Monday, February 4, 2008

What is your ROC?

The financial world is filled with three letter acronyms that all talk about different kinds of return on assets, return on controllable assets, return on shareholder equity, return on sales etc. and I was thinking why not a new one called "return on consulting". The reason I think this might be of some value is in watching presentations from a large consulting firm (to remain nameless) to a mutual customer in the last two years has left me wondering what the client really got for their money spent. In one case the company presenting their 50 plus slide deck had a chart that compared current spending on research and development to current sources of revenue. Now maybe these consultants got their degree in business from a different school than I did but it seems to me that if we are going to compare data it should be temporally matched. This would mean that the money spent in each category applies to the same time period. But on this particular chart, what the presenter was actually saying was that past revenue had a different pattern than spending on future products. Even though the graphics were nice, a chart that essentially says that the past does not equal the future is not terribly valuable. Nevertheless, the client has spent many thousands of dollars on that one chart alone. It doesn't take much of a calculator to figure out that the return on consulting for such a chart is extremely low.
In another case with the same client but a different consulting company, I witnessed a presentation that demonstrated the lack of correlation between how a salesperson spent the day and the sales results that they generate. Again this is a multi-thousand dollar chart. Again the return on consulting is extremely low.

What's needed here is for organizations that purchase consulting do so on the basis of the consultant understanding the real issue that they are working on and not the deployment of some standardized methodology that comes out of a consultancy's run block. Before spending huge sums of money to end up with a PowerPoint deck that contains primarily the obvious, the mundane, and the simply inane, they should sharpen up their consumer skills and simply ask people who are doing consulting work for them how they approach the subject delivering a significant return on consulting.

Oh... and in case you are wondering, I dont mind being asked for my R.O.C.

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