Some sayings are so profound that in time, they become the absolute truth in all matters of economy, society, culture and our very beings. One may wonder if Ben had any inkling about just how applicable his words would be, especially to the world of business consulting today.
Well, herein lies the problem. We are all in the perennial habit of ascribing a price to everything. However, when a decision that really matters to us; when an expense must be incurred on something of true importance – our minds quickly make price far less important than value.
Let’s think about this, shall we? Your annual flu-shot can be very comfortably taken at the neighborhood clinic. It’s convenient, inexpensive and quick. However, gaining an honest, unfiltered and high-quality opinion about what you must do if a loved one has been diagnosed with a serious illness – now that will push all of us to seek advise from the best & most experienced doctor that we can manage, wouldn’t it? It would be of little consequence that this Doctor is a two-hour drive from home and the consultation may burn a big round hole in our pockets. We wouldn’t dream of using the neighborhood clinic for this. So what if it’s convenient, inexpensive and quick? What value can the clinic add to this situation? I need real & valuable advice!
The truth is that we are very capable of making a clear and evident distinction between awarding value to matters of importance and making price our decision driver in things less concerning. Yet, while we see the clear need for making our choice of a Doctor or say a Lawyer one that is driven by value, when it comes to our choice of consultants, we are often unable to move away from the idea of retaining the cheapest or quickest one available. The pricing mentality takes over the value proposition far too often. Is it, perhaps, because we find matters of personal health and safety to be far more concerning as compared to situations that may impact the health and safety of our business? Are we sometimes unable to see the long-term value erosion that we cause to our enterprises by making short-term pricing decisions? My hypothesis is that this is very likely the case.
When viewed from a different lens, it’s probably not fair to pin this entirely on the advice seeker. The provider too must be scrutinized. While it is true that the commoditization of advisory led work has caused ‘rate wars’ in the consulting space, it is very convenient to state that the client is seeking ‘cheaper options’ and therefore the consultants have no choice but to drop fees. The larger portion of the blame for this downward spiral must rest with the consulting firms themselves. In a bid to grab more business in an ever-competitive environment, some firms regularly succumb to the pricing mentality, thereby eroding not only the very ethos of what trusted advisory must represent, but also creating an environment that benefits no body at all. While the consulting firm suffers because of lower fees, the client is offered sub-par advise, well because the truth of the matter is – You get what you pay for!
It is also clear to me that simply stating the challenges yields scant results. So while I present the quagmire for your consideration, it is only fair that I also opine on a solution. Perhaps, comparing the relative cost of quality consulting when stated as a percentage of overall project cost would set things in perspective. For instance, when building a 100-room Luxury Hotel, the money spent on a very good quality feasibility study would likely amount to 0.0004% of the overall project cost. Now, this same cost could easily be 0.0003% if you chose to subscribe to sub-par advise. As is evident, while the difference in professional fees between good and not-so-good advisory does not even qualify as a rounding error, the material implications this could have on the viability of the project are almost always phenomenal. Sadly, one too many projects have borne the brunt of shoddy consulting rhetoric in our industry; remnants of their bleeding balance sheet standing as proof for all of us to see. When viewed holistically, the savvier client would therefore award weightage to the quality of advice being sought rather than the miniscule savings that a ‘cheaper’ consulting firm could offer.
The fact remains that all businesses can benefit from unbiased, uncolored and perspective led advise. Choosing your consulting firm must really be about seeking direction and opinion that can enhance the overall viability of your business. You see, when it comes to trusted advise – A penny saved is not always a penny earned. It could well be a dollar burnt!
Just some consulting food for thought…