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David C. Baker: Secret Tradecraft of Elite Advisors

Elite Advisors

The consulting life is a constant challenge. You’re standing naked in front of people who’ve tried their best to figure it out but are stuck. You are with them, but you are pushing them upstream into uncomfortable places. You’re a human with all your own challenges, but you have to let them feed off your own (sometimes contrived) confidence.

Technique is what makes insight applicable and thus valuable to your clients, and part of your positioning is how you do your work.

Leadership, consulting, and parenting are the three unheralded forces in our world.

Are You the Right Person for This?

An expert is someone whose thinking is regularly sought and paid for.

An expert is more likely to listen than to talk. She observes to learn and build her pattern library, and when she is asked what she thinks, the din of conversation lessens a bit and faces turn to hear what she says. The observation is either new, or familiar but expressed in an interesting way, but seven things are always true:

  • The expert has a point of view (or perspective).
  • The expert is concise.
  • The expert is believable.
  • The expert can answer follow – up questions without choking.
  • The expert seems confident.
  • The expert holds many principles subject to later modification.
  • The expert — in a work setting — believes the “how” is just as important as the “what.”

How does that particular expert apply his expertise? I would argue that many experts aren’t rewarded in the marketplace simply because they don’t know how to apply their expertise. They have the knowledge but they don’t have the tradecraft. They haven’t developed their own proprietary method of working.

Getting a Quick Start Out of the Blocks

Make sure your positioning is not interchangeable with more than 200 other advisors, but make sure you can find at least 10 other advisors who do the same thing as you. Not who do it the same way as you, but who do the same thing as you. As a secondary check on your positioning, make sure that there are at least 2,000 addressable prospective clients, but no more than 10,000.

Have a simple lead generation plan. This must include the regular development of insight that’s disseminated somehow, but you’ll need at least one higher – impact tactic that fits your personality and takes advantage of the context in which you work: speaking engagements, events, research reports, a book, etc. The goal is to secure more opportunity than you have capacity to serve, because the delta between the two represents your ability to say “no” and maintain more control over your client base.

Understand your financial performance. Know exactly what to track, and keep an eye on your cash cushion especially.

Develop a cadence to foster accomplishment. The idea is to divide your week into three kinds of days. The first kind (Preparation), which will comprise three or four days of each week, are the days when you get things off your plate or clear the deck. The second kind of day (Contribution), which will only be one or two days per week, is when you get real work done. These are the days when you are changing your world. The third type of day (Perspective) is the weekend, for most people. It’s when you become a normal human again, reconnect with people, pursue hobbies, do physical labor, read, and largely forget about work.

Be realistic in your to-do list management. Don’t put things on there that you won’t actually accomplish.

Cultivate a broad generalist context for your deep specialization. It’s a destructive false choice to assume that you have to be a deep expert or a broad generalist. You need to be both.

One of the things that impactful experts do is make connections between disparate areas of knowledge. They see things in one field and apply them in another. Useful nuggets of insight are buried everywhere.

Your role must be clear.

Your mental health has to be paramount. Your mental health is obviously tied to your physical health, so that’s important, too. Clients want to listen to advisors who have a provisional POV and not advisors who are too hesitant with a declared perspective. This requires a certain degree of mental health.

Getting Started on the Right Path

The great advisors provide four things, all wrapped up in a fifth, governed by a sixth. The four things are insight, objectivity, courage, and empathy, all wrapped up in a methodology unique to you, governed by a dismissive perspective about your own future — a disregard for how you will survive.

You bring insight that very few other people possess. This insight owes to the prior decisions you’ve made about what work you will turn down so that you can go deep in one particular area.

Your clients are too close to things and your objectivity (i.e., distance) gives you a reliable perspective. Objectivity requires distance. Intimate knowledge obviates distance. To understand everything about why they do things requires enough intimacy to diminish your objectivity. Choose a lane and live with the consequences. Without distance, everybody’s nose looks huge.

Having insight and objectivity — without courage — is like losing the launch code for a missile when you most need it.

Empathy is courage … delivered without permanent harm. Empathy inspires change, not because you’re some rah-rah motivational coach but because they see the truth and the success path you’ve charted smacks of believability.

The most effective advisors don’t care too much about the wrong things (being liked, having a locked-in future, being around for years). They do what’s right regardless of where that takes them.

Curbing Your Enthusiasm for Fun and Profit

You must care a little less about winning the business than the prospect wants you to take him on as a client.

I’m suggesting that you should take that desire to win and funnel it into a commitment to stating your point of view to the large mass of people who might want to work with you instead of trying so hard to close that one prospective opportunity … that might not even be a terrific fit.

The more insight you publish for free, the less you need to invest in the sale.

The better your positioning, the easier it is to give insight away.

No middle ground: free to prospects … or high fees to clients. The distinction here is that the free stuff is unapplied, leaving the prospect to figure out what parts work and which ones need to be modified. Your clients, though, pay you good money to figure that out for them.

All the little issues will be combined in a client’s own unique form of dysfunction and it’s your job to know which tools — in which order — to apply in solving that for them.

Your “less-exchangeable” insight, given away for free, earns you a seat at the table and shortens the sales cycle because they feel like they already know you, even before that first conversation takes place.

Peter Block (author of Flawless Consulting) said something like this: In a marketing context, everything that you pre-sell, if you oversell it, works against you.

One of the biggest dangers in business development is wasting time chasing prospective clients who are just kicking the tires.

  • Define the ideal size of the first project (in dollars), and how that number fits into the larger relationship you want with the client.
  • Describe the typical mix between strategy and implementation in your work.
  • What payment terms work well for you?

What You Are Really Selling to Clients

Experts are not order takers because they understand that the client probably knows what they want, but that they don’t know what they should want. They sometimes have clear expectations, but they are not as well informed as they could be.

Being an expert in large part means working on the right things, in the right way. Notice that this chapter isn’t called “what clients are buying,” but rather “what you are selling.” Those things don’t always match, and I’d rather focus on the latter. Selling the right things is part of “directing the relationship” as an advisor.

Let me suggest a three-part framework for what you are selling. (This is the what and not the how.)

  • You are selling objectivity, which comes from externality. One of the only reasons you can actually help them is that you are not in their world.
  • You are selling knowledge, which comes from focus. You can’t just observe and speak to what you see. From there, after that accurate diagnosis, there has to be a prescription.
  • You are selling perception, which comes from self-awareness. You are not a reliable observer until you calibrate your own sensors and see where things are throwing you off.
  • There’s something else you could be selling, too, and that’s coaching, or ongoing assistance where you get down in the mud and help them implement things.

Clients will not pay a premium for ongoing presence, long term. They will only pay a premium for episodic presence.

Your mental model must not depend on “accomplishing all the right things” but on “doing most of the right things,” regardless of the result. You will need to be okay with walking away, again and again, from unfinished business as clients make your advice their own, adapting it, bending it, interpreting it.

Where Your Leverage Comes From

You must have some leverage if you are to do what’s in your clients’ best interest, whether that’s telling them the truth, gathering data as you know you must, or whatever you think is necessary.

Your sustainable leverage comes from seven things:

  • Your leverage comes from positioning. Think of this as having a camera in their office. They simply cannot walk away from someone who understands their world to that degree.
  • Your leverage comes from excess opportunity. Excess opportunity makes the choice easier; it doesn’t require nearly as much courage to choose between two as it does to turn down your only option.
  • Your leverage comes from calibrating how much you care.
  • Your leverage comes from black-box models that only you have access to. Great positioning is often enough, but the very best advisors take that positioning as a license to learn and they never stop there.
  • Your leverage comes from confidential data gathering that only you can interpret.
  • Your leverage comes from prepayment, or at least advisor-friendly terms. I didn’t realize this until about three years into my consulting practice, but one day my own weakness hit me over the head. I found myself holding back on a cogent observation because the final payment hadn’t been made and I wasn’t sure that I’d help my case if I was transparent with the client about what I was seeing.
  • Your leverage comes from flexible scope. You can’t have this without the former point (prepayment).

How Much Should You Care?

If you care too much, you’ll lose some objectivity by getting a little too attached to the client. If you care too much, it will be difficult to create a consulting practice that is sustainable over many years.

So, there are two guidelines that might serve you well: Don’t maintain a level of caring that cannot be sustained for decades. Don’t care more than the client cares, even though it will pain you to do so.

I have found some generally reliable ways to find where a particular client is on the “care scale.” Here we go:

  • Is the client disciplined in getting her homework or responses to you?
  • Is she disciplined at making your check-in calls?
  • Does she take interruptions while on a call or in a meeting with you?
  • Does she gather all the decision makers at key points in the process when decisions need to be made?

Successful advisors are looking for efficiency, impact, and revenue. Working with clients is a constant game of triage.

Your job is not to help them care. Your job isn’t even to create change. Your job is to correctly assess a situation and then give clients the very best possible tools to effect change on their own. If you both aren’t doing your jobs well, this change will be elusive.

Expert vs. Order Taker

An expert (in this context) is someone who is regularly paid for his thinking. An entrepreneurial expert is an expert who is also a risk-taker in that he has created a firm that sells that thinking.

Clients come to experts with challenges that they can’t solve. They’ve picked all the low-hanging fruit and it’ll take a ladder to get the rest.

An order taker takes direction from the client. The client presumably knows what’s required and simply needs help with the execution or implementation or application.

So, what’s so wrong with being an order taker? I can think of several hazards of approaching your consulting business like one:

  • Clients will lose because their ideas are always the best ones.
  • Without the benefit of your vast experience and your objectivity, they can only implement what they know.
  • You’ll be dragged around like a small boat in a storm.
  • Clients will quit listening to you because they put you in a box labeled “doer” instead of “thinker”.
  • You’ll get so close to the client that you lose your objectivity.
  • You’ll constantly be reacting. The client will always throw things your way and expect you to catch them.

The Ideal Composition of Your Client Base

Let’s talk about clients. Not specific ones, but rather what an ideal client base looks like for a smallish, privately held indie consulting firm.

  • First, note the relative size of your largest client. You want that largest client to represent 15 % – 25 % of your total fee billings.
  • Second, see how many clients (after that largest one) represent at least 4 % of your billings. What we are looking for here is six to eight in this category.
  • Third, what’s the total count of clients? Here we are looking for 10 – 15 or so.

Any client that is too big will typically turn you into an order taker as you move from expert to server in order to keep that client happy out of fear of losing them; and smaller ankle-biter clients aren’t going to be profitable if you stay within the budget, and they’ll be responsible for lots of wheel spin without much traction.

Onboarding Your Best Clients

While the natural focus of an advisor’s role is the insight you deliver to a client in order to improve their situation, the actual delivery of that insight is critical to both their ability to apply it and to your ongoing success.

Specialization and focus and proprietary problem solving will always play a role in landing clients, but it is never enough. In the end, they will have to work with you, and you will have to work with them, and the quality of that experience will determine the extent to which you have the opportunity to be effective on their behalf.

As you think about building one for your prospective clients, here are some of the elements that you might include.

  • CLIENT LEADERSHIP. Here are some elements you might address:
    • Partnership: Is the relationship a partnership that is best described as a collaboration?
    • Client qualifications: What type of clients get the most out of your work?
    • Point of view: While you can’t promise to always be right, you can obligate yourself to express a helpful point of view.
    • Confidentiality.
    • Contact cadence and standards.
    • Agreement: How formal will the agreement be? What are the specifics?
    • Change orders: How are scope changes managed and then memorialized?
    • Terms.
    • Credit.
    • Expenses.

Productizing Your Service Offerings

I can think of four meaningful advantages to productizing your service offerings to some degree.

  • First, it’s inefficient to rethink every engagement. Your pricing (including hourly rate, scoping decisions, and value-based pricing, if you use it) is far less important in making oodles of money than your efficiency in stacking engagement after engagement, and without customizing each one.
  • Second, it’s too tempting to fudge the price when you customize each engagement. The problem with reinventing pricing each time is the emotional load that it creates for your psyche. I should clarify that there is no innate reason that the package price needs to correlate with the hours it requires to complete that work.
  • Third, each engagement contributes to comparable data. If you are collecting and analyzing similar data from engagement to engagement, not only can you can make comparisons that will be useful in subsequent engagements, but you can also convert that data into intellectual property (IP), which can be monetized, sold, converted to press coverage, and wrapped into a package that lends itself to employee training.
  • Fourth, an expert directs the relationship, by definition, which logically leads to a more prescribed path.

So those are the four reasons why I think it’s important to productize your service offerings. But I promised two disclaimers, and so let’s look at those next.

  • First, if you are really nervous about locking yourself into a single fixed price for each package, regardless of the client’s size or how desperately they need help, then just use price ranges.
  • Second, maybe only productize one or two packages and then customize the rest.

Engaging the Client in Problem-Solving

There’s no mystery about why we want to involve the client in problem-solving. We involve the client in order to: Foster their engagement in the process. Transfer as much work to them as we can.

When I work with a client, too, they almost always get a list of materials to gather and send to me for review, as well as a list of specific questions to answer.

The first reason you involve the client in the work: so they can learn more effectively.

The second reason is to shift as much work to the client.

I’ve heard a friend respond to client requests like this: “Hey, you don’t give me homework. I give you homework!”

Blair Enns also says this: “If you want a report, take good notes.” Again, it’s said with a twinkle in his eye, but that’s exactly the point.

Data Is One Reason Your Clients Should Listen

Numbers are what decision makers look at to overcome organizational inertia … and then use to defend their decision to others, especially when the result didn’t turn out as expected.

Here are the most useful ways to use data:

  • Develop proprietary metrics that are based on the numbers that clients are already collecting. They supply the data and you apply the algorithms.
  • Gather your own data from the client — data that doesn’t already exist — and interpret it for them. The best example of this would be employee or customer surveys.

Let’s look at these two methods, starting with proprietary metrics applied to the data that they provide. The first step in this process is to normalize the data.

Overwhelming a client with data can be worse than sharing no data at all.

There is no quicker way to learn the inside of a company than employee surveys.

You can overweight an employee survey and assume that everything reported is accurate or even directionally helpful. It’s not.

How to Choose Participants in Your Advisory Work

You may see the truth and deliver the insight, but if the wrong team is there, you’ll be far less effective.

First, let’s draw a distinction between the data gathering and the insight delivery. For the data gathering, all useful data should be welcome.

It’s okay to hurt feelings in the interest of efficiency.

You also have the third level of meeting where you are delivering entirely unvarnished recommendations to the highest-level leader(s). Generally, no one should hear these except the leaders who can take action and implement them.

That’s a little bit about how to decide who should be in the meetings. Be directive, resolute, and also careful about the political considerations. But don’t abdicate your leadership of the engagement.

Every engagement needs a north star. That establishes the primary motivation, either for the entire engagement or for one particular session on the agenda.

When the discussion gets off track, get everyone’s attention, smile, and walk over to that statement and ask if they can focus back on this main issue, in spite of how interesting the conversation is getting.

Managing the Deliverables Dance

What are the typical deliverables in a working relationship? I am an established thought leader in this field, and my energy is expended in ways that maintain that position. Stated otherwise, my main deliverable is insightful analysis and transformative advice.

The deliverable is a concise, specific set of suggestions about how to improve their situation. If someone wants more than that, they need to hire someone else besides an expert.

Putting some things in writing is a good way to build this repeatable sequence that you’re always aiming for. You want them to love you, hate you, and then love you, in that order, over many years.

  • Avoid superlatives, even if you feel strongly.
  • Everything you say needs to be true, but you don’t need to blurt out everything that happens to be true.
  • Couch your recommendations within the good that they have accomplished. Search for those good things, even if they aren’t easy to find.
  • Most clients want to know where they stand in relation to their competitors, whether that’s around their business strategy, their people, their processes, their service lines, or whatever.

After every critical-phase engagement, you’ll be getting one very simple request from the client. It’s important that you answer that query quickly and helpfully.

One thing you can do to help them build momentum is to suggest some smaller steps to facilitate a few early wins.

Limiting Your Workload to a Sustainable Level

In an advisory relationship, it’s hard to know how much to let a client struggle instead of just quickly stepping in and pointing to the answer.

  • The most important strategy is to not define the scope so tightly that you have to follow it. A better strategy is to be more general in scope, and then interpret it as you see fit.
  • Another good way to limit your work to only what’s necessary is to require that the primary decision maker be present on every call or in every meeting.
  • Eliminate regularly scheduled meetings of all kinds. Our world is plagued with a scourge of meetings, most of which are not necessary. Meetings (in this context) should be issues-based.
  • Always move discussions away from the phone to email where possible.
  • Finally, don’t get into small, private conversations with people where the “airing of the grievances” occurs.

Don’t Be That Advisor

  • “If you don’t take all the advice, I can’t help you.” When you say or imply this, you’re really looking for an out. But that’s not worthy of a good advisor, whose job it is to take a client where they are and move them as far as you are able without losing their enthusiasm.
  • “You’re going to need more courage to see this through.” People don’t change that drastically over short periods of time. Rather, they look for models from whom they can “borrow” courage.
  • “The private employee surveys indicate that ____________.” Your representation of the data — especially for the qualitative questions — is governed only by your own conscience.

Your duty is a relentless pursuit of the truth, based on data. It’s not to make a point, shut down an argument, or further your own agenda. That’s malpractice in every way. It’s one thing to look for efficiency. It’s another to look for shortcuts.

Upselling in the Client’s Best Interest

If you are good at what you do, the client deserves the opportunity to do more work with you.

There are two great opportunities for this. The first opportunity is when you are initially discussing the engagement. You’ll want to give the prospective client multiple options for the engagement, each one priced and scoped differently.

The idea is to slowly work up to the point where they are comfortable engaging you for the “master package” and then choose some later options that are based on that experience.

I’ll illustrate this purchase path from my own experience.

  • Insight gathering.
  • Buy a book.
  • Come to a seminar.
  • Remote consulting. This is the first level that’s individually customized.
  • Consulting in person.

The second opportunity to upsell (or should I say, future sell) is near the close of the first engagement.

The world is awash in opportunity for an expert, and you don’t need to approach it from a scarcity mentality. It’s not a zero-sum game.

Surfacing and Monetizing Your Own IP

IP is based on the proprietary, packaged observations from your work, delivered because of your positioning. You can differentiate your practice by who you focus on, what you do for them, or how you do it.

You should aim to build at least one significant IP model within the first four years of your practice. And then you should add another one every three years.

Making an Impact

If you are interested in making an impact on your world, then think about how you are changing the world through your work.

Impact isn’t a singular destination, and there isn’t a straight-line path to reach it. It’s a process that — and I hate alliteration, but it works here — starts with competence and ends with creation, with a point of crossover in between.

  • Competence has almost nothing to do with raw talent. It has to do with discipline. Start with discipline.
  • Seek meaningful conversations with authentic people.
  • View the truth as your friend always.
  • Make principled decisions based on who you are.
  • You decide what success looks like for you and then make the decisions to get there.
  • Seek opportunities that are a slightly better fit for you because you understand yourself better.
  • Quit adding goals to your life.

Reinvention, self-determination, truth-seeking, and discipline all help you increase your impact on the world.

Special Note on Winning as an Indie (One-Person) Advisor

  • First, know your own story. Maybe your relative size as an advisory power is intentional.
  • Second, develop a list of co – advisors who operate entirely independently, and who can be brought in at key moments to do the things you have elected not to offer.
  • Third, while acknowledging the actual size of your firm, brand yourself as much larger and influential that a small firm would normally have the right to be.
  • Fourth, pay particular attention to developing proprietary IP.
  • Fifth, firms with deeper benches aren’t typically doing more analysis, but rather more implementation, and you can highlight rather than dismiss this distinction.

Staying Relevant

Remaining relevant for decades springs from playing the long game. Being relevant for decades means that you must genuinely enjoy being a giver, or you won’t have people around that you can take from.

Be the kind of person that people half your age like being around.

Don’t forget your health. Poor health can stop an otherwise relevant person dead in their tracks.

Combine impact, money, and culture and be ready to love your life as an entrepreneurial expert.

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