Change vs. optimization consulting

Warning: over-simplified model of the world ahead.

Let’s keep exploring this change vs. optimization consulting idea. It’s one I’ve been thinking about for months, so there’s no reason to keep it from my best bullshit detector: y’all.

Here’s one way to model this:

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You’ve got activities that are change-ey, that involve lots of risk, novelty, or both.

And you’ve got activities that are optimize-ey, that involve less risk and/or novelty, and feature a better short term ROI.

The “-ey” suffix is cute, but henceforth I’ll just stick with “change consulting” and “optimization consulting”.

Risk & uncertainty

Let’s say you’re a solo operator. You land a huge project, have always wanted to build an agency, and so you decide to leverage this opportunity and go for it. You’re gonna staff up.

Here’s roughly where you sit:

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You’re trying something that’s novel for you. You’ll have to learn new behaviors. You’ll have to plan differently. You’ll have to feed more mouths. You might have to take on work you find distasteful or boring. This is change.

In my model, I say change consulting involves more novelty and/or more risk.

That’s a critical distinction.

How risky is this agency-building project in reality?

It certainly involves uncertainty for you. But uncertainty is not identical to risk. [^1]

If you go to a truly excellent restaurant, and when the server asks what you want you say “Surprise me!” (and you genuinely mean it), you’re not taking a risk. You’re inviting uncertainty, but the risk that your meal is bad is quite low. You just don’t know which tasty meal you’re going to get. That’s uncertainty, not risk.

Back to our agency example: let’s say this is the first time you’ve ever landed a project that could keep a small team busy, and furthermore you have no idea how you might even try to repeat getting this kind of client. The agency-sized client was pure luck for you. Furthermore, you have 2 months of runway when you decide you want to agency up. That’s both novelty and risk made into one nasty-tasting, stress-filled sandwich.

So on the change end of our spectrum, you may be accepting more novelty, more risk, or both more novelty and more risk.

The CRO consultant

Moving to the opposite end of the spectrum: let’s say you have an e-commerce business. Sales are good. You have a 7-year track record of good sales on your site. Amazon has not eaten your lunch because you have a differentiated product, customers like it, and you have solid business fundamentals.

You hire a conversion rate consultant.

They’re playing here:

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Their work looks much more like optimization consulting.

Yes, they might propose some new stuff. In fact, they can’t do their work at all if they aren’t allowed to change some things.

But their work involves so much less risk and novelty than what I’d define as change consulting. In fact, the CRO consultant’s work is likely to produce strong ROI with little risk of screwing things up. After all, they aren’t changing your business model one bit. They’re just trying to squeeze more profit out of it, which is a noble venture.

Patio11

Some of you have read Patrick McKenzie describing getting paid ~$20 to 30k/week consulting rates for doing what he has described as a “dramatic reading of some blog posts”. (source: see first two results of https://www.google.com/search?q=site:www.kalzumeus.com+dramatic+reading&ie=UTF-8&oe=UTF-8&hl=en-us&client=safari)

Patrick is describing optimization consulting. Moreover, he’s describing optimization consulting at a certain very lucrative point in the pre-maturity of a particularly profitable business ecosystem. In other words, he’s describing optimization consulting for very young, mid-sized, high-profit SaaS businesses.

In essence, he’s telling people with an incredibly productive apple orchard who’ve never heard of a ladder that — not only can they pick up the bounty of apples that fell to the ground — they can also use this thing called a ladder to pick even more perfect fruit from their incredibly productive apple orchard.

This “telling orchard owners about ladders” work is good stuff.

It’s low risk, high ROI. That’s an attractive combination.

It may be easy to sell, but not necessarily. That depends on what size client you’re selling to, their urgency of need, and other factors.

It does have some structural problems though.

Guess where the competition flocks once you write a few blog posts crowing about getting paid $30k/week to do dramatic blog post readings to clients?

You might at that point have a first-mover advantage, but you better also have a sustainable differentiator as well if you want to keep those kinds of consulting projects coming in.

The other structural problem is that there’s not an unlimited supply of low-risk/high-ROI optimizations out there. These are the very definition of low-hanging fruit, which gets picked first.

Far fewer competitors have what it takes to operate in the “red zone”: [^2]

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Why?

Because it’s really hard to navigate risky change.

Clients get excited about the idea of digital transformation, but how many have what it takes to really transform that way?

Consultants like to facilitate impactful change, but how many really have what it takes to support and/or lead that kind of change?

If you’re facilitating genuine change for clients, you’re unlikely to have much competition, especially if you focus on larger companies. [^3]

You

Should you be practicing change or optimization consulting?

I haven’t (yet) used my scrappy research tools to look outside the pool of my clients, which is composed primarily of folks bootstrapping a consulting business and early stage change consultants. I don’t know, for example, what percentage of all consultants are change vs. optimization consultants. So as I reflect on the above question, I’m working from a biased sample. And I myself am biased towards change consulting. That’s essentially the kind of consulting I practice.

Repeating the question for convenience: Should you be practicing change or optimization consulting?

In my experience, you won’t have much choice at the outset. Unless you have an exceptionally high risk profile, you’ll need every advantage you can marshall as you bootstrap your business.

That means you’ll use whatever head start you have, and that head start will define what kind of consulting you practice.

Over time of course you can migrate from optimization to change consulting.

But I can’t think of one change consulting client of mine who would willingly migrate to optimization consulting. Something about their wiring seems to preclude this.

I get it! Despite the greater ease of optimization consulting (easier marketing, lower risk, higher chance of strong ROI), the change consultants seem happy to wrestle with the greater difficulty inherent in their path (more difficult marketing, higher risk, “weirder” service offerings, and delayed ROI for clients).

And I’m happy to support them/you in this growth.

-P


Notes

[^1]: Uncertainty is not identical to risk. And sometimes, doing something new (which is the source of the uncertainty) is less risky than continuing to do the same known thing. So again, novelty/uncertainty are not identical to risk. Sometimes they’re not even correlated to risk. And increased novelty/uncertainty doesn’t cause increased risk.

[^2]: I should probably change the colors in my illustration in the next revision. If what’s currently the “red zone” were blue it would line up nicely with the ideas in “Blue Ocean Strategy” including the color associated with new opportunity.

[^3]: There are interesting areas where those facilitating change do have a lot of competition, even when focused on small companies. A good example is those helping actual startups, which often tend to be small. There’s just something inherently sexy about this problem, and it draws folks to it, creating lots of competition to work with startups.