your stakeholders, you are likely to find that your Change Management activities only meet the needs of a small portion of your audience.  If this happens, many people will never move on to the "New Cheese" that awaits them at the end of the project.

Burn the Platform
Although the impending loss of cheese was described as a gradual change in the book, only two of the characters realized it was coming, and none of them made a change until they considered it absolutely necessary.  This is why, in Change Management books and methodologies, you'll often hear the term "Burning Platform."

The burning platform provides the reason why the change is necessary.  As Who Moved My Cheese? illustrates, it's important to burn the platform early and mercilessly.  Most people will not change unless the need to change is compelling and imminent.  Consider these two examples that could be used for the same IT system implementation:

1. We need to change our sales systems because IT says the new system is better.
2. We need to change our sales systems because our current system is out-of-date, and will no longer be supported as of next month.  Using an unsupported system will slow our ability to find and attain new customers, allowing our competitors to take away business and overshadow our best-in-class products.

Which statement is more likely to make people run after that New Cheese?  As long as there is an old platform left to stand on, there will be some people who just refuse to move.

Paint a Picture
One of the main points highlighted in the book is, "Imagining myself enjoying New Cheese even before I find it, leads me to it." (p. 58)  This is an excellent strategy for individuals trying to make a change.

Your job as a Change Manager is to paint the picture that individuals imagine.  Help them picture what the New Cheese looks like, whether that means providing demonstrations of the new system, holding role-playing sessions of new business processes, or simply sending communications describing the end state of the change.

If you don't paint the picture for them, people will create their own picture.  If they create their own picture, you can't be sure that what they're imagining matches the reality of the change that is coming.  This can lead to:

1. People imagining a New Cheese that is so wonderful, the real thing will disappoint them.
2. People imagining the New Cheese will taste awful, causing them to fight the change.
3. People having no imagination at all and ignoring the need for change.

Once you've painted the picture, make sure that anyone else who talks about the change is describing the same picture.  And don't be afraid to add details to the picture as they become available.

Provide Quick Wins
As Haw navigates the maze looking for his New Cheese, he finds himself getting weak.  He hasn't had any cheese since he left the Cheeseless Station, and as his hunger grows, his commitment to finding New Cheese diminishes.  Luckily, as Haw is reaching the end of his resolve, "He found little bits of Cheese here and there and began to regain his strength and confidence." (p. 67)  This leads him to make the statement, "When you see that you can find and enjoy New Cheese, you change course." (p. 66)

This revelation is the concept behind building "quick wins" into your project.  The theory is that as people trudge along on the path to change, a path that can take months or years to complete, they will get overwhelmed and discouraged.  This can cause them to eventually walk slower, stop walking, or even turn around and go back.  To help keep people motivated, you need to break the path into smaller increments and celebrate each time you successfully navigate a portion.  This helps people see that they can be successful and encourages them to tackle the next part of the change in a positive manner.

These quick wins should be:

1. Close together: Don't expect people to go a year between success and encouragement.
2. Manageable: If people fail at the small pieces of the change, they will be convinced the larger change will fail, as well.
3. Real achievements: Don't create a win just for the sake of having a win.  It must be a real and meaningful accomplishment.
4. Celebrated: Allow people to celebrate their achievement in making a small change, so that they have positive reinforcement for making the larger change.

Reward the Right Behavior
I often see rewards and recognition programs at organizations that actually reward people for stubbornly staying with the Old Cheese, rather than encouraging them to embrace the New Cheese.  In effect, the Haws of the organization, who work to find New Cheese, get to the new Cheese Station and find it empty.  Meanwhile, the Hems of the organization remain in the Cheeseless Station (often making loud and belligerent comments about the futility of the New Cheese to anyone who will listen) and the organization eventually gives in and hands them some more cheese.

Not only does this derail the current change effort, it also discourages people from embracing future changes.  They have seen that if they just wait long enough they can be rewarded for maintaining the status quo.  Here are a few reward and recognition Do's and Don'ts based on my project experience:

• Do guarantee that anyone who joins a special project will still have their old job to return to when the project is done.
• Don't pay out project bonuses based on hitting deadlines.  This only encourages people to do things fast, not right.
• Do recognize that people are going above and beyond their normal duties and are gaining new skills that can position them for better jobs and promotions.
• Don't cause people to miss out on the benefits of their old job.  If you ask a commission-based sales person to join a project, but don't supplement their income to make up for the commissions they'll lose, they have no incentive to become a member of the team.

And the unanswered question...Who moved my cheese?
Dr. Johnson never answers this question in the book.  The point he seems to make is, it doesn't matter who moved your cheese.  Just get up and start looking for New Cheese.  I would argue, however, that in a corporate Change Management program, answering this question is very important.  Are we making the change because the customer is asking for it?  Is the CEO decreeing the change?  Is this based on a grass roots effort among employees?

Understanding who moved the cheese can greatly impact people's emotional reaction to a change, which in turn will influence the type of Change Management program you create.

Let me know: Have you read Who Moved My Cheese?  What did you think of it?