Collaborative consulting

I often find myself working with other consultants, sharing a project with another business, or even finding a way to work with a client who wants me to have "skin in the game". No-one wants to get into the area of recording time-sheets or accounting for each and every hour of our time. Isn’t that why a lot of us left the cubicle farms? Here’s how I manage a fair share of revenues that gives everyone a stake in developing the business together.

We agree we will calculate our proposed fees and divide the revenue by using a "rule of thirds". First, I deduct costs, and 10% that goes to whichever firm is doing the invoicing. Then I divide the revenue into thirds: 1/3 Selling and Lead management; 1/3 Customization and Configuration; and 1/3 Execution and Implementation. Within each
third I divide the revenue up roughly according to the time put in by each person. Each partnership is really a "joint venture" on each customer project.

For this to work each person needs to have complementary skills and a similar work ethic. Trust is essential.

Here is an example working with a consultant identifying new prospects and implementing consulting solutions.

· Together we determine $30,000 is an appropriate fee in proportion to the value for the client and the market for the solution. We assign the revenue to three areas: 1/3 Selling and Lead management; 1/3 Design and Development; and 1/3 Execution and Implementation. Within each third we share the revenue according to the approximate time put in by each of us.

· Let’s say my involvement is focused on the sales and marketing, and I contribute about half of the s&m effort. I have little or no involvement in design and I don’t do any implementation.

·My reward for a successful sale would be $5,000

I think this is very fair. I have always been prepared to adjust or tweak the arrangement if we think something else would look fairer. However, the final outcome looks a lot like the 10-15% “spotter’s fees” that some consultants use, while it establishes a principle that can be used for any future collaboration. I have used the same formula where I have provided a sales opportunity to a trusted colleague from my network and we have shared in the execution and implementation of the final service.

Of course, revenue sharing is irrelevant if the other person is providing me with a defined fee for service which I'm passing through to the client. Revenue sharing arises from shared effort and shared risk.

If it looks like the project will be an ongoing engagement with the client I put a twelve month cap on revenue sharing. I always offer to share revenue like this on any potential project where there is shared risk, and I use the “rule of thirds” as a simple way of discussing how to share the reward.

Much simpler than time sheets.

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Welcome

For an independent consultant I have a rare background – an economist who became a psychologist, a corporate executive with international experience and military training. I held senior positions in some of the world's largest companies before starting my own consulting and professional speaking business.

My expertise is principled leadership behavior in business and organizations. I work with senior executives, management teams and entrepreneurs to address the people issues that make the most difference to their success. The paybacks for my clients' regularly have broad strategic impact and exceed millions of dollars.

In more than twenty years of business I have been lucky enough to know many good leaders, and even a few great ones. Some I was fortunate enough to work for, and some I worked with, and some I was lucky enough to have work for me. They all showed a talent for dealing with people and issues that goes beyond personality traits or management training. They managed the immediate needs of their organization and set the direction for growth. They acted with candor and honesty. They were principled leaders. They are the kind of people I like to work with, work for and help succeed.

Principled leaders understand that successful business is about relationships. It requires integrity, vision and commitment. They make the connection between what needs to be done and how it needs to be done.

It is not about being task focused or people focused. It is about being both task focused and people focused. It is about understanding that the soft stuff is the hard stuff.

Three basic principles govern success.

1. Treat everyone with integrity
2. Align activities to deliver what matters most
3. Engage stakeholders to commit their time, talent and trust

What you get in Farrar's Faucet is my ongoing passion: an expert’s candid, informative and sometimes humorous view on the relationship between principled business behavior and better business outcomes.

Sincerely,

David

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The dead horses of strategy

Sometimes as a consultant I find myself called in to help clients who can best be described as caught in the act of flogging a dead horse. When that happens you don't need a consultant. You need a new horse. (Of course, a good consultant can find you a new horse or a better form of transport. That's another story.)






In case you're not open to that, here's a time honored list of consultants' favorite alternatives:

• Buy a stronger whip.
• Change riders.
• Say things like "This is the way we always have ridden this horse."
• Appoint a committee to study the horse.
• Arrange to visit other sites to see how they ride dead horses.
• Rewrite the standards for dead horse performance: "Stability is good."
• Appoint a dead horse revival team.
• Hope for spontaneous horse revival.
• Create a training session on riding dead horses.
• Compare the state of dead horses in today's environment.
• Change the requirements declaring that "This horse is not dead."
• Hire contractors, (or consultants), to ride the dead horse for you.
• Harness several dead horses together to increase speed and pulling power.
• Declare that "No horse is too dead to beat."
• Provide additional incentive funding to increase the horse's performance.
• Purchase a software product to make dead horses run faster.
• Declare the horse is "better, faster and cheaper" dead.
• Form a quality circle to find uses for dead horses.
• Say this horse was procured with cost and performance as independent variables.
• Promote the dead horse to a supervisory position.
• Shorten the track.
• Establish industry benchmarks for dead-horse leaders.
• Gather other dead animals and announce a diversity program.
• Put together a PowerPoint presentation to get planners to double the dead-horse R&D budget.
• Create a spreadsheet and graphs showing how much cheaper deadhorses are because they don't eat much and never complain about poor working conditions.
• Get the horse a website.

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