5 questions for Steve Shu...

Steve Shu is an independent Management Consultant, Business Development Professional, and Blogger living in the Los Angeles area. Steve got his MBA from The University of Chicago in 1999, and we asked him five questions about his work and what he was witnessed as a management consultant.

1. What is a typical week in the life of an Independent Management Consultant?

Just as backdrop on my consulting background, I have worked for a traditional management consulting firm (PRTM), as a management consultant within technology firms, and as an independent consultant. It is also noteworthy to mention that I tend to be more of a general management and business development consultant as opposed to a specialist in finance, say. So what I write here will be from those perspectives.

As an independent consultant under normal situations, I try to target the balance of work similar to that of a principal consultant within a traditional firm. So let’s say for argumentation sake the target is approximately 60% delivery, 30% business development & sales, and 10% other. That said, since resources are limited as an independent, it is not always possible to compress work into Monday-Thursday with business development on Fridays. I try to use that as a guideline in order to keep things focused, but often business development needs to bleed throughout the week. One of the biggest problems that independent consultants face is that when they are delivering work they are not selling. Vice versa is true also, so there is an inherent tendency to oscillate in terms of workload.

To compensate for that (i.e., augment the portfolio of high involvement, longer sales cycle, and shorter engagements), there are a variety of techniques to use. One of them is to try to sell more work and multi-phase engagements into existing clients, which keeps the sales cycle down. These practices are already well-documented elsewhere, so I’ll go into some other methods that I’ve not seen documented so much. Another technique I have used is to blend contractor or interim management work with traditional consulting work. Contractor work tends to be at a lower pay rate because it simply enables a client to have flexible workpool, but in some sense it requires a less arduous sales process and helps to guarantee a minimum level of work if the independent consultant needs it. Interim or fractional management work is often like retainer-based work for an extended period (e.g., 6, 12, 18 months), but it often requires a custom employment agreement, including scope of management definition and goals and objectives articulation in the riders. The longer contract timeframes for interim management roles help to keep the sales cycle down. As a final technique to keep a mix of sales involvement and contract lengths, I’ve started to explore subcontracting and partnering with principals and partners at other management consulting firms. This structure broadens the services that can be offered and can keep the sales cycle down for the independent. It is too early to tell how these arrangements will work out in terms of deal flow, but on the delivery end I’m confident things will go smoothly.

2. What are some of the common issues or problems you see at your clients?

The work that I do as an independent is more varied in terms of industries covered than when I was part of a larger firm. So it’s harder to find common themes. If I had to pick two common themes, the first one would be around assessing new business opportunities and funding them (later part is tricky in this market). The other theme I have been seeing more of is in the operational process improvement area. The themes here, however, have not been so much around improving profits as they have been about weathering the economic storm and making improvements that increase either customer satisfaction or quality of services and products. Clients, on the balance, are more conservative right now. Whereas the smart executives and managers may have been going for broke before and taking bigger chances, they now see making continuous improvements as a must-do (not necessarily demonstrating immediate margin or revenue improvement until after the storm lifts). As additional light, some executives are missing their revenue numbers in the current (bad) market climate, but they are making their net profit numbers. These companies are using the stable net profits as their bulletproof vest with their Boards while using consultants in very targeted ways or in controlled “entrepreneurial experiments” to help build for the future.


3. Can you tell us about a mistake you have made in your job, and what you learned from that mistake?

One of the mistakes that I suspect many consultants make (especially early in their careers) is to fail to get client feedback throughout the entire time frame of an engagement. When I was on that path, I was fortunate to have a senior consultant coach me back on track (mentorship is key in consulting businesses). If a consultant just generates a fancy analysis without transferring knowledge, transferring stewardship of deliverables, and getting client buy-in and feedback, then the customer just gets a bunch of deliverables and paper. The customer hasn’t really advanced. I have argued in the past that “In Consulting The Process Is An Essential Part Of The Deliverable”.

4. From your experience, can you tell us what factors separate a startup that fails from one that succeeds?

Startups can fail for many, many reasons, whether they are incubated entities within a larger company or standalone. Luck surely plays a role, but aside from that I think the biggest failure points for startups are related to 1) their ability to adapt, 2) their ability to be honest about progress and scalability/repeatability, and 3) their resolve to move forward (with either changes to processes, strategy, team players, or technology). #1 is about hiring talented, creative, and flexible people. #2 is sometimes tricky because I think there is an inherent bias in startups to drink one’s own Kool Aid and see confirming evidence only. #3 is tricky because everything has to glue together properly.


5. What did you learn at the University of Chicago that has been the most help in your career?

I cannot say enough good things about the Chicago training, despite my recent wavering on free-market theory (I know, sacrilegious!). For me, bread-and-butter training came down to core finance & financial analysis, technology strategy, and core marketing. I probably have used this training in 70%+ of the situations I have been in whether consulting or management. As far coursework goes, the next tier of must-haves for me are around statistics, decision-making and organizational behavior, operations, negotiations, and strategy and organizational structure. The operations and negotiations courses at Chicago are really unique, and offhand I can’t think of the best way to get that level of foundation in the industry. If there were some areas that I had to sharpen post-business school, I would say that marketing segmentation, consumer behavior, business law, corporate governance, new product development, and sales and sales management were areas that I needed to refine the most.