By Douglas Cole, 10EQS Managing Director. This article was originally published as a guest post on theconsultantlounge.com

When we think of an independent consultant we typically envision a one-person operation. What’s interesting about today’s environment, however, is that independents can now leverage an extensive global infrastructure in much the same manner as any company can. In fact, to a significant degree the individual has become comparable to a global firm. Let me try to offer a more detailed explanation below.

A Different World

Generally speaking, independent consultants have a common history, mindset, and aspiration (at least among the hundreds I’ve met and worked with). First and foremost, they enjoy the autonomy and flexibility of independent work, not least as a reprieve from the lifestyle imbalances they experienced as an employee at a large consulting firm. However, they also tend to retain the curiosity, drive, and ambition for which they were hired in the first place. Ultimately, their personal fulfillment depends on whether these deeper needs can be satisfied.

Traditionally, this has been quite a challenge. For those consultants who are strong enough to build a client base and secure a stable revenue stream, they usually reach a point where they become bound by two constraints. First, they realize they are limited by their own capacity, in the sense that they perceive their knowledge and expertise as the sole source of value to clients. This necessarily confines the size and scope of potential engagements. Second, they begin to see how administrative duties eat into their productivity. The unrelenting minutiae of time and expense tracking, tax planning, and contractual arrangements (among other things) not only consume potentially billable hours but also the time that could be devoted to business development.

Fortunately, these constraints have been substantially lifted. In all key areas – lead generation, administration, and even delivery – a growing number of virtual solutions offer ‘steroid shots’ for the independent consultant.

Lead Generation

Pre-existing relationships are the logical starting point for someone who decides to venture out on their own. But diverse project work requires a wider platform through which potential leads can be generated. Nowadays, there is a plethora of services that match pre-vetted candidates with available projects – from InContract toHourlyNerd to Zintro. My own firm10EQS also plays in this space, though we place a greater emphasis on our channel partnerships with consultancies, investors, and global enterprises.

Such middleman services are increasingly attractive to corporate clients, who recognize that they can access top-tier talent without having to cover the overheads embedded in traditional consultancy fees. They also provide a marketplace that allows qualified consultants to access a much wider client base.

Administration

In the area of outsourced administration work, there is a similarly broad array of options. Theoretically, one could engage oDesk or Elance to hire a virtual assistant, but there are also more specialized services such as MBO Partners that specifically cater to independent consultants with a range of support services, from quarterly filings to online expense tracking to inter-jurisdictional tax management, etc.

The benefits of such services are twofold: first, they free up independent consultants’ time, allowing them to focus on higher-value activities; second, they facilitate access to larger and more prestigious clients, many of which have complicated legal, insurance, and security requirements. An outsourced service provider can vastly reduce the bureaucratic complexity associated with accessing these companies, thus removing a critical barrier to entry.

Delivery

Delivery capacity is another potential barrier, and here again there are many interesting possibilities. In essence, today’s independent consultant can leverage a virtual collaboration platform to assemble larger teams with which to win and deliver more ambitious engagements.

At the proposal stage, one can improve one’s ‘hit rate’ by including indicative profiles of global experts who can be brought in to fill specific knowledge gaps on demand. In this way one becomes empowered to bid on a much wider range of projects, dramatically increasing the scope of potential topics and geographies.

For content generation, one can leverage a virtual community of collaborators – i.e., other independent consultants at various levels of seniority – who can provide client-ready deliverables, such as synthesized points-of-view on market or customer demand, industry benchmarks, competitor assessments, and so forth. These deliverables can be integrated as part of one’s remit on larger assignments, positioning the independent consultant as more of a virtual team leader than a one-person show.

A New Paradigm of Work

One of the most significant benefits of these virtual strategies is that they allow the independent consultant to focus on the highest-value activities, and to outsource time-consuming administration, research, and analysis. The consultant can do what ultimately matters most: strategy development, implementation, and forging a stronger relationship with the client.

As companies become more and more dependent on flexible talent, the demand for independent consultants will only increase. Virtual intermediaries will contribute to a new professional paradigm that is fundamentally different from the outsourcing model of old. This new model will be less about replicating functions like IT, Finance, or HR and more about performing discrete tasks on demand. At the center of this evolution are the independent consultants themselves, and the virtual ecosystems that are steadily empowering them.

 
Posted on Tuesday May 19th, 2015 20:28:00 by

By Douglas Cole, 10EQS Managing Director and Daniel Kauffman, independent consultant and entrepreneur. To learn more about how to work with 10EQS on your next project, please go to: vip.10eqs.com. You can also download and read this paper in a PDF format.

The Oilfield Services Investment Opportunity 

Although the recent drop in the price of oil has impaired the performance of many portfolios, it has also revealed a unique acquisition opportunity in the form of overleveraged oilfield services firms. Those that ramped up capabilities when the price per barrel was over $100 are now forced to scale back as oil & gas companies cut costs and encourage competition among vendors. Oilfield services providers that optimize costs and establish the right strategic focus, perhaps as a result of new ownership, will reap the greatest rewards.

 

 

 

 

 
Limitations of Traditional Due Diligence

The logic behind any acquisition depends on several hypotheses, and the essential goal of any due diligence process is to put these hypotheses through rigorous testing. To do so, investors typically rely on a range of services: strategy consultants analyze industry dynamics, research firms reveal general industry trends, and expert networking firms broker one-on-one discussions with industry specialists.

Each service is individually useful, but also limited. Traditional strategy consulting is expensive, time-consuming, and not appropriate for acquisitions below a certain price tag. Strategy consultants also tend to lack the expertise required for technology and physical asset evaluation, both of which are common for due diligence exercises in the oilfield services sector.

Research firms can survey large numbers of respondents, but the mechanics of doing so are such that answers are usually oversimplified and not always actionable. Finally, expert recruiters are usually without the industry knowledge required to properly qualify experts, leading to a subpar yield of value-added discussions.

The Value of Intermediated Expert Engagement

To complement traditional due diligence, many investors use an intermediated expert engagement format that preserves the best of what consulting, expert networking, and research have to offer. Firms such as 10EQS not only recruit the right experts for each project but also work with these experts on the client’s behalf to compile the insights that validate or disprove acquisition hypotheses. After extensive testing of direct and intermediated expert engagement, 10EQS has learned that an intermediated format is more effective for two main reasons:

Interviewing and Consulting Skills: Maximizing the value of experts is a skill unto itself, one that involves high-level interviewing and consulting skills. Interviewers pose questions, elicit answers, lead the discussion, and summarize the results. To be effective in these areas, interviewers should have a background in the industry and sufficient technical depth to hold meaningful discussions with industry experts. The best interviewers also have the high-level consulting skills needed to challenge, refine, and ultimately structure expert points-of-view. Such skills allow them to engage experts in a peer-to-peer dialogue as opposed to a simple question-and-answer exchange, and to compile the extracted information in a way that delivers the most value to clients.

Confidentiality and Compliance Buffer: The interviewer also provides a confidentiality and compliance buffer that benefits buyer and expert alike. The buyer’s identity is protected, which is especially valuable when there is a time-sensitive opportunity to submit an unopposed bid. In addition, the interviewer serves as an information filter, protecting the buyer from receiving non-compliant information even when an expert unintentionally divulges it.

From the expert’s perspective, the buffer provides reassurance that even if sensitive or proprietary information is accidentally shared it will not be passed on to the client. Experts also value the disinterested nature of the discussion, since people are generally more open when answering questions from a third party than from someone who personally stands to benefit from the information requested. Intermediated exchanges have thus proven to be a highly effective way to collect actionable, compliant insights that have not yet entered the public realm.

Two Case Studies

The following are two recent examples from 10EQS’s due diligence work on behalf of investors in the oilfield services sector.

1. North American Turnaround Services Provider
With the price of oil in the $40-$60 range, capital projects have been postponed and turnarounds at operating facilities have been deferred or reduced in scope. A mid-sized private equity firm sought to acquire a turnaround services company that had been forced to scale back a portion of its services and to focus on a core group of clients. Through a series of interviews with operational decision-makers at client companies, 10EQS was able to validate the extent to which the target’s revenue projections would be vulnerable to cutbacks. These insights were pivotal to the evaluation of investment risks, and these experts could not have been accessed or their insights extracted without a double-blind process for engaging them.

2. Asian Offshore Services Fleet
A global private equity firm wanted to purchase an Asian offshore oil services company, on the assumption that the target would be able to scale its production capabilities over a five-year investment horizon. Such capabilities had been divested only a few years ago, and 10EQS was able to access individuals who were familiar with the target in its earlier incarnation as a production company. These interviews uncovered various causes for concern that eventually undermined the investment thesis. It is unlikely experts would have agreed to share such detailed perspectives had the client approached them directly, or that anyone but a seasoned industry professional could have elicited the same level of detail from them.

 

Buyer Beware

Price swings in today’s oil & gas market have set the stage for redeployment of capital in the oilfield services sector, but this door will close soon enough. While a distressed asset environment makes for a good hunting season, buyers should beware: oilfield services targets must have the correct market profile to weather the current downturn without suffering from excessively restricted cash flows. Acquiring the right market intelligence at the right time from the appropriate cross-section of experts can make or break an investment decision. Investors who recognize the need to expand their traditional due diligence toolkit to include intermediated expert engagement will reap the benefits of greater depth and nuance in their due diligence efforts.

About the authors:

Douglas Cole is a Managing Director at 10EQS. He leads the global due diligence practice and brings more than 15 years of experience in the consulting and energy sectors. He can be reached at douglas.cole@10eqs.com

Daniel Kauffman is an entrepreneur and independent consultant whose practice specializes in technologies, services, and innovations across the energy value chain. Daniel regularly leads energy-related due diligence engagements for 10EQS clients. He can be reached at daniel.kauffman@10eqs.com

 

 
Posted on Monday April 27th, 2015 14:22:40 by

By 10EQS Managing Director, Douglas Cole. To learn more about how to work with 10EQS on your next project, please go to: vip.10eqs.com

Last week some 10EQS colleagues and I were honored to take part in a Columbia Business School course on the consulting industry. The course is taught in New York by Deloitte’s Global CEO, Barry Salzberg, who invited a number of consulting organizations, including 10EQS, to share their thoughts on how the industry is evolving. Below is a representative sample of our contribution to the discussion.

Theoretical Underpinnings of Change

As explained in an excellent HBR article by Clayton ChristensenDina Wang, andDerek van Bever, two foundations of traditional consulting – and especially the strategy model exemplified by McKinsey, Bain, and BCG – have steadily eroded: opacity and agility. The opacity of yesteryear – represented by a team of high-cognitive overachievers developing frameworks and performing analysis behind closed doors – contributed to the mystery, and hence the prestige, of consulting brands. Likewise, consultants’ ability to generate output very quickly was impressive, particularly in contrast to what client teams could accomplish.

Today, however, opacity is not such a compelling value proposition. First, clients are less receptive to a segregated working arrangement with their advisors, especially when clients themselves have a consulting background (a statistical probability that grows by the day). Second, discretionary spend is evermore closely scrutinized, which tends to diminish the appetite for big-ticket consulting contracts. Finally, the ubiquity of information means there are fewer and fewer custodians of truly black-box insights.

With regard to agility, technology has changed the game. There is now a robust global infrastructure – Skype, Google Docs, Go To Meeting, etc. – to enable virtual collaboration at practically zero marginal cost. Technology has also created digital communities of experts from every conceivable industry, function, and geography, all of whom can be accessed electronically through a variety of open-sourced channels. Because of these developments, insights and recommendations can be delivered at a speed that often makes traditional consulting teams seem sluggish by comparison.

What Now?

What, then, might the future of consulting look like? Let’s consider four terms that are commonplace in the industry, each representing an important aspect of the go-to-market strategy of consulting firms: “tip of the spear,” “utilization,” “operating model,” and “trusted advisor.” Here are some thoughts on how each of these concepts could evolve in light of the trends discussed above.

Reimagining “Tip of the Spear”

Traditionally, strategy engagements have been positioned as the “tip of the spear” to secure longer and more financially alluring implementation projects. The tip-of-the-spear mindset hinges on two assumptions. First, it assumes there is a linear relationship between strategy and implementation – i.e., that the latter must follow the former. Second, it assumes the strategy phase should be as thorough as possible, providing a comprehensive basis for subsequent implementation work.

Both assumptions should be revisited. Given the speed with which information can be accessed and strategic decisions made, the consulting firm of the future can support clients in much faster and more flexible ways. Strategy formulation can be compressed at the front-end, and strategic iterations can be embedded as components of the implementation phase. In this way the “spear” can become multi-pronged, using numerous touch-points with the client organization and its workflows. By offering smaller consumption packages than traditional strategy engagements, the consulting firm of the future can deepen its relationship with the client through closer integration, and it can make itself more relevant by serving a wider range of constituents.

Reimagining “Utilization”

Consulting leadership teams are understandably preoccupied with utilization, defined as the percentage of the workforce that is billable at any given time. Considerable effort is spent trying to match supply with projected demand, and balancing the two represents one of the key financial drivers of profitability. It also significantly affects employee morale when miscalculations occur. Unfortunately, full utilization relies on several unknowns, and such miscalculations are common.

The consulting organization of the future could significantly reduce the number of permanent employees and greatly increase its variable staff, creating a much leaner and more nimble workforce. This idea is likely to encounter two objections. The first is that quality would be undermined because of the allegedly unpredictable nature of contract staff. The second is that it could threaten the apprentice model on which the employee development model depends.

Each of these concerns is eminently manageable. Core capabilities for a consulting firm are partner-level client relationships (the key source of sales) and an irreducible number of junior staff that can be determined based on expected turnover. With regard to quality, there is no reason why an Uber-like model of transparent reviews couldn’t solve the issue. And given the sheer number of independent consultants who are alumni of marquee firms, there is a deep global bench of pre-vetted candidates to draw from.

Reimagining “Operating Model”

For large global consulting firms especially, operating model re-design is typical every 4-6 years. Such firms usually have a matrix structure, allowing for different degrees of emphasis on industry or function. Regular adjustments are a rational response to market fluidity, but they are also quite disruptive to the enterprise. Moreover, whatever the specifics of each re-organization, the essential reporting relationship continues to be top-down.

The consulting firm of the future could embrace a network model that preserves only a few core capabilities and has limited vertical integration. Such a networked structure could consist of independent units that connect outward rather than upward – bringing together delivery partners and relying much more heavily on external resources for execution. This would dramatically enhance the responsiveness of the organization, and significantly reduce the friction that follows traditional operating model re-design.

Reimagining “Trusted Advisor”

Trust has always been at the heart of the advisory relationship. The sources of trust – competence, impartiality, transparency, and understanding – will remain the same, but the manner in which they are demonstrated should change in light of current trends. Take competence, for example. In the past, this came from cultivating a sense of exclusivity – exclusivity of employees, and exclusivity of information. It was based on the idea that clients had to pay to access an inner sanctum.

For reasons discussed, this is no longer a sustainable premise. Consulting organizations can still emphasize competence while embracing a more open approach to gathering expertise and supporting clients. What better way to underscore one’s trustworthiness than to say: “Statistically speaking, we recognize there will always be more smarter people outside our organization than within it. We don’t see ourselves as a professional priesthood but as a partner you can trust to find you the right people and skills – whether they come from within or beyond our corporate boundaries. We pledge to do this in a manner that upholds our exacting criteria for quality and professionalism.”

The Key Imperative

Having been immune to disruption for many decades, the consulting industry is currently undergoing some significant changes. These go beyond the general move from strategy to implementation work, or the increased importance of information technology services. We are also witnessing seismic shifts in the availability of expertise and how work gets done in a web-based economy. Consulting firms that embrace these trends while preserving the unique attributes of their brand stand to gain the most.

 

 
Posted on Tuesday April 14th, 2015 17:10:19 by

By Alexander Graf v. GneisenauBusiness Development at 10EQS 

In today’s rapidly accelerating market, businesses face new pressures to make key decisions quickly. To do this, you need to have your finger on the pulse of your industry.

10EQS connects businesses with the right industry experts to solve specialized business challenges. Research that used to take months can now be completed in as little as 2-4 weeks, with a team of 15-20 experts contributing valuable market insights to your project.

10EQS (www.10eqs.com) is globally positioned with access to a pool of more than 250 million professionals. Our consultants lead the discussions with the experts online, with meetings held in the local language. This unique approach increases both the quality and speed of delivery, creating first-in-class results.

Many high profile companies (www.10eqs.com/clients/our_clients) already rely on 10EQS. Can we help you with your next project? Please visit vip.10eqs.com to learn how 10eqs could help you connect with the right experts for your project.

 
Posted on Friday April 10th, 2015 18:10:22 by

By 10EQS Managing Director, Douglas Cole

Ted Graham, Innovation Leader at PwC, recently published a terrifically funny LinkedIn post that documented the extent to which all kinds of businesses are now claiming to be the Uber of their industries (more than 300 in 2014 alone). It would appear the comparison is exaggerated in many cases, and I think it’s worth pausing to ask: What are the distinguishing features of Uber’s business model, and to what extent can a company be considered ‘Uber-like’ on the basis of these features? Let me propose four key questions and score my own firm with reference to each (I’ll use a simple rating system of 1, 2 and 3 for low, medium and high degrees of similarity).

#1: Are you leveraging previously untapped supply?

The genius of Uber’s business model is that it found a way to tap into an immense pool of excess capacity – car owners interested in making supplementary income – by offering them a simple mechanism to monetize an existing asset and a portion of their free time. Signing up as a driver in my home city of Toronto can be done in less than a week and requires no upfront cost apart from a mechanic’s inspection of your vehicle (from what I’ve been told).

My own company, 10EQS, is a crowd-sourced advisory firm, and I have to say there are legitimate parallels. For us, this untapped capacity is in the millions of professionals whose expertise can be accessed efficiently through open-sourced channels. Whether these professionals are recent retirees or front-line practitioners, many of them have deep and specific knowledge that is of singular value to an as-yet unidentified customer. As with Uber drivers, they can sign up on our platform as experts in a matter of minutes by agreeing to a simple set of terms and conditions.

And, like Uber drivers, their motivation isn’t purely monetary. Many experts relish the opportunity to participate in the latest discussions across their industry, and they appreciate being valued for what they bring to the table. From my personal experience, Uber drivers derive similar enjoyment from interacting with a diverse array of clients each shift.

10EQS supply score = 3/3

#2: Are you targeting pent-up demand?

Uber is able to satisfy a variety of customer needs that were simply overlooked or ignored by the traditional transportation model: cleanliness, timeliness, choice, ease of payment, and professionalism. All of these were never prioritized because of the top-down structure of the industry, which effectively downplayed the importance of the customer. Suddenly, through Uber, end users are being given their due. They can now rate their driver, know exactly when their car will arrive, and pay with a mobile device (among other revolutionary benefits).

I would argue the 10EQS model does something similar. We are responding to pent-up demand for expertise that wasn’t typically provided through conventional channels. Previously, consulting firms were largely closed organizations that relied primarily on the expertise of in-house employees, requiring large margins to recruit and retain top talent. But clients have been steadily raising the bar in terms of the specificity of insights they seek. We help our consulting partners meet this demand by providing a way for them to access highly focused expertise from the “global brain” on demand.

Simultaneously, we give smaller organizations a chance to engage premier consulting talent, which was once prohibitively expensive for them. The inherently virtual nature of our business model means that overheads are vastly reduced, and we can quickly deploy teams of top-tier consulting alumni who now operate as independents on our behalf. These collaborators can work directly with 10EQS-sourced experts and deliver highly valuable insights and recommendations with unparalleled efficiency.

10EQS demand score = 3/3

#3: Are you exploiting the latest technologies?

The elegance of the Uber model is that it integrates a number of existing mobile technologies – voice, data, payments, and GPS – to create value that is greater than the sum of these individual parts. In so doing, Uber has managed to put to rest the most obvious concerns for first-time users: safety and quality control. Quality is maintained through transparent reviews and the abrupt deactivation of any driver who is reported to be substandard. Safety is enforced through the full traceability of each ride – pick-up, drop-off, and all mobile conversations (which are routed and recorded through a central backend).

Again, there are notable similarities. We rely heavily on technology for identifying and recruiting experts and collaborators through a variety of open-source channels, for maintaining a platform that organizes expert profiles and project delivery processes, and for facilitating collaboration through an extensive virtual infrastructure. Quality concerns are addressed through the transparency of our insight development process, as well as structured review meetings with the client.

One difference, however, is that we are not first and foremost a technology company. In our business the user experience is more noticeably shaped by human involvement: clients return to us because they have a trusted relationship with a sales representative, and they delight in our service when they perceive the value of expert insights or the conceptual, analytical, and communication skills of our collaborators. This is quite different from the sublime convenience of traceability, communication and payment when one takes an Uber car. I would say we return to Uber primarily because we remember the interface, not the driver.

10EQS technology score = 2/3

#4: Are you redefining your industry structure?

From the perspective of taxi companies, Uber is perceived as the enfant terriblebecause it seeks to replace an oligopoly with a democratic model. Uber dramatically reduces the barriers to entry for prospective drivers, thereby undercutting the profits of a small number of players who control the distribution of taxi licenses. In addition, Uber lets basic market principles determine supply and demand, for example by using surge pricing to entice more drivers on to the road during busy periods.

Our vision at 10EQS is similarly democratic. We believe the nature of work is fundamentally changing, and that we are moving toward a world in which professionals will be collaborating online in radically more open ways – within and beyond organizational boundaries. We believe that “managed crowd-solving” (experts and independent knowledge workers collaborating online under tight content and process control) will bring unprecedented improvements in efficiency, quality, and speed. And we see this as the next major phase in the evolution of the web-based economy.

Compared to Uber, the pushback against this vision is mild, but it is still apparent. And reassuringly so, one might say, because if one is truly disrupting an industry one should expect to encounter resistance.

10EQS disruption score: 2.5/3

Going back to the number of people jumping on the Uber bandwagon, one could say the phenomenon illustrates something deeper than mass psychology or shameless copying. A recent New York Times article speculated that many industries may indeed be “Uberized” in short order, due to underlying fundamentals that are not going away any time soon:

“New technologies have the potential to chop up a broad array of traditional jobs into discrete tasks that can be assigned to people just when they’re needed, with wages set by a dynamic measurement of supply and demand, and every worker’s performance constantly tracked, reviewed and subject to the sometimes harsh light of customer satisfaction.”

So how Uber is 10EQS? I would score us 10.5/12. And while that may seem high, you’re likely to find many others who, based on the above criteria and in light of current trends, would rate themselves in a similar way. Out of curiosity, then, how Uber are you?

 
Posted on Wednesday April 1st, 2015 14:34:11 by
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