On Running a Consulting Firm

So most of the consulting firms are run as partnerships (as you might have already figured out). There was an experiment in the late 90s where a then leading firm was bought over by an IT company, and that saw stagnation for the next few years until the consultants did a “management buy out” in order to rid themselves of the IT company’s controls. By then, though, valuable time was lost, and last I heard this company was severely lagging its peers in terms of reputation, among other things.

As I had mentioned in the earlier post, the rut sets in once partners reach “steady state”, where they have an established set of relationships that they milk to get more business. And as I mentioned, it’s hard to get out of this rut, until employees start leaving protesting the poor quality of work, and lack of opportunities to make it big. And that starts sending the firm into a downward spiral. So what is it that the firms must do, in order to keep themselves dynamic, and not get into this kind of a rut?

The answer is something that is practiced by most leading consulting firms. Every few months or a year, these firms add to the partnership pool, mostly by promoting from within their ranks. Once thus promoted, it is the new partner’s responsibility to expand and generate new business for the firm, and he is not able to piggyback on the relationships established by the established partners. And thus, in his process to expand and get himself established, he has an incentive to take more risks. And take on projects with long-out-of-the-money option kind of payoffs.

Regular promotions to the partnership level means that there is always a bunch of partners who are thus taking risks, and that keeps the firm dynamic. I don’t know how well this works in practice, but in theory at least, this helps firms from getting into stagnation. That this is the model followed by most leading management consulting firms indicates that this is probably an appropriate approach.

So, if you think your consulting partnership is stagnating, get in more partners. Promote. Or make way. And keep the group dynamic and a great place to work.

Dropping out

Less than a semester into my undergrad (Bachelor of Technology in Computer Science and Engineering at IIT Madras) I wanted to drop out, and start work. I didn’t want to be an “engineer”.

I didn’t know why I’d to spend all my Thursday and Friday afternoons filing away at some piece of iron in the “fitting workshop”. I didn’t have the patience to draw three views of a random object in “engineering drawing”.

And I had the reputation of being one of the studdest programmers in my school. Apart from winning competitions here and there and doing well in acads, I had enormous respect from peers for my programming skills. Given that it was a “high-performance school” (which subjected its own 10th standard students to a test before admitting them to 11th) I guess this peer respect does carry some weight.

So, being good at math, and having the reputation of being a stud programmer, I didn’t know what I was doing studying “engineering”. I wanted to be a programmer, and I wanted to drop out and take up a job. My JEE rank counted almost as much as an IIT degree, I thought. I didn’t have the balls, and I continued.

In hindsight, I’m happy I didn’t drop out. By the end of my second year, I knew for sure that I DIDN’T want to be a programmer. While the theoretical aspects of Computer Science excited me (algo analysis and stuff), I had absolutely no patience for “systems”, or “computer engineering”. I was perhaps alone in my class in my love for Microsoft products (easy to use).

I realized then that I liked only the algorithmic aspect of programming, where one solves a (mostly math) problem and codes it up in a simple program. Huge complicated systems-intensive programming, making GUIs etc. didn’t inspire me at all.

Looking back, all that “major” (i.e. Computer Science and Engineering) stuff that I’ve learnt and internalized was learnt in my first two years of engineering. Of course several concepts that are part of CS&E are taught in the last two years, but I ended up not liking any of that.

Looking back, I do find it positive that I did all those “general engineering” courses. I do find it really positive that we had to do 12 compulsory credits in Humanities and Social Sciences, for that allowed me to discover what I was really interested in, and indirectly led me to doing my MBA.

I have only one regret. That I wasn’t able to switch streams sooner than I could. That IIT, being a one-dimensional technology oriented university, didn’t allow me to transfer credits to a course that I would’ve liked better, simply because it offered undergrad courses only in engineering.

There was a humanities department, where I discovered what I was interested in, but unfortunately it was a “minor” department. It’s been partly rectified now, with the setting up of integrated MA courses, in Economics, etc. (if that course existed back when I was studying, there’s a good chance I’d’ve transferred to it from CS&E). But it’s not enough.

Kids at 17 have no clue what they want to do. What we need are flexible full-scale universities, which allow you to switch from any branch to any other branch after two years of reasonably generalized study (the earlier branch can then contribute to “minor” credits). We need to stop putting our colleges in silos such as “engineering”, “arts and science”, etc. Only then would our universities be truly world class, even from an undergraduate point of view.

And looking back, I’m really happy I didn’t drop out.

LinkedIn recos

LinkedIn in general is a useful site. It’s a good place to maintain an “online CV” and also track the careers of your peers and ex-peers and people you are interested in and people you are jealous of. If you are a headhunter, it is a good place to find heads to hunt, so that you can buzz them asking for their “current CTC; expected CTC; notice period” (that’s how most india-based headhunters work). It also helps you do “due diligence” (for a variety of reasons), and to even approximately figure out stuff like a person’s age, hometown, etc.

However, one thing that doesn’t make sense at all to me is the recommendations section. Point being that LinkedIn being a “formal” networking site, even a mildly negative sounding recommendation can cause much harm to a person’s career and so people don’t entertain them. Also, the formality of the site prevents one from writing cheesy recommendations – the thing that made orkut testimonials so much fun. And if you can’t be cheesy or be even mildly negative, you will be forced to write an extremely filtered recommendation.

Rhetorical question – have you ever seen a negative or even funny or even mildly unusual recommendation on LinkedIn? I haven’t, and I believe it’s for the reasons that I mentioned above. And if you think you are cool enough to write a nice recommendation for me, and that I’m cool enough to accept nice recommendations, I’m sure you and I have better places to bond than LinkedIn.

Anyway, so given that most recommendations on LinkedIn are filtered stuff, and are thus likely to be hiding much more than they reveal, isn’t it a wonder that people continue to write them, and ask for them? Isn’t it funny that “LinkedIn Experts” say that it’s an essential part of having a “good profile”? Isn’t it funny that some people will actually take these recommendations at face value?

I don’t really have an answer to this, and continue to be amazed that the market value for LinkedIn recommendations hasn’t plummetted. I must mention here that neither do I have any recommendations on LinkedIn nor have I written any. To those corporate whores who haven’t realized that LinkedIn Recommendations have no value, my sympathies.

Update

Commenting on facebook, my junior from college Shrinivas recommends http://www.endorser.org/ . Check it out for yourself. It seems like this cribbing about linkedin recommendations isn’t new. I realize I may be late, but then I’m latest.