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A Wee Notice to Readers (Consulting Porn Edition)

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Oh, you are such a good reader! You either care about this site enough to look at notices and/or you found “consulting porn” worthy of attention (probably because you found the expression to be an oxymoron).

Like it or not, if you are in a large, or even a medium sized organization, you may have to use a management consultant someday. I’m a bit embarrassed to admit to being in the business, since many people in the industry practice forms of shamanism, but rest assured there are some good professionals out there.

I thought I’d take the liberty of telling you about one group (yes, I am biased, and yes, this is an ad of sorts). If you are tempted to stop reading here, I advise otherwise, since this piece is brief and will make you sharper about hiring and using professionals.

The firm in question is Aurora Advisors. I’m affiliated with them (although you won’t see my bio on their website; I prefer to remain behind the scenes); they’ve been around for 18 years and focus on finance and financial services. They have several offerings. One is management consulting (strategy, growth/market entry, performance improvement, joint ventures/franachises, as well as project management) to financial services firms (mainly the securities industry and wholesale banking), typically at the business unit level.

Another is corporate finance advisory, mainly on the buy side, for financial institutions, funds, and very substantial individuals (Forbes 400 level). Industry experience includes financial services, media, and niche technologies. Their services range from fundamental industry analysis to valuation, due diligence, and post-deal planning. They have considerable success in valuing businesses in industries where there is a great deal of uncertainty. They have also acted as house skeptic and have been engaged to review the work of major investment banks.

Why consider them?

They are good. McKinsey refers business to them. If you know McKinsey at all, you will know that it virtually unheard of, particularly over such a long period ( the firm’s inception through 2007).

They give money-making recommendations. In one case, the difference in outcomes was $2 billion; in several others, several million dollars.

They are cross-disciplinary. One of the unfortunate trends in consulting over the last 20 years is specialization. The dirty secret is that it benefits the consultant more than the client. The consultant sells a packaged product which gives the client the illusion of certainty, but also too often deprives him of fresh thinking, since inherently many of the same ideas and approaches are used on other clients. And these packaged products are more profitable to the consultant than more customized approaches.

In addition, while narrow specialization can be useful, it throws the burden of diagnosis back on the client. So if the client goes to a focused consultant but hasn’t zeroed in on the real root issue, the consultant is unlikely to tell the client they’ve framed the problem incorrectly. They’ll accept the client’s parameters in order to get the work (and this may not be disingenuous; they may not know any better).

They are efficient, pragmatic, and tenacious. Even though their rates are middle of the road to high-ish due to the seniority of their staff, their project prices are almost always the low end in a competitive process because they are highly motivated to take the most efficient path through a problem (many consultants, particularly less seasoned ones, have a propensity to boil the ocean). They are also highly productive.

They are particularly good at difficult/unusual problems, particularly when the problem is thorny but the budget is constrained. Often, they have been engaged after the client has gone through an exhaustive search to find a suitable firm and has kissed a lot of frogs. Some examples:

A Fortune 100 company asked Aurora to identify consumer lifestyle trends in the America, Europe, and Asia, to help them design reward programs and advertising campaigns. Aurora understood that the trick here wasn’t identifying trends per se but determining how to screen them to find ones that were relevant for the client’s products and image. The client launched one global product and two ad campaigns (plus fine tuning of existing campaigns) based on the recommendations, which was completed for less than 1/10th of what trend experts said it would cost.

Another client, a media company, had a 50/50 joint venture in which it appeared that it would have the opportunity to buy out its partner. Aurora determined the value of the company (approximately $1.5 billion) and analyzed the attractiveness and likely terms of various financing options (public stock, high yield and bank debt) and assisted in assessing alternatives from a financial and tactical standpoint. They concluded that the other side’s price expectations were excessive, and, instead recommended ways to renegotiating the business terms of the partnership.

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