Buy outcomes, not output

There a couple of things you need to think about before you buy consulting services, management consulting, or any of the types of services where you’re looking for a unique perspective or insight, the benefit of experience, and a fresh view on things. Anytime you’re looking for something that’s going to end in real change for your organization, it’s important to make sure the original purpose doesn’t get lost in the current economic climate’s push to make sure that you’re making the most of your dollars and spending appropriately. I know that a lot of organizations are much more cost conscious than they have ever been previously but I think that focusing on value, especially when you’re looking at management consulting type engagements where small changes have huge consequences, is vital. You need to be really careful about how you judge value there. More people at a lower rate does not necessarily mean better value. I’ve had some interesting conversations with people over the years as they look to maximize individual rates on personnel, or in this case minimize. They try to maximize their perception of value so they focus on driving down individual rates or sometimes total cost, but a lot of times it means using people with lower individual rates, and in turn that sometimes means quality. It’s just part of the problem with contracting things on a time and material basis.

I would really like to see a shift away from that. I know that it’s an easy way to measure what you’re getting sort of situation, but I think what it tends to make vendors do is beef up the amount of paper that they deliver; and to deliver more paper they put more junior people on tasking because those are the paper creators. They slim down the time that senior staff spend on the engagement and you end with maybe one person who’s been there and done it before. Then you end up with five or six people other people that are no doubt smart and have been to the right schools and know lots of things but probably aren’t maybe necessary to get the job done in the first place. They’re extra; they’re part of the extra value that the client is getting but in reality they are not necessarily solving the problem that you went in there to fix. I think it’s why so many organizations, when you initially start talking to them, they point to the failures of the past and the failures of the past are monstrous SharePoint sites that are full of documents. You know they’ve got an entire library of things that have been created on their behalf but they haven’t really moved the ball forward. You know why that is? I think it’s because they focused on the output not the outcome.

So I think that as you go into to acquire something, be careful about what you’re really trying to get on the other side. Now I’m not sure what the exact answer is but I know that at MB&A we try to position things in terms of here’s the value of that you’re going to get and less in terms of here’s how many hours you’re going to get of somebody’s time and what it’s going to cost you per hour because I just don’t find it to be very valuable. I know that by using a times and materials basis it’s easier to explain as a vendor talking to a client, but I don’t think it gets the client anything and it tends to encourage the wrong kind of behavior which is: lower rates, more hours, neither or which has to do with more outcomes. So I’d be interested to hear how others have solved this problem for their organization or times when they’ve run into this problem.