Consulting businesses are like dental practices - if you're not drilling teeth, you're not making money. Syndicated information businesses, on the other hand, deliver cash flow while you sleep.
So it's not surprising that consulting firms are anxious to shift their business model - nor is it surprising that how to do so is one of the most common questions I get.
The quick answer: though it looks simple, converting most consulting-heavy business models into great information businesses is hard work. Really hard.
Why? Because although it seems like a hop, skip, and a jump, it's actually a tremendous voyage between the two. Though they both have insight at their core, they're actually very different businesses.
Have I scared you off? I'm not saying it's an impossible transition - just that making the leap isn't for the faint of heart, or those short on patience.
On the other hand, it's a journey that can radically improve the economics, predictability, and value of a consulting business. For the right business, it's worth the time invested.
Here's the typical path:
Let's walk through it. Bespoke consulting is where many (most?) information services businesses begin. When you've got expertise, consulting is the easiest way to monetize it - and provide direct value to customers.
But the very thing that makes consulting valuable - the custom delivery of insight - is what makes it poisonous to a syndicated business model.
I've worked in both kinds of businesses and one fact is very clear: it's the rare person who can succeed at both. Successful consultants like to consult - they like to be the smartest person in the room and love to win over a client.
They don't, on the other hand, like to create standardized offerings - especially those that put their livelihood at risk!
Standardized Consulting. Standardized offerings, however, are the only way to move the business to a new model. Think scorecards, maturity models, benchmarks, and the like - tools which allow a consulting engagement to take on a standardized workplan and standardized set of deliverables.
As an example, think about web customer experience consulting. A bespoke project might involve an expert examining the web site, testing the experience, and offering a wide variety of perspectives on how to improve it.
A standardized project, on the other hand, might involve assessing the site against a few dozen "best practice" characteristics and presenting a report card about how the site fared.
While the former is more specific (and perhaps useful to the client), it also will be expensive. The latter, on the other hand, can be delivered quickly - and often cheaply - by using less expensive talent. Thus, the client can get much of the value for a fraction of the price.
That being said, however, it still requires the time and effort of an expert to deliver the engagement.
Automated Deliverables. But what if you could automate the assessment? Perhaps the client could do much of the legwork - for example, filling out a worksheet to assess the maturity of their shift to cloud computing. Or sending in their data for a salary benchmark.
Then, algorithms can do much of the work of the expert. Rather than drafting a deliverable from scratch (as in bespoke consulting) or working from a template (as in standardized consulting), deliverables can be automated.
For example, a web service can take in salary data and spit back out benchmarks against other firms, industries, geographies...or anything else the client desires. No human contact necessary.
Syndicated Information. We're almost there - but not quite. We still need to make the transition from one-off consulting sales to subscription-based relationships.
You see, it's relatively easy to sell a one-off consulting engagement to someone with a particular need. It's another to sell an ongoing stream of data or insight - and get the client to keep paying year after year.
The secret? Developing an offering that's embedded in a business process. Follow the link for the real details, but here's the quick summary: great information businesses are embedded into their clients' workflow. They are consumed by the client in a way that they power a required step in the completion of a business process...such that removing them would make the process cease to function effectively.
So that's the path from consulting to syndicated business. It's a long - but often worthwhile - journey.
Have you taken your information business from consulting to syndicated? Tell us the story in the comments below! And let me know if I can help with your business as well.