Associates' Revolutionary Consulting Model
Posted At: July 5, 2007 3:42 AM
Related Categories: Spend Management, Sourcing
Earlier in the month, I had the chance to speak to the leadership team at
Paladin Associates, a boutique consultancy that works with middle market
companies. What makes Paladin unique is not just its business model --
pricing its services based on the implemented returns they deliver versus a
day rate -- but how it staffs its projects. In this regard, Paladin is not
parachuting twenty or thirty something MBAs to deliver results. No, quite
the opposite in fact. Their consulting team is comprised of, as they term
it, "semi-retired folks who have a lot of experience."
How much experience you ask? Well, Paladin has less than two dozen
consultants in its arsenal, yet it claims over 500 years of experience. Do
the math. There's a lot of grey hair they bring to the table from a sourcing
and procurement perspective -- Spend Management and supply chain initiatives
form the majority of their revenue -- which allows them to step back from
individual opportunities to look at the big picture for their clients.
For example, Paladin worked with one middle market organization who
wanted to transition from having a largely tactical procurement model to a
more strategic one, yet they lacked the funds to make this happen. Because
of the returns Paladin was able to achieve for a "very large telecom
buy" they were also able to develop a procurement transformation mode
for this organization at no charge.
Flexibility like this in working with the middle market comes from a
business model, which, by nature, is never set in stone, but rather aligns
the client's interests directly with those of its advisors. In other words,
it's the opposite of how lawyers and accountants typically work with the
same client base, and it is precisely why cracking the middle market code
has proved so challenging for many larger services companies who are used to
charging on a non-value basis for engagements.
The good news in this case is that sourcing and supply chain consulting
often lend themselves to a gain-share type of revenue model that can make
such work highly rewarding for both firms and their clients. Of course it
also depends on a bit of creativity and flexibility on behalf of the
provider -- not to mention the confidence to put one's fees at risk. But if
I had 500 years of experience myself, I'd probably have a good feel for what
deals made the most sense for both parties.
- Jason Busch