How to Make Your Consulting Firm Work for You

575. Maria Isabel Rios

SPEAKERS

Maria Isabel Rios, Will Bachman

Will Bachman  00:04

Hello, and welcome to Unleashed. I’m your host will Bachman and I’m delighted to be here today with Maria Isabel Rios, who is a principal in the David A. Fields Consulting Group. She was at McKinsey for five years and has been an independent consultant for 20 years. Her focus now is on advising independent consultants and boutique consultant, consulting firms on growth and running a practice. Maria, welcome to the show.

Maria Isabel Rios  00:33

Thank you. Well, I’m delighted to be here with you. So

Will Bachman  00:36

Maria, we agreed on a topic of how to make your firm work for you. And so that you don’t work for your firm. But beyond that you haven’t clued me in yet, I didn’t get the inside scoop on, on how you think about that topic. So so so lead on Tell, tell me about how to make your firm work for you.

Maria Isabel Rios  00:59

So this work is really dear to our hearts. Because we find that firm leaders, which we will work with day in and day out, I often immerse in working in their firm, and in service to their firm in service to growing the firm to making their firm successful. And there’s a better way to be a firm leader, which is to also make your firm work for you. So that it creates more delight for consultants, better results. Your firm gets the leaders what they need, and a feeling of success and joy, in addition to meeting priorities and goals.

Will Bachman  01:41

All right. Well, tell me more about that.

Maria Isabel Rios  01:43

So there’s this mental shift, right? When we set goals and strategic priorities for front, we think, Okay, this is where I want my firm to go in the next two to three years. How big I want it to be this is a model that I want to work on, we often forget to think of the element that made us want to found a firm in the first place makes us want to lead a firm in the first place, which is what does it give us that a corporate position or a position at a consulting firm as an employee will not get us? And part of finding that and exploring that framing around? That is how we find ways to make our firm work for us? How do you make your firm be evaluated to you? And all the stress and implications of owning a firm? Right? How do you make it so that it adds value to your life? And it brings that additional element of success into the picture? So an example is folks say okay, I want my firm to net me roughly x $100,000 a year, right? Say 500,000, or 600,000. There’s a lot of elements, and ways to make that $500,000 in a way that are either more satisfying to you or less satisfying to you that contribute more to your life or less your life. And part of what we’re encouraging folks to think through is why would bring the light and success into their life. And each person has their own formula. Right? My formula looks very different than yours. Well, I can’t imagine looks different than migrators. And anyone who’s listening. So what’s that formula? And that formula, it’s made out of two parts. It’s a combination of looking at your consulting firm purpose, mesh, question your values, what do you really want your consulting firm to be? And the finding really tightly your consulting firms intentions? So what is the goal of your firm as it relates to you? Does that make sense? Does

Will Bachman  04:13

let’s make this concrete perhaps you could share a sanitized example of a situation where you worked with one of your clients, a leader of a consulting firm, helping him or her, you know, maybe they were struggling, they’re feeling just working all the time. It’s not any fun anymore. And you help them kind of figure out their purpose or intention and, and kind of redesign their their life and their firm so that their firm work for them. Absolutely.

Maria Isabel Rios  04:45

I’m happy to do that. So let’s imagine we’re speaking with what we call a transition firm. So a firm making as a firm, roughly a million dollars a year so there’s a couple of folks involved in delivery. On the road to be in a boutique not quite there yet. Right? There’s a couple of support folks. And the firm leader in this example is setting their goals for the next three years. And so we started talking about it, you know, we have a four part consulting firm model. So we look at, what’s the strategy? How are they going to win engagements? How are they going to create value? And what infrastructure support they need? And in the middle of all of this, there’s the question of the firm leader saying, look, if I get all these things, I can’t complain. And part of our reaction is way, there’s a better way. We don’t want to get here so that you can’t complain. We want to get here so that you’re going from a negative positive? To our resounding Yes, this is fantastic. So first step in this road, is we look at the firm leaders personal intentions, what are their intentions for themselves? What do they want, right, in terms of family, in terms of their professional life, in terms of their friendships, their community, in terms of their wellness, and their well being? And other areas, right, that they name where they want to have personal intentions, and hear the first kind of tip as you’re going through it? And if you’re listening, you’re thinking, How do I draw my personal intention is to go from a general, oh, I want to spend time with my family. Turn that into a very specific, I want to spend my one weekend day, uninterrupted family time, zero work, every week, for the next 52 weeks. The shift from a general more time with family to a very specific goal, uninterrupted one week, one day per week, is very empowered, right starts making it specific that we can act upon, right. So in this case, that was one of the examples that came up in conversation. Another example is we say, Okay, I want my firm, you know, I want to be financially successful. Okay, what does it mean? How much do you need to receive from your firm? And where does it go. And in this person’s case, they decided that for them, part of the formula of being financially successful, is that they will be able to contribute 10% of what came home, into their retirement account. Again, very specific, right, we have a goal. You know, they work with the rest of the 90% to 10% goes into a retirement account. We go through this in each of the metrics of personal intention. At the end, we had a very specific list with 35 items. Now, as good consultants that we all are, we know those are too many. And so the next exercise we do always say, Okay, for the next year, or two years, what are the three items that are going to be relentlessly prioritize, no matter what, no compromises? It doesn’t mean we don’t work on all the other 22. What are the three that this person is prioritized, right? So they end up prioritizing a no work hands off the keyboard, three week vacation during the year. They ended up prioritizing one morning I’d volunteering at their children’s school every week. And they also ended up prioritizing meal management in a way that every meal that they would eat during the weekdays will be a healthy meal. Right. So their list looks different than my list may look different than your list. Well, the idea is, what is that priority Size list off personal intentions?

Will Bachman  09:38

Beyond and then beyond just sort of asking the question, oh, you know, what are your intentions with your family? What are your intentions with your friends? What are your intentions with your finances? Beyond that, any other ways that you had secret sauce of surfacing the ease of getting people to reflect.

Maria Isabel Rios  10:03

So I think naming what areas of your life are important to you, is part of the secret sauce. And then looking at what surfaces over a period of time, as opposed to one sit down some of these things. For a lot of us, we benefit from the extra introspection, right? From saying, Do I want to sit with this? Is this what I really want for myself for this year? What would really bring me joy? And we’re not going to Mary Kondo this and say drop by everything that doesn’t bring you joy. That’s not the formula in this case, right? But still sit with it over time, come back to it. See the list looks anything similar than the first draft? Or if anything has changed? Fair.

Will Bachman  11:01

That’s good. Thank you.

Maria Isabel Rios  11:02

All right. All right. So now, our consultant is armed with the list of the three items that they prioritize, which is step one of this exercise, right? We went through it, identify the personal intentions prioritize them. Now we move on to step two, which is the intersection with a firm the first element here is to define for the next, say, three years, or five years. What do you want your firm to bring out? And do for you? And there’s generally five models here. And I can go from kind of more easily achievable to hardest to achieve.

Will Bachman  12:00

Yeah, what are the five models?

Maria Isabel Rios  12:02

All right. So one of the models is, you want your firm to provide a certain lifestyle for you. So the firm is a vehicle for the firm leader to do something else. So for example, we have a client, the purpose of, and the intention of their firm is to provide enough time so that they finished writing their third book, and can go on a book tour. We have another firm leader, who supports and nonprofit organization out of Africa. And the purpose of the firm is to generate enough revenue on a sustainable basis. So that one, they can fund their nonprofit. And two, they can spend as much time working on their nonprofit as they can. So two examples of lifestyle firms, right. A third example, perhaps more common is somebody who says, you know, my family is at a stage where I don’t want to spend 60 or 80 hours a week working, I want to spend 25 hours a week in work. And the rest of the time, I want to support my friend. So three very different colors of lifestyle oriented firms. The second is your firm is an ATM. And you want it to regularly generate cash to support you. Right, that’s it, you put ever and consulting, good consulting work and you get cash out of it. And evolution of that is the third model, where you have a growing ATM. Meaning that it’s not only generating cash, but every year generates more cash than the year before. And what and how you think about an ATM, it’s very different than how you would think about the fourth and fifth model which are acid base. Which is when you think okay, I want my firm to be an acid. In the ATM models, cash comes out. In the acid models, you use some of the cash you generate to build and grow your firm so that it has more intrinsic value. So model number four is you’re growing your asset model number five is you’re getting your asset ready for cash up for a transaction one kind of real life example we see here because We work with clients over many years, is the firm intentions will change with time. So another example another client we’re working with right now, for the last four years, their model has been I want to build an asset. No, there are asset, you know, has a certain intrinsic value. And they made a shift in their model. And for the next two or three years, they want their model their firm to be growing ITM. And so we prioritize different work in their firm, right, the way they approach decisions, such as hiring, training, who do they have? How do they deliver, where do we spend our time changes, once they decided of their mothership?

Will Bachman  15:55

Oh, I would, I would propose a sixth version, or model, which could be orthogonal to some of the other ones that you’ve listed. So not necessarily distinct, but there is a model where the firm is a vehicle to deliver a certain impact or change that you want to create in the world, which I’m thinking of as distinct from a, you know, finding a certain lifestyle of have someone who wants to create a certain impact, whether that is, you know, moving the needle on climate change, or whether it’s, you know, impacting the way that that people live in work, right, or, you know, helping certain, solve a certain problem. So that would probably be, you know, potentially be more ambitious, but not necessarily, not necessarily in conflict with with the other models, you know, it could be along the along the way with with building an asset, but a slightly different set of drivers, or things that you might do.

Maria Isabel Rios  17:15

So luckily, no, one no one’s in what you just shared. Well, that it’s very important is, is do you, for example, impact climate change, by delivering more climate change work? That’s one, you know, climate change related work? That’s one way to impact that? Or do you impact climate change mostly outside the boundaries of your firm? And then it fits differently within the models? But absolutely, there is certainly a purpose, kind of higher purpose, if you want driven firm example, in here as well.

Will Bachman  17:57

Yeah, I mean, some people would be motivated to actually build kind of an ongoing institution, as opposed to the more purely financial aspect of of building an asset that you can sell. Alright, so So continue on, tell us a little bit about how you would work with someone differently, depending on which of those models, they’re going after, let’s say, you know, if someone is working to, you know, particularly, you know, maybe talk about the distinction between someone who’s interested in building an ATM versus someone who’s interested in building an asset, perhaps talk about the distinction there, and what sorts of different activities someone should be focusing on, if they want to build an asset versus building an ATM.

Maria Isabel Rios  18:45

Beautiful. So the distinction is very important. Because, of course, we all want a measure of cash out, and a measure of value contributed as well. But choices will often put those priorities in conflict. And that’s why it’s important to know which one we’re leading. If somebody wants to maximize cap, then when they think about staffing, when they think about the type of projects they get and how they deliver that. Cash is a consideration. Right? Do you Do we have more leeway in a bigger project, to perhaps bring somebody else in? How much net profit you make out of that project becomes a consideration because the model is to favor cash. So we want to look at cash at every turn, or at every major decision the firm makes, right? You’re going to hire somebody, well, what’s your model, right? What’s ultimately going to cost you to hire somebody? How does that contribute to your ATM desire? Now, part of what that results in, is not. And we’re not advocating for folks prioritizing money over anything else is the note. Okay, certain decisions when you bring people in, how much do you invest in? Priorities training, knowledge building that will bear fruit years in the future and not right now shifts when you’re thinking about an ATM model. So it’s not a soulless model in any way. Just okay. We want to make sure we want to protect what’s your what’s your ATM withdrawal number for this year, we want to protect that ATM withdrawal number and then build beyond that, if you will, if so, that’s one example. Right for somebody who’s looking at and decisions are often involving, okay, how I am perhaps more involved in delivery than I would have been in an acid model. Or I bring in folks that are more senior because I want them focused on delivery, knowing that they’re not part of my permanent team. Right, and I build a subcontractor model, which works great in, in an ATM situation, for example. So two considerations to keep on your radar. On the ATM model. If we’re looking at building an asset, we want to look at an extended timeline of what creates permanence and value. And for young boutique firms, that often involves investing in growing more rainmakers for your firm, more folks that can bring bring in revenue, we know that directly impacts the value of a firm, when all their revenue generation relies on one person, the value of the firm is impacted. Right? So growing for the long term, you perhaps invest more in systems and infrastructures, in creating stronger processes that allow folks to come and be a part of your firm. If you’re building an asset, you invest more in knowledge development, and in knowledge sharing. And you also address visibility, with a longer term view. Meaning I’m going to participate at XYZ conference. And I know the payoff from my relationships may take three, four or five years to come. And that’s okay. Because I’m really expanding my network. I’m really building stronger relationship. And there’s a longer term view. Now, for those of you who may be scratching your heads and saying, wait a minute, but I need to eat right, as I do all of these things. That’s part of why we work on this on an ongoing basis. And it’s not a one time exercise. Because yes, of course, we all need to eat and meet a certain are certain financial goals, as you build an asset as well.

Will Bachman  23:32

Yeah, and to build on what you said, to build the asset. In addition to adding rainmakers to the firm, the ideal asset would be not about hiring some experienced partners to come in who already have a set of relationships and can leverage those but the ideal asset would be developed rainmakers from within who are almost frankly replaceable or interchangeable, where it’s not so much dependent on that person, but more about the systems and tools and technology that you’ve built, so that people are coming for your firm, and not for that particular partner who is selling the work, because you have some kind of unique proprietary technology or tool or database, or access that your firm uniquely can provide so that you can you know, grow those people and that the relationships are ideally more embedded in your systems and your CRM system and so forth, than in just the person strictly in the personal relationships right of the senior senior rainmakers. Exactly.

Maria Isabel Rios  24:51

Well, your point is super important in the acid model, that relationships are the firm’s relationships. In the ATM model, you can be very happily having the relationships be individual relationships. And that’s both relationships with experts and with prospects and your market and clients. So if it’s clear that, yes, I have a relationship with you, but in reality, I have a relationship with Umbrex Veritux. That’s more an acid model, right? Whereas I have a relationship with you for a particular project. And it’s delightful to both of us, but it walks out with me when I walk out of the relationship that’s more akin to an ATM model. And that’s okay, both models can be wildly successful, very fulfilling, right? The key here is deciding as a firm leader, what is your aspiration for your firm? And then how long does it take to get there? Neither of the models are necessarily ones that can be if you want seen in action, where a difference is noticeable immediately. They require work over time, because each decision builds on the prior one.

Will Bachman  26:20

Yeah. Let’s talk about going in the opposite direction, closer to model a, where have you? Can you share any examples where you’ve worked with a client that says I’m overworked, I’m just working like crazy, I’m not really getting out of this what I want in terms of running my own practice, and perhaps you help them pare back a bit and and pare some things away and help them realize, what you really want is you want something to fund a certain lifestyle and help them dial back from working crazy hours to 25 or 30 hours a week. And that might have changed their business development approach or changed some of the investments that we’re making

Maria Isabel Rios  27:06

salutely. So oftentimes, when we haven’t thought about this, right, and we people come into independent consulting, they either come from industry, or they have they come from consulting firms, we have an embedded model in mind that it’s somewhat an extension of the model we were living in before, where we said, You know what, no more of this, I’m going to do exactly the opposite. Right? There’s an incumbent model in mind, we find that oftentimes, that model says, I work many hours, they for I make a lot of money, and therefore I am successful. And shifting that paradigm. When someone for example, says, Okay, I’m reaching the point where I’m burned out, one of the elements that guides us to that a need for that shift is how much kind of happiness is the firm life bringing to the firm leader, we tell all of our clients, something that is how we approach the work, which is we serve our clients, their firms are their vehicle for success. But in general, unless we do work with large boutique firms, we’re serving the firm owner, who is the person. And sometimes that leads to a very hard conversation, or saying, Look, you’re not taking care of yourself. Right, this is the fifth time or the fourth time or the 20th time that we’ve heard, we’ve have great news in hand. And somehow they feel disappointing or overwhelming, right? Because now I got to deliver on this piece of work that I just sold. So how do people shift? To make the shift? We want to say, Okay, what’s the basics of your personal intentions? Right, going back to the very first start of our conversation? And then we walk it backwards? Say, how can we achieve this? Not needing so much of you? So do you either take larger projects, or projects with larger margins? Or do you create more sustainability in your pipeline so that you know you’re reliably working less are going to have a pipeline that gives you a certain volume of revenue for the year? Or do you strategically shift the model of how you deliver so there’s less of the firm leader in delivery? Meaning the delivery still getting done getting down at quality? What does that imply? What are you giving up in terms of your revenue share, in favor of getting back hours of your life? So we basically design a map of okay where Are all the tweaks and changes we’re going to make, which of these we can put in place today? Which of these we’re going to put in place every time you propose a new project. And which of these we’re going to put in place over time, because you either need to build a bench of consultants, or shift the mixture of your network? You know, where do we need to make tweaks so that we have a sustainable firm that can deliver on that lifestyle?

Will Bachman  30:35

I think you’ve raised an important point. And we haven’t even gotten into other sorts of me, perhaps somewhat, it fits into Model A the certain lifestyle. But there are other directions that some people might prioritize or be using their firm as a vehicle to get to, such as some people might want to, over time, build a reputation as a thought leader or in their space and want to build a career where they’re getting speaking engagements, or publishing books or teaching at a university or at a business school, or doing some kind of some kind of thought leadership creation moving in that direction. Some people may want to, you know, create an online course and try to generate most of their revenue through products, which can’t necessarily be done right away. But with some planning ahead, I do know consultants in the community of Umbrex, who have planned a progression and built a nice revenue streams with some online classes, in some some cases, ones that are asynchronous or do it yourself. And so it’s I think the message to me from what you’re saying is really be intentional about what you want, just don’t automatically take more and more projects and fill up your, your, your hours each week with with paid work. But think about what am I trying to get to two or three years from now? And then align your activities to to get there?

Maria Isabel Rios  32:17

And do you know, say you want to get to? We’re starting today, right? And I’m 60 hours a week in delivery. And I want a model where I can deliver for 25 hours a week, you know, God fit another 35 In this example, back and still make equivalent revenue? Do I know? Do I have the tools? Do I have the systems? Do? Do I actually know how to go from point A to point B? And if not, then today is the right time to start thinking why would I need to learn? How can I get curious about what this shift? Because the goals may be very clear. But this intermediate steps of how to get there may not be? And that’s where, you know, working off on a plan and getting that expertise in how do you do it? Maybe it’s a partner, right? In the case of the person who has the products that sell synchronous, right, this the courses, the trainings, the systems that it’s in a synchronous selling, I imagine that took a lot of building in terms of an investment in terms of knowledge building in terms of design thinking in terms of finding the right spot in the market? If so there’s a question. Exactly. Like you said, Well, where do you want to get? And also what tools and capabilities do you need to get there? Right? Do you need to know how to delegate better? And do you have tools that allow you to do that in a way that doesn’t make you second guess yourself? Do you need? Do you need expertise in how to build a product? Do you have the tools to do that? You know, do you need to widen your network and universities so that you build up parallel reputation there? And how’s it compatible with the work you’re doing in your firm?

Will Bachman  34:25

I like to ask two questions. When you know, after someone has gone through your exercise of really defining their intentions that you talked about, at the beginning of this episode is is ask yourself, Okay, where do I want to be a year from now? And second question is what can I do this weekend to get some step towards that goal. So if you wanted to be a thought leader in three years, a year from now, you want to have a draft of a book, you know, maybe this weekend you sketch out the Table of Contents Right, right? If you want to be a really, if you want to create a course, maybe a year from now, you won’t have the course launched this week, and you can sketch out some ideas for the course. And if you wanted to really get superb at business development, then this weekend, you could say, Okay, let me get some books or podcasts on business development for small firms, or read the irresistible consultants guide to winning clients by David APNS.

Maria Isabel Rios  35:28

That’s where we want you to start for sure. Right? place to start. Absolutely good place to start, without a doubt. So first invitation is take a time window, blog, substantial time windows, take four hours of your time, go to a park, go to a cafe, go to a setting that it’s not your office or your regular work environment. And that’s not an airplane because we all know, you know, we think that’s the best way to think but it may not be right? Go to a place that’s relaxing, that feels fun, that feels insightful. And that’s different than your day to day and spend the next four hours thinking about your personal intentions, your intentions for your firm, come back to it. Like you said, Well, why are you going to do this weekend? And also including your mixture, a form of listening? Whether it’s formal research, or speaking with folks who are who have already done it, or speaking with folks who would be your potential target for your book or your potential readers, your ideal readers, right? What do people have in mind include always a form of listening, that will enrich your process of sifting through priorities, and it will help you clarify ideas.

Will Bachman  36:59

Wonderful, Maria. Where can people find out more about David A. Fields Consulting Group?

Maria Isabel Rios  37:06

All right, so two suggestions. Davidafields.com, of course, this is our house of course,  if you will, where you can find us online.

Join us on Mondays every Monday at 1215. Eastern. On LinkedIn. We take questions from consultants live, we answer the questions live. It’s called 15 minutes consulting best practices. And if you want to create a recurring event in your calendar that will always take you to the right place. And you can join us. DavidAFields.com, forward slash Monday live. That will take this where we are on Monday. Submit your questions. That’s how that program works.

Will Bachman  37:53

And I also will recommend, and we’ll include a link in the show notes, do sign up for David’s weekly blog posts. You can get those by email, and they’re always insightful and they have David’s highly artistic stick figure drawings, which are fun. Maria, thanks so much for joining today and you’re sharing some thoughts about how to make your firm work for you.

Maria Isabel Rios  38:18

Thank you for having me. Well, it’s been a pleasure.