What’s Way More Important than Your Consulting Firm’s Competitive Advantage? (This is.)
You’ve probably been in a situation where your consulting firm is competing to win a project. For instance, say you know you’re one of many consulting firms bidding to help the Foucault Co. shift their momentum.
You review the other players and your own approach to Foucault’s challenge. Then you decide what you will emphasize to distinguish yourself from other consulting firms—the pivotal difference that will swing Foucault’s project to your firm.
Your decision in that type of situation can shape your consulting firm going forward. Once you identify how you’re superior to other firms, it’s natural that your energy, marketing, solution development, and systems all revolve around supporting your competitive advantage.
But they shouldn’t.
Resist the urge to direct any part of your firm’s efforts based on some perceived edge you hold over other consulting firms.
Competitive advantage misses the point—for the long-term prosperity of your consulting firm, and even in the competition for the Foucault project.
Competitive proposal situations create a false frame. It’s like someone presenting you with a drawer of black socks and brown socks then you thinking those are your only choices. False frame. Dude, you can spin over to the store and grab a funky pair of multi-colored socks.*
First of all, your consulting firm’s primary competition isn’t another consulting firm. It’s inertia. The number of clients who Need your consulting firm’s services outstrips the number who are seeking help. By a lot. But most potential clients feel insufficient urgency (a.k.a. Want) to hire a consulting firm.
Second, your firm’s other big competitor is most often internal staff—if not current staff, then staff they could hire instead of paying your consulting firm’s high fees. Most clients harbor an inherent bias toward using any form of home-grown solution over contracting an outside resource.
Third, competition doesn’t matter.
Consulting isn’t a summer track meet where your goal is to be the fastest in race. Some of your competitors aren’t even running in the heat (inertia and internal staff).
Plus, the slow consulting firm at the back of the pack can win Faucault’s engagement by turning off the track and serving the judges hot chocolate at 160 degrees.
Don’t look for a competitive advantage. Look for a customer advantage.
If you abolish competitors from your thought process and redirect all that energy to understanding your customers better, you’ll fare better as a consulting firm.
Leave the game of one upsmanship, and devote your consulting firm to answering questions like the following:
- What are your prospects’ most pressing needs?
- What’s causing clients like Faucault to spin in place?
- What’s blocking prospects’ urgency to hire a consultant, and what could open the tap? Could you heighten urgency by creating awareness? By touting a new message or a realigned perspective?
- What’s missing in current solutions that would make your consulting firm’s solution extraordinarily desirable?
- What unmet, client needs are adjacent to the problems your consulting firm solves and could be addressed at the same time?
When you examine competitive offerings, rather than looking for spots where you can be better than your competitors, look for opportunities to better meet client’s needs. That’s a subtle, but important difference.
Of course, it’s okay to tout your solution’s superiority over competitive alternatives, as long as you’re hanging your consulting firm’s direction on clients’ needs, not competitive advantage.
How have you oriented your consulting firm toward customer advantage? 14*
Text and images are © 2023 David A. Fields, all rights reserved.
The distinctions you make in this article are thought-provoking, David. As a result of reading this, I have been thinking about how I operate, as a solo practitioner,
relative to competitive vs customer advantage. In situations, for example, where I know that I am one of several coaches who have been referred for a coaching opportunity with a senior executive, I like to emphasize, in the initial interview, that because I am both a coach and a leadership/organizational effectiveness consultant, I bring the ability to pivot in the moment — from coaching to consulting — depending on what the coachee’s needs/interests are in a given situation. . . . When the first contact in exploring a potential opportunity is with someone other than the prospective coachee (HR Director or contracting person, for example), I always offer to have a conversation at no cost with the person whom I would be coaching or consulting to get a better sense of what their considerations are. . . . And I try to reflect my brand — personal connection, responsiveness, customization, continuous learning, passion for the work, and co-creation (the name of my business is Synergies) in all of my dealings with my clients. Other things I should be thinking about . . . ?
That’s all good, Carole, as long as the benefits you’re bringing up are relevant to the prospect. That’s they key, of course: highlight ways that your approach benefits the client, and build trust in the reliability and credibility of your approach.
Hence, whether or not you talk about your brand (personal connection, passion, etc.) should depend on whether your prospect cares about that information.
I appreciate you sharing your situation, Carole.
Thanks for the article David! It seems to be timely for me and my relatively new engineering consulting firm. It seems my biggest competition is the client’s staff they could hire instead of paying me. I keep running into situations where the potential client wants to hire direct for the work I do instead of using a consultant. I had never thought this would be the case – boy, was I wrong! I am currently re-thinking my messaging and even my firm’s focus so the set of 5 questions above are really helpful to me.
Do you think this “client internal competition” situation is common, or did I just get unlucky with my firm’s focus?
From my experience inside companies, I think the internal competition is real. Often the internal staff has started to deal with the problem and think all they need is additional staffing to prove they can solve the problem. My experience also shows hiring an outside expert is ultimately more cost effective than hiring additional staff.
Your experience is right in line with what I see across all the consultants and firms we work with. Double bonus points to you, Ilene, for chiming in another consultant’s question!
Greg, internal staff is the #2 competitor for most consulting firms, right after inertia. Where some consulting firms go astray is trying to compete with internal staff or trying to convince a prospect that it’s smarter to use a consultant than to hire a full-time employee. That’s a waste of energy on a quixotic mission. Rather than competing with internal staff, make sure you’re set up to check in with the client at the right time so that when the internal staff fails, you’re there to pick up the pieces.
By the way, congrats on your new firm, Greg! (And thanks for joining the conversation today.)
Excellent article, David.
It reminds me of when I was approached by a very senior consulting leader (ex-Accenture) about joining a new startup. When I asked what the startup’s intended differentiation / competitive advantage would be, his response was, “None. No consultancy is truly differentiated and no consultancy has inherent competitive advantage.”
A similarly thought-provoking moment.
This also underlines the criticality of personal relationships and the near-impossibility of success when responding to an RfP in the absence of a relationship and additional knowledge.
Keep that pendulum swinging!
Boom! Exactly right, Alan. In the world of RFPs, if you’re not the one writing it then you’ve (probably) already lost it. As you pointout, differentiation is irrelevant in consulting.
Thanks for highlighting that point, Alan, and for sharing the story.
Hmm. I try to differentiate. All of my competition bills by the hour. I bill based on milestones. Clients like what I offer better. This is all based on right-side-up consulting to get the client what they need when they need it for a predictable budget. Milestone payments align my goals with client’s goals.
My choice to differentiate based on pricing model was deliberate.
Thanks for sharing your experience, Peter. A couple of ideas to noodle on:
Regardless, you’re winning business, and that’s good!!
I asked several clients why they chose me, which implied why they didn’t choose others who were in the mix. And some provided explicitly stated differences.
Besides my irresistible personality (i couldn’t, or rather didn’t want to, resist that), they consistently pointed out my authority in the field, track record. speed of insights (during the first hour they are making fundamental changes), and my inclination to provide specific guidance rather than hand holding feel good coaching (there words not mine). I wasn’t afraid to walk into danger zones, reveal the truth and make explicit recommendations. This is all based upon my proprietary model (we all have proprietary models right) that informs the advising and coaching that I do.
And i speak about the big ideas that i have in my forthcoming book.
David, i like the distinction but am trying to make it more concrete. So which part is competitive differentiation/advantage and which part customer advantage in my description? And, how do you market, make visible customer advantage?
Hope all is well and safe with you and your family.
Stay safe and strong
– Steven Feinberg
Steven, your initial assumption can be challenged: “which implied why they didn’t choose others who were in the mix.” For most clients, a distinct possibility is to use no consultant (or in your case, coach). They don’t choose you because you’re better than others (though it may appear that way), they’re choosing you because you best meet their needs.
Let’s say a client tells you, “I like that you provide more specific direction than other coaches.” That sounds like a competitive advantage; however, what they’re really telling you is, “Specific direction is important to me, and you’re good at that.” The competitors served one purpose: helping clients understand better what’s important when selecting a consultant.
Thanks for your question, Steven, and the opportunity to clarify the difference.