Client Selection, Coaching Plan, Fee Structure and Fee Comparison Results Based Fees, One Client per Industry
We seek to co-achieve strategically driven growth for internationally oriented businesses. With the client, we solve problems and make things happen. The preliminary exploratory meeting treats the three "CAPs" of client selection, the engagement plan and fees, as well as the setting of SMART goals.
I. Client Acceptance Process (the selection CAP)
--- leadership attitudes
- openness to change
- commitment to strategic initiatives
--- business prospects
- product/service innovation
- market (niche) opportunities
--- available resources
- human capital
- production, technological and financial wherewithal
II. Coaching Action Plan (the engagement CAP)
--- Discovery: where your business is, and where you want it to be
- problems (perceived vs. actual)
--- Deliberation: on closing the gap between what is, and what could be
- strategy: what to do where
- tactics: who does it how
- execution: doing it – making it happen
III. Commitment And Performance (the fee CAP)
--- initial commitment fee
--- milestone fees
- % of revenues earned
- % of savings realized
--- performance fee
- tied to results, to meeting agreed upon objectives
- the majority of the fees
1) Start-up or SMB: A successful outcome for a start-up or SMB is determined to warrant total remuneration of 20,000€. A commitment fee of 1,000€ (5%) is paid upon initiation. As milestones are reached, a further 3,000€ (15%) is disbursed. Upon successful completion, goals achieved, the remaining 16,000€ (80%) is paid.
2) Multinational: Alternatively, an engagement for a multinational is valued at 600,000€. A commitment fee of 12,000€ (2%) is paid and as milestones are reached a further 198,000€ (33%). Upon achieving the goals, the remaining 390,000€ (65%) is paid. Other scenarios include equity participation, stock appreciation rights, a seat on the board of a new or joint venture or the provision of company goods or services. An hourly fee, for instance on a 40%/60% contingency basis, may also be negotiated.
IV. Fee Comparison
The premier consulting firms (McKinsey, Bain and BCG as the "big three" in strategy) charge significant fees. Walter Kiechel III writes in The Lords of Strategy about the "price creep" of strategy consulting from its early days. Some of the consulting pioneers have hit the C-suites of the Fortune 500. They are now on the other side of the fence, hiring their old firms for consulting engagements. "It will cost you $150,000 a week to get in a team from BCG or McKinsey," one incredulous pioneer told me. "Four or five million dollars for a six-month project!" another marveled."1
Given these prices, one should choose strategy services carefully. Implicit to that is to negotiate win/win engagement terms. The selection process is discussed further at 1) "How to Select an Executive Coach. Don´t Be This Person!" Its subpage "And other advisors" also applies to management consultants. Yes, they will also work on a performance basis, sometimes more, sometimes less grudgingly, if you properly negotiate! The negotiation process is treated at "Negotiation Strategy."
V. Determine the goals
"It´s hard to get there from here if you don´t have a destination."
Goals should be SMART:2
Specific Strategic - goals should generate
Measurable Momentum - and include several
Achievable Alternatives - as well as negotiating
Realistic Reconciliation - of differences with
Timely Tenacious - monitoring and follow-up.
One can re-order the SMART acronym and change "timely" to timed (i.e. with deadlines) for Timed RAMS for a better sequence with which to set goals. The M is critical: "What gets measured, gets performed." Beware of goals that are Achievable and Measured Specifically but not Realistic. These are goals that are a low priority, or face more resistance than is worth overcoming.
The devil is in the detail of the "W´s:" Why What should be done, Where and When, by Whom, with which Wherewithal. The "W´s" are discussed further in the subpage "III. Corporate Strategy Formation" at Services. Note that when it comes to implementation, a KISS approach works best:
Keep It Strategically Simple.
Stoney Creek Bridge, Canada3*
1 Walter Kiechel III, The Lords of Strategy, Harvard Business Press, 2010, Note 5 to Chapter 14, p. 330.
2 The original acronym SMART (Specific, Measurable, Achievable, Realistic, Timely) was created by George T. Doran, 1981.
3 A Canadian Pacific Railway freight train crosses the Stoney Creek Bridge on the Connaught track between Rogers and Flat Creek in Canada. The bridge is 200 yards long and 108 yards over the creek. The source is www.senic-railroads.com.
* © Train crossing bridge by David R. Spencer, 1988, GFDLGNU, CCASA 3.0, Gyan Web Design 2010