What Makes A Good Business Consultant
Updated: Jun 29, 2021
In the last 50 years, the world has seen a massive expansion in the industry known simply as ‘consulting’. As the world has become more complex, companies and individuals have felt themselves in need of someone who can help guide them through whatever challenge they are facing. While the word ‘consulting’ conjures up images of corporate meeting rooms, PowerPoint presentations and white boards, people calling themselves ‘therapist’ or ‘life coach’ can also be considered consultants as well. But what are the characteristics that make one a good consultant, and how does one find such an individual so that one doesn’t waste time (and money) on bad consulting?
1.) Generalist Or Specialist?
The first thing you must determine when looking for a consultant is whether you are looking for a generalist or a specialist? In large part, you need to define the problem that you are looking for help with, before you can begin your search. If your project is very narrow (how do I set up this computer system), then you want your consultant to be able to have the experience necessary to immediately know several options and be able to begin analyzing which one might be the best for your situation. On the other hand, if your project is more broad (how do we begin to sell our products into that country), then you need someone who has the proven capacity to think broadly, understand what the various challenges might be, and how these factors interact with each other. The generalist often doesn’t know all the answers immediately, but they know what answers they need and where to go to get them.
2.) Proven Ability To Think In Multiple Disciplines.
Over the last 50 years, the world has become much more specialized than it used to be. Specialists have become more in demand as work (especially office work) has become more detailed and complex to the point that no one person can truly know it all. The general growth in regulation has led to the demand for people who understand the regulations and how to guide companies through them. The explosion in computers, the need to understand them, and the complexity of systems has led to the demand for specialized computer experts. In academia, disciplines like economics and political science are separate, even though they clearly impact each other.
What is starting to be noticed in certain circles is that there is a shortage of people who can see how these pieces fit together. Whether one ultimately needs a generalist or a specialist, it is helpful if your consultant at least has some understanding as to how their small part impacts the whole. When I was an analyst, we would take financials and put them into a spreadsheet program, something that is a highly specialized skill. To those on the outside, it looked like a simple data-entry job (take the numbers from the paper, and put it into the spreadsheet). But understanding what the business did allowed one to develop a feel for how the financial statements were constructed. This in turn would dictate where in the program one would enter the number so that the cash flow and asset movements would come out accurately. Analysts that didn’t see the bigger picture and simply handled it like a data-entry job ended up with an inaccurate picture what the business was doing, and that would impact the decisions that were made down the line.
To find someone who has the ability to think in multiple disciplines, you should ideally look for someone who has worked in at least two industries in their career prior to becoming a consultant. It’s okay if they worked for 30 years in one and 3 years in another. It just needs to be some significant experience in something besides what would be described as their primary career. Someone who can be effective in two very different industries is likely someone who has the ability to wrap their mind around something completely different than what they are used to seeing.
3.) Ability To Understand Your Business (aka The Ability To Listen).
Many consultants (especially business consultants) tend to run in and begin making recommendations before truly understanding what the problem is. As a commercial banker, I was once asked by a client what I was trying to sell him. I responded that I didn’t know if I was trying sell him anything, because I didn’t yet understand his business. I pointed out to the client that until I understood his business, I really couldn’t say if I had anything that he needed. And so, I proceed to do the most important thing that a consultant can do, which is to listen. A good consultant will be able to listen to you as you describe your business and what you are trying to do, and they will be able to ask intelligent questions in response to what you say. Every business is a different animal, and every business has different needs at specific points in time. A consultant who comes walking into your first meeting with a folder full of recommendations based on what he/she thinks you need isn’t somebody who you want to hire. They haven’t bothered to listen to you, which means that they can’t possibly understand your business.
4.) Someone Who Is Comfortable Not Knowing (But Knows Where To Find Out).
When a consultant is hired, there is a natural expectation that they will know everything. After all, why would you hire a consultant who doesn’t know something? This expectation will sometimes lead them to pretend to know something that they really don’t. If they continue to fake it, their recommendations can come out sub-optimal for whatever it is that you are trying to do. A consultant who is willing to admit when interviewed that they don’t know something is one that you should look closer at, because this is someone who is likely to be honest with you. If the interviewee indicates that they know someone else with more experience in whatever the question is, you may have found your lead consultant. As important as knowing what you don’t know is knowing where to find the answer. Of course, if you are looking for a highly specialized individual in something, then perhaps the fellow who doesn’t know the answer isn’t who you are looking for. But for projects that are broader in scope, someone who knows that they don’t know it all is a positive, rather than negative characteristic.
Overall, there are multiple factors specific to what you are trying to do when looking for a consultant, and no article could possibly capture all of them. However, a true business consultant is likely going to need a broad range of knowledge and experience, relative to say a consultant that you are hiring to set up a computer system. Looking for someone with a diverse range of experiences and the confidence to not know it all are important factors when evaluating a prospective consultant.