During one of my recent consulting experiences, I received a piece of advice from my supervisor that saved our engagement. His advice was specific to consulting, but applicable to other areas of business too.
I was assigned to a typical strategy engagement – should client X selling product Y increase sales in market Z? Our hypothesis was that increased sales volume would be associated with increased profitability due to economies of scale. However, we struggled to calculate profitability over time, as the client had multiple kinds of products and used various procurement methods. Our analysis was impossible without extensive internal data and financial statements.
When we asked the client to provide the needed data, they ghosted us. We repeated our request a week later, but they only provided a balance sheet from the previous year. While this was useful, it was insufficient for our analysis. We were at a loss for what to do – our deliverables depended on this analysis, but we lacked the necessary information to finish our calculations.
Lacking data can lead to confusion, ambiguity, and incomplete results. However, finding enough quality information is often difficult. Moreover, a large client will often avoid responding to data requests, even if it paid top dollar for the consulting services. This may be because the client doesn’t have the data or doesn’t have the time to collect it. Occasionally, the client may have the data but, due to a fear of data leaks, be unwilling to share it, even if a failure to do so is likely to compromise the results of the consulting engagement.
Halfway through our project, my supervisor gave me a piece of advice that changed everything. Instead of “throwing in the towel” and providing sub-optimal recommendations to the client, a consultant must work around the issue of unfulfilled data requests. There are three ways to do this.
1. Simplify the data request
Reduce the number of data points needed, or ask for a more accessible piece of data. For example, instead of asking for the average payroll for each department over time, ask for a representative current salary of an employee in each department: sales, operations, finance. Companies hire consultants to simplify their workload, not to add more elements to their “to-do” list.
However, be sure not to oversimplify the analysis from the start. If the client actually has the data needed, by all means ask for it! Most companies will have historical data pursuant to the recording protocols of their industry. Talk openly about what data would be needed, and the client may decide to entrust you with complete records.
2. Get the data indirectly
Much data can be derived through your own calculations based on what the client is willing to provide. If the client is afraid of data leaks, they could provide an average data point to estimate the desired number.
In our recent project, we took this option. Instead of asking for the profitability of each product for the last 20 years, we asked for the revenues per product overtime. Then, we used their current income statement to calculate the average cost for each product. Through conversation with the client, we found out how much procurement costs had changed over time. Finally, we used predictive analysis to estimate the economies of scale that would be enjoyed by the client.
3. Find the information yourself
Often, the best solution is for the consultant to conduct primary or secondary research. The internet is an abundant source of information, and scholarly articles are available on most topics. Conversations with industry experts and customers can be just as eye-opening. Often, a client will have never quantified their geographic market size, relative market share, or customer willingness to pay. You can often do this for them, which will make them even happier with the results of the engagement.
While building a proprietary data solution might be time consuming, it can liberate consultants from the endless task of sorting and sifting data. Since data collection can be focused on one or two pieces of information, data collection from third party sources is often much simpler. However, the key challenge with this option is identifying the right sources of information.
Conclusion
Data is often difficult to collect in consulting, even if the client has been around for a long time. Remember, precision is important, but aiming for 100% precision may only be achieved at the high cost of failing to consistently deliver value to the client or to complete a consulting engagement on time and under budget. Consultants often only need to collect 20% of the available data to be 80% sure of the answer, and to give reliable guidance to the client. Thus, consultants must work around any data collection challenges by simplifying their requests, finding data indirectly, and doing their own research.
Wes Brooks is an incoming Summer Business Analyst at Cicero Group and an undergraduate studying economics, management, and strategy. He is a serial entrepreneur, works in venture capital, and enjoys singing a capella and piano improvisation.
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