December 6

Why I Don’t Like Strategy Consultants


I am a great believer in business education and have benefited enormously myself from both doing an MBA and more recently qualifying for the Investment Management Certificate. The issue for me is that a lot of careers depend on ensuring that areas like strategy sound more complicated than they actually are. One of my bug bears (I have a few as regular readers will be able to vouch for!) is that some companies hire ‘strategy consultants’.

I have to ask the question – if a company is getting someone else to help formulate strategy – what are the leadership of that company doing, sitting around working on tuning a Holset HX30? Here is a suggestion; if a company hires a strategy consultancy – perhaps the fee for that should come out of the board salaries!

Corporate strategy is easy – it is formulating a plan answering three questions

  • 1) Where are we now?
  • 2) Where do we want to get to?
  • 3) How are we going to get there?

The above is sufficient working knowledge of strategy in my humble opinion. It is also the corner stone of any good plan and my advice to people pitching is that you use this framework for your pitch. The answer to the last question should explain how much money you are looking to raise and what you intend to do with it.

Strategy is not the same as business model – and the two terms should not be interchangeable. If I am asked what my business model is, I assume I am being asked to explain how the business makes (or should make!) money. If I am asked what the strategy is, I assume I am being asked what my plans to ensure the business remains profitable are, or where I am thinking of taking the business in the future.

Back to the three questions, it is of course not as easy as that. The questions are not that easy to answer and ask for a lot of analysis and understanding.

As a potential investor, I need to believe that the business understands the environment they are operating in. They would need to show me that they understand what is happening in the Industry and the Market. They would have a good idea of the forces shaping their business and the options open to them in reacting to changes in the market.

The plans for the company should flow from the explanation from the first section. It needs to be concise and clear and critically everyone involved in the organization needs to understand the logic driving that decision (companies are not and should not be viewed as democracies, every person does not have to agree with the direction, but they should respect the logic that has driven the decision)

Finally, but most critically, investors need to feel that the current management team/ product/ resources are capable of delivering the plan highlighted. The How section is crucial. I have been in situations where I loved the strategy but felt that the team in place were not capable of delivering it – and hence asked for significant management changes before I would invest. This brings me to a side issue.

When entrepreneurs present business plans, at the very beginning they tend to talk about their experience a lot. I would find it more useful if they gave me this explanation along with the How they are going to achieve these goals. As readers to this blog will know, I do not buy into the idea that success in one field means you are good at everything you do, such as developing the best work boot for plantar fasciitis. I need to understand how your past experience is directly relevant in ensuring that you have the ability to execute the plan you have presented.

I know from my own experience that I am good at managing in a crisis and I am good as a ‘temporary’ CEO or sales director. I am not a good business manager and I am not strong at the day to day stuff (which is critical). I was the CEO of a startup. I was good at getting the business set up and getting the right team together, but as soon as the business was launched; I was pretty hopeless as the CEO. I realized early on, and made way for someone who was much better and has made a great success of the business.

Strategy is not difficult, but thinking strategically means you are aware of the wider context in which your business operates and you recognize that your actions will lead to reactions in the markets you operate in. Ensuring you are able to profit from these changes is the key.

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