Be Your Own Management Consultant

They say the smart guys know all the answers. This is true. But the really smart guys know all the questions.

You don’t need any management consultants to help you in your company. Be your own trusted advisor. Ask yourself these simple questions –

1. What can we do?

This is about core competencies. What can your organisation do in its sleep? What’s it been doing for years? What do you excel at? Be honest. Richard Branson’s core competence is the assessment, selection and execution of business ideas. Nothing to do with planes. Or music.

2. What’s happening in our market?

Is it expanding or contracting? Is it profitable? Is it cyclical? Where are prices going? Costs?

But you must segment your market. A segment is a part of the market that buys in the same way. Think airport parking – there’s executive parking at £30/day, all the way through to offsite parking at £20 a week for the happy holidaymaker. I reckon at Manchester airport there’s at least 5 segments of airport parking. Each segment will pay different amounts for different services. And broadly, the mass market segment (mass = many people) generates low margin per person, but there’s lots of them. The niche market (£30/day execs) generates high profits per person, but there’s fewer of them. And the costs to service them are different.

So, what is happening in your market? – by segment.

3. What does our competition look like?

Again, segment-wise. What’s your USP, by segment. Focus on underserved segments. Who isn’t getting what they need? Ryanair saw a mass market for low cost airfares all around Europe. In fact what they probably saw was Southwest Airlines doing it in the States. So they copied them. Fair enough.

4. What are the economics of our market from our customer’s viewpoint?

Well before Ryanair you got all sorts of stuff bundled in that you wouldn’t have paid for if they’d been offered to you separately – bad coffee, bad wine, bad sandwich. Now, you can pretty much avoid all additional costs if you want to (although being charged for unavoidable services, like check-in, simply annoys).

5. What are the economics from our perspective?

For Ryanair it’s maximising the asset utilisation of the fleet (i.e. keeping the planes in the air as close to 24/7 as possible) and driving costs down (which is why “Glasgow Airport” is in fact at Prestwick Airport, because the latter’s landing charges are lower. ) Also, what are the effects of scale across your value chain? For that matter, what is your value chain?

Keep asking yourself these questions until you convince yourself you know the real, insightful answers. It is often just one new insight that changes the game, and not just in big companies. I had a client who was selling a software product face-to-face. The product price was £50. This doesn’t work. A new distribution model was needed. Now it works. Simple? Yes – when you see it.

Nobody built PCs to order before Dell. But think of the advantages – customers feel they get an exclusive service (to an extent). They get to buy exactly what they want (and probably end up buying more than they need). Dell do not put the value-adding bit in (assembly) until the cash from the customer is in the bank and they never end up with the perennial problem faced by technology hardware businesses – masses of obsolete stock.

Go on. Spend a day as your own management consultant. Could be the most profitable day you ever have.

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3 Responses to Be Your Own Management Consultant

  1. Eilidh Milnes November 22, 2010 at 7:21 am #

    Another good thought provoking post Mark and very timely as I have a meeting with Virgin at the Virgin Training Academy for a do they want me to speak at end of January.
    I’ll remember, “Richard Branson’s core competence is the assessment, selection and execution of business ideas,’ and follow your good advice.
    Off to Tweet this now,
    til next time,
    Eilidh

  2. Keith Plumb November 22, 2010 at 9:34 am #

    Your Ryanair comments should remind everyone to ensure that they look at the full cost of everything. Lost cost air lines are not very low cost when you factor in all the costs. You still need to eat and drink while you wait an age to get on the aeroplane, even if you do not pay Ryanair.

    Virgin could do why some of your advice. Recently Virgin Trains have made a mess of number of reasonable ideas. They are also bucking the trend, you can use your Barclaycard on a roller coaster but not on Virgin Trains.

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