Sao Paulo, December 15th, 2019.
To my fellow friends, partners of consulting firms.
We have had a great 2019. Our numbers were solid and in line with our budget. Our clients are satisfied with our deliverables and the results achieved with our consulting services. One thing though, is catching my attention. Our efforts to capture new clients are increasing, and it is becoming more difficult do grow. Do you remember how easy it was, not many years ago, to just make one single visit to a client and get a contract signed? This reality has changed, as many consulting firms like ours are arising, and currently we face not only price competition, but quality as well, and some of our staff left to better paychecks and career opportunities.
You all know, from our meetings, that I am an innovation enthusiastic. Now it’s not a futuristic speech, but a means to our survival. Why? Let’s ask the taxi drivers that park in front of our building what they think about Uber and what hey would have done if they were aware of what would happen before it happened. We must stay ahead! Some younger firms in our niche are being founded by recent graduates with top notch technology and integrated financial and business intelligent systems that makes the service cheaper, faster and more reliable.
How long you think it would take for our clients to perceive that they could have more for less with our competitors? The argument that our client base is stable and that they have been with us for a long time is somehow weak. We cannot rely on this only. Information is even more available now with social media and our clients will migrate from us as they seek efficiency. That is a fact! And the sooner we face it, the better are our odds of success. Not only we will be able to maintain our position, but we will have the opportunity to expand into new markets (we are talking about servicing SMEs for quite some time) and delivering new services (such as the cash monitoring our clients are asking us).
Am I saying it is going to be easy? Not at all.
As you know I worked for KPMG and one of our researches showed that most C-levels feel uncapable of driving changes, for the lack of capabilities to respond effectively to fast-paced shifting environment. KPMG’s research points three factors to overcome this: (i) focus on the customer, (ii) embed continual innovation into the business and (iii) learn to thrive on change. I have outlined a detailed plan on how we can drive our innovation and I will be happy to show it to you. In this letter I just want to highlight a few points, following KPMG rationale: we have to interact with our clients in a closer matter and try to understand from them what they need, probably interviewing not only C-levels but directors and staff, and it would be also be good to figure what our competitors are delivering and we are not. We must create an innovation environment in our firm, with right incentives for our employees feel motivated to innovate and allowing them to take some moderated risks. We need to use this opportunity to conquer new markets and clients.
To do so, we will challenge the ways of doing things around here, getting rid of old concepts. It does not have to be radical, but incremental. We will add new technologies, improve processes, deploy new features and services, delivering with more value added. For that we need to be organized. Harvard Business Review’s edition of February 2109 points that innovational environment are hard to create and sustain as “cultures are like social contracts specifying the rules of membership. When leaders set out to change the culture of an organization, they are in a sense breaking a social contract. It should not be surprising, then, that many people inside an organization—particularly those thriving under the existing rules—resist.” (Gary 2019, paragraph 36). We will face resistance, and it is more advisable to face it inside our organization than from the competition. I am aware of our firm’s inertia, and the concerns related to the risk of getting negative feedbacks from clients. This will be mitigated by implementing changes in a moderated pace.
Just an anticipation of what we will need to start this journey, according to Ranjay Gulati from Harvard: hire hands-on specialists, implement new organizational structures, have a robust planning to set our strategy and adjust it fast if needed and spread our innovation values. I am conscient that our financial resources are limited, so we will work to efficiently combine the other resources needed to implement this innovation (human and organizational resources) in order to save cash on the process.
I would like to conclude this letter with a quote from McKinsey’s Ted Callahan: “Staying in the high-growth club appears to depend on a company’s ability to create new markets with hundreds of millions of users (think Facebook, Google, or Microsoft), disrupt existing markets through new business models (eBay or salesforce.com), set new and revenue-rich technology standards (Adobe Systems), or develop truly innovative products (Citrix Systems or Electronic Arts)“. (Callahan, 2014, paragraph 2).
Whilst we are not yet aiming at millions of customers, maybe our competitors are. Whilst we are not disrupting any market, maybe our competitors are, or even better, maybe our clients are, and we must follow them. Who knows? The worst thing that can happen is we maintain our presence and learn a lot in the process. Let’s “shoot for the moon. Even if we miss, we’ll land among the stars”. Hope to be able to discuss my detailed plan with you in the coming weeks and start implementation as soon as possible.
Yours.
Estevao Rocha – Estevao.rocha@gmail.com
References:
1. Drucker, PF 2015, Innovation and entrepreneurship. practice and principles, Online access with EBA: Taylor & Francis, Routledge, viewed 23 October 2019
2. Helmkamp, Katrina (2000). A Disciplined Approach to Breakthrough Innovation. The Boston Consulting Group.
3. Brait, R.A. (2004) ‘Lead users as a source of innovation’, International Journal of Law and Information Technology, 2 (2), pp. 168-177.
4. Christensen, C.M. & Bower, J.L. (1995) ‘Disruptive technologies: catching the wave’, Harvard Business Review, 73 (1), pp. 43-53.
5. Rogo, F., Cricelli, L. & Grimaldi, M. (2014) ‘Assessing the performance of open innovation practices: a case study of a community of innovation’, Technology in Society, 38, pp. 60-80.
6. Shehabuddeen, N. (2007) Innovation in real life: a hands-on guide to genuine innovation. Open Innovation Ltd.
7. Pisano, Gary P 2019. The Hard Truth About Innovative Cultures. Harvard Business Review, January/February, 2019.
8. KPMG Global Transformation Study 2016 (KPMG’s 2016 research on business transformation, based on survey responses and interviews with more than 1,600 senior executives across industries in 16 countries).
9. Drucker, PF 2015, Innovation and entrepreneurship. practice and principles, Online access with EBA: Taylor & Francis, Routledge, viewed 23 October 2019.
10. Callahan, Ted. Breaking through the start-up stall zone. Mckinsey Quaterly 2014. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/breaking-through-the-start-up-stall-zone
11. Gulati, Ranjay. Start-Ups That Last. Harvard Business Review. March 2016.
12. Chirio, Gino. The 6 Ways to Grow a Company. Harvard Business Review. June 2018.
