Advanced Consulting: Earning Trust at the Highest Level

By Bill Pasmore

This is the first book to address the specific needs and challenges faced by high-level consultants, who work on very complex projects and must win the confidence of the most senior leaders in organizations.

Advanced consulting requires both expertise and personal qualifications that are distinct from those needed in everyday consulting. Advanced consultants work with high-level executive teams on complex issues such as strategy, organizational design, merger integration, digital disruption, culture change, and system-wide transformation. While neophyte consultants are often given a playbook to follow, advanced consultants need to invent methods that take full advantage of the opportunities that their work with clients presents.

There is an art to advanced consulting as well as a science; who you are is as important as what you do. Bill Pasmore draws on his four decades of experience as a consultant and teacher of consultants to show readers how to see possibilities that are not evident, conduct analyses that support the value of more comprehensive work, build relationships that engender deeper trust, adapt to changing circumstances, and empower members of their team to take independent actions while maintaining overall control of an engagement. Illustrated with vivid real-world examples and including a self-assessment to measure your progress, this book equips you to advance to more senior positions in your firm or to build a successful independent practice.

• Language: English
• Publisher: Berrett-Koehler Publishers, Inc.
• Release date: Mar 20, 2020
• ISBN: 9781523088089

Bill Pasmore

Bill Pasmore is a senior vice president and global organizational practice leader for the Center for Creative Leadership, which annually provides executive education to more than 20,000 individuals and 2,000 organizations, including more than 80 of the Fortune 100 companies. He is also a professor of practice of organization and leadership at Columbia University and was formerly a partner with Oliver Wyman Delta Consulting, part of the MMC Corporation. He is a consultant to CEOs of global Fortune 1000 firms on change, leadership, senior teams, and organization design and is a frequent speaker at corporate events and conferences.

Book preview

Author

PROLOGUE

It’s 1998. I’ve gone to work for Delta Consulting, a New York–based consulting firm started twenty-five years previously by David Nadler, a former Columbia Business School professor. The firm specializes in consulting to CEOs. Even though I have been consulting for over twenty years, I have recently completed six full weeks of orientation to learn to do consulting the way people do at Delta consulting. This is a description of a fairly typical first meeting between Delta and a client, in which I had the opportunity to observe David Nadler (a wonderful mentor and friend to me, now deceased) work his art. The names of the firm and client have been changed but the rest is as it happened that day.

8 A.M.—the heliport at 12th and 30th on the Hudson. As the Sikorsky A-76 descends over the water, the calm water of the river at first erupts into a fury of waves and spray, and then actually seems to form a depression as it absorbs the weight of the powerful craft that hovers above it. A second later, as the helicopter settles on the tarmac, the river returns to normal, no worse for wear.

John Healey, the corporate pilot who guides the helicopter with the tail number PM101 that identifies the aircraft to air traffic controllers on its frequent journeys between Hartford and New York, explains that he earned his pilot’s license before his driver’s license, by working for flying time instead of pay at the local airport. After that, it was the military, where he learned to fly these strange birds without wings. Since then, he’s never paid a cent to fly. As a pilot who still has to pay to rent an airplane, I envy him.

Are you Dr. Nadler? he asks. No, I’m Bill Pasmore, I tell him. He doesn’t seem impressed; to John, I might as well have been another piece of baggage. Well, is Dr. Nadler joining us this morning? Yes, he’ll be along shortly. On cue, David arrives, and soon we are lifting off over the Hudson, straight up past the 38th floor of 1177 6th Avenue, where our office is located. Hartford is 48 minutes upstream.

The reason for this magic carpet ride needs some explanation. This story, like others, has a beginning. It seems that this fellow named George Smith runs a company located in upstate New York that keeps the local Wegman’s grocery in business and, by the way, Delta Consulting, too. George, who has worked closely with David for many years, experienced an interesting transition a few years earlier, becoming the first non-family member to run the company. The last family member who served as CEO before George was another client of David’s and took David’s advice about how to retire with style and grace. As a result, the company didn’t miss a beat as the reins were handed over to George. There were other CEOs in the news at the time who could have used David’s help with succession planning but failed to ask for it. Some of them didn’t fare as well. Succession can be wonderful, or it can be hell.

George finds time to sit on the board of People’s Mutual, one of the largest mutual life insurance companies, which in 1998 had about $60 billion in assets and another $130 billion under management. The company is large enough to own several other companies that would be large in their own right—such as the Stratus Fund, which offers People’s Mutual the opportunity to get into the 401K asset management business; John Cline & Company, which serves individual and institutional investors; Malther Realties, which manages real estate equities; Pinetree Capital Management, which provides investment advisory services to the insurance industry; and Nova Leveraged Capital Corporation, a commercial finance company. People’s Mutual also owns PM101. They can afford it.

Sam Tyler has been CEO of People’s Mutual for nine years. Under his uncannily insightful leadership, the company has done well, doubling in size while making bold moves into new products that its largest competitors still haven’t matched. There is no doubt that Sam deserves to go out a hero and that is precisely what he would like to do. He’s not having as much fun as he used to; some of his close friends have died; others are playing golf and reaping the just rewards of a life of hard work and honest living. Sam is about as down to Earth, honest in his self-appraisal, and open in his confusion about how to do this thing right as anyone you will meet. He started out as an insurance agent (he must have been a good one) and rose through the ranks. Now, at age sixty-one, he’s decided that he doesn’t need to ride the horse until sixty-five or beyond. In fact, he’d like to hang up the spurs at sixty-three. He mentioned this to the board, and George picked up on his inner turmoil. There’s a problem, you see; Sam has no clear heir apparent. He feels as though he has failed to prepare someone properly but, at the same time—like a guy shopping for a new car—he has made up his mind to make a trade and he wants to close the deal. Now.

George pulls Sam aside after the board meeting and mentions that he’s had a little experience with succession himself, from the other side. No, he doesn’t have the answers for Sam, but he knows someone he thinks could help. George calls David to ask a favor. Then Sam calls David. Then David calls me. We’ll meet at the helipad early next Wednesday morning. In the meantime, I read the background that our research group has prepared on the company and the materials Sam sent along.

Have I ever consulted in the insurance industry before? No. That’s OK. David knows the lingo, and I’ll pick it up along the way. Have I ever done a CEO succession project? No. That’s OK. David knows the process. I’ll pick it up along the way. Why am I here? Precisely because this is what I need to learn. There are certainly others more qualified, more experienced in this particular work and industry. David has an eye on the future; the sooner he gets me up to speed, the better it is for my billings—and the firm’s. I don’t mind tagging along.

Incidentally, David is looking forward to this. It’s a try to stump the band challenge for him. It’s one thing to work with the same clients, year after year. You get to know them and they get to know you. If you have done good work, they appreciate having you around. You’re allowed to offer your advice and they’re allowed not to take it every time you give it—you’re friends and will continue to be. The work won’t disappear tomorrow with one misstep.

This situation is different. Each CEO is different. Prior to the first meeting, we don’t know what Sam is like. He mentions a few things over the phone, agrees to fly us up in the helicopter, and meet with us for three hours to see if there is any point in talking further. David finds the challenge of not knowing what Sam will ask and what answers he will give invigorating. It’s a make-or-break encounter. Anything could happen. Sam might not like the way we look. He might be the type of guy who needs advice, wants advice, but can’t bring himself to take it. It could be that he hates consultants and is only seeing us to humor one of his board members. We might say something or do something that turns him off. If he doesn’t like us, there are a lot of other consultants in the world. So we’re going to be on trial. Suddenly, I feel like one of the mannequins in the window of Saks Fifth Avenue. On display with nothing to say.

In reality, I know that the spotlight isn’t on me. David is the lead on this one. Somehow, I have confidence that Sam won’t stump the band. I’ll contribute what I can, focus on developing a good relationship with Sam, and try to learn as much as possible about his business and ours.

David has the foresight and confidence to anticipate that things could go well. He tells Sam before the visit that he will be bringing along a colleague because he really doesn’t have time to work on another long-term engagement. Sam probably figures that this is a gimmick that all consulting firms use to double their billings. Nevertheless, he consents. After all, he’s anxious to buy that car. Now. The helicopter seats six. Bring the whole gang.

After pointing out landmarks and offering last-minute advice (let me take the lead, but don’t be afraid to jump in) David spots the company from the air. It looks like a college campus. We touch down at the helipad, which is just at the back of the employee parking lot. We are immediately met by a stretch limo that takes us the two blocks to the front door. I could get used to this.

We are shown into Sam’s office (David later notes that it’s about twice the size of the Delta cafe) and sit down with Sam on some comfortable couches. Very civilized, relaxed, low key. Should I start by talking a little about the company? Sam asks. Of course. (Try to imagine a CEO not talking about his company the first time he or she meets you.)

Sam tells us the history, and—like People’s Mutual’s Standard and Poor’s ratings—it’s impressive. Acquisitions, mergers, solid performance when others stumbled in real estate and the stock market, getting out of the group health business at its peak, just before the bottom dropped out. If I ever take to gambling on the ponies, I’m having Sam do the handicapping for me. Then we get around to the real reason we are there and we hear the story about George. Outwardly, David is listening intently. Inside, he’s smiling. He’s already got this one figured out.

Sam pulls out bios on the top internal candidates and wants to get right to selection. It’s clear that he doesn’t know how Delta works. David straightens him out. Sam, before we start discussing the individuals, could you say a bit more about where the company is headed? We usually find it useful to have some idea of the strategy and context that the person will have to operate in. Then, we’ll have more of a basis for determining what qualifications might be required for the job. Let me begin by stating what I think you have said about this. David reels off a summary of the key challenges facing the business, dropping in appropriate usage of insurance terms that I don’t understand but that make Sam feel like David has been sitting in on his board meetings.

I notice that while we are there because Sam wants to talk about succession, David has already begun to drop hints about other help he needs from Delta. People’s Mutual looks on paper and operates in fact as a set of disconnected businesses. Each business that has been acquired is still a stands-alone operation, hanging like an ornament from a branch of the parent company tree. The company isn’t taking advantage of its opportunities to achieve real synergy through cross-selling its products. Sam explained to us that if you buy one product from People’s Mutual, like life insurance, there’s about a 20 percent chance that you will do business with the company for the long term. If you buy two or even three products, like life insurance and a 401K or mutual fund, there’s a good chance that you will stay with People’s Mutual for life, and that you will put more and more of your money in their safe. Cross-selling is a good thing.

Sam explains that it’s hard to get the businesses to collaborate because they have very different cultures. Insurance is conservative, especially at People’s Mutual. Insurance companies don’t get into high-risk investments (or at least they shouldn’t; some got too heavily invested in real estate, thinking that it was a sound bet and then saw the bottom drop out of the commercial real estate market). If you’re in the insurance business, you don’t like surprises. The investment folks, on the other hand, are cowboys. They aren’t there to protect your investment; they’re there to grow it. To do that, they have to take risks. Nothing too daring, you understand, but still, the kinds of investments that would keep an insurance wonk awake for a month of Sundays.

David notes that Delta has expertise in organizational design and that Sam should really think about fixing the cross-selling problem, preferably before he retires. People’s Mutual is also considering growth through continued acquisition and again, there have been some notable instances in which Delta has helped to mesh the merger gears, like the one between Chemical and Chase banks. Since Sam is thinking about merging with another large insurance company, he thinks it may be possible to approach it as a union among equals. David explains that there is never a true merger among equals. To the world, it may have appeared that Chase and Chemical were equals but in fact, Chemical was in the driver’s seat. Despite what they call the new entity, you can usually tell these things by noticing who still has a job after the polite conversations about partnership and teamwork are over.

Planting seeds by telling stories and dropping names is how you sell more work than the client thought he or she needed. David is a master at this. Sam senses that the people David calls by their first names (and that everyone else calls Mr. or Ms., if they get to speak to them at all) really depend on him for advice. He also senses that Delta has been around the block on similar issues in other organizations and that the outcomes have been good. George has been happy with David’s work. The new CEO of Xerox, another client of David’s, is happy. Sam should be happy.

This getting off track to sell more work down the road turns out not to be so much of a diversion after all. You see, one thought Sam has had is that if People’s Mutual merges with another large insurance company, he might be able to finesse the situation so that the other company’s CEO takes over the merged entity. Then he wouldn’t have to worry about turning over the scepter to one of the guys on his own team, who he doesn’t think would be right for the job. If Sam executes his plan, People’s Mutual winds up with a good CEO and members of Sam’s team aren’t hurt because they weren’t selected for the job. It’s becoming clearer that Sam is looking for a way to settle this succession issue. Now.

The problem with this plan is that Sam has had some preliminary conversations with the CEO of the best-matched acquisition target and things haven’t gone well. The guy has no vision. He’s traditional insurance. He’d probably sell off our acquisitions instead of seeing the growth potential they provide. He’s also nearing retirement, but he doesn’t want to quit and he would never pick a People’s Mutual guy for his successor. David’s reply is to the point. If you do the deal, you will risk flushing everything you have done in the last nine years down the toilet. Sam nods. He thought so too, but he wishes that it could be different. Sam can see the beauty of the merger. Why doesn’t he like their CEO more? Given time to think about this, he will realize that the answer to this question is the same as the one about what kind of CEO the guy would be. The thought isn’t pretty.

What about an external search? Sam has an appointment lined up with a headhunter. If he goes through with it, he’s concerned that word will get out that he’s looking and that he doesn’t have faith in his internal candidates. In the end, he may have to select one of his own and he doesn’t want the best candidates jumping ship. He wants David’s opinion: Can I conduct a search and not have people know that I’m thinking about stepping down? David helps him out a bit. He tells him that these things can be done confidentially, and that the search person can screen candidates without them knowing which company is doing the looking. Then Sam can review who is out there, on paper, without anyone being the wiser. David then cautions him that once he begins actually talking to potential candidates, the cat will be out of the bag. He also warns Sam that external candidates always appear to be better than internal candidates. Candidates present themselves in the most favorable light and the headhunters do their best to put the emphasis on the candidate’s achievements while sweeping their failures under the rug. Headhunters get paid only when you hire their client. Don’t be suckered in. The truth is, David says, you won’t really know who you have until eighteen months after the person is on the job. That’s great if you have time to bring the person in as a president or chief operating officer, evaluate them, and if you’ve made a mistake, start over again. Two or three rounds of this could keep Sam off the golf course for a long time.

So, it’s back to reviewing the internal candidates. They are probably starting to look a lot better to Sam. He makes some attempts to sell each one to us, but the attempts are half-hearted. The fact is, if there was a clear winner, we wouldn’t be sitting on Sam’s couch, drinking his coffee.

Sensing Sam’s frustration, David takes control. Here’s the way we normally approach these things. David explains the strategic selection process, which begins with using an instrument to give weightings to the dimensions of the CEO’s job in light of the specific challenges the company is facing. Later, Sam and possibly one or two others will use the weighted rating scales to assess each of the candidate’s strengths and weaknesses. Gaps between job demands and capabilities represent development needs. Does Delta work with individuals to help them with their development? Sam is already beginning to think of Delta as a resource for other work that will need to be done. Sam is comfortable with the process, with one exception: how long will this take? He will work until sixty-five if he must, but he really would prefer to retire at sixty-three. We haven’t forgotten.

David offers a suggestion and some advice. The suggestion is this: You can’t really tell how well a person will run the company unless they run the company. What you should do is to ease the current chief operating officer aside (who isn’t a candidate) and create an office of the CEO that runs the company, composed of you and the four leading candidates. This will give you a chance to work with them closely so that you can evaluate their performance. You can see who is a team player and who isn’t; how each one really thinks. The role will give them a chance to develop. We’ll rate each candidate now, work with them on their development, and really intensify and accelerate the whole process. Sam likes the idea of acceleration.

The piece of advice is this: Tell everyone that you intend to step down at sixty-five. You can step down anytime, but let it come as a surprise if it’s sooner. Otherwise, you will generate a horse race that makes it harder for people to work together and for you to see what kind of leader each could be. Sam understands, even though he had hoped at the beginning of the meeting that he might have a successor identified by the time we left.

We discuss next steps and calendars. There’s work to be done. We never talk about money. That will come in the letter of agreement. David does mention that he wants to get another Delta person involved who is familiar with the candidate rating process. Sam doesn’t protest; by now, he and David have formed a bond. David reinforces how seriously we are taking this assignment by requesting that Sam send us information over David’s private fax instead of through the normal Delta channels. (David explains to me later that it doesn’t really matter where information comes into Delta—but sending these kinds of signals is important. Sam needs to know that we can be trusted to think about the smallest details of this sensitive engagement.) By the time we leave, Sam is convinced that David’s only interest is in helping him to achieve his objective, which David frames as leaving the company in good shape and in good hands.

If I make it sound like David has another interest, like increasing revenues for Delta, that’s intentional. But I don’t want to make it sound like David is selling Sam something that he doesn’t need. The fact is, David is just as deeply invested in the outcome of the succession process as Sam. It just so happens that the resources David needs to make the project a