Quanta Corporate Citizenship I was recently speaking to a professor of Innovations at London Business School who expressed her admiration for our innovative business model and charging process. This seems to be a common trend among all those who come in contact with Quanta for the first time.
Consulting companies are known for charging thousands of pounds per day of work and they normally lock their clients in upfront: the client accepts the cost without having a clue about the outcome they will get for their financial commitment. All they have to justify this financial commitment are their reputation built on previous assignments. It is like going to a restaurant with a great chef heading the kitchen. But, frankly, we’ve all been to expensive restaurants on the day when the great chef was off, or when the great chef was having a bad day, or simply because once the dishes started arriving we realised that, although he might be a great chef, his style of food was not what we were looking for. At the end of the night you end up with a very high bill and an unsatisfactory experience. The result is that you will probably never go back there again and, worst, you will badmouth your experience to all your friends, who will definitely never go there either.
When we decided to start Quanta we spent some time looking at our strengths and weaknesses (a short example below):
Consulting companies are known for charging thousands of pounds per day of work and they normally lock their clients in upfront: the client accepts the cost without having a clue about the outcome they will get for their financial commitment. All they have to justify this financial commitment are their reputation built on previous assignments. It is like going to a restaurant with a great chef heading the kitchen. But, frankly, we’ve all been to expensive restaurants on the day when the great chef was off, or when the great chef was having a bad day, or simply because once the dishes started arriving we realised that, although he might be a great chef, his style of food was not what we were looking for. At the end of the night you end up with a very high bill and an unsatisfactory experience. The result is that you will probably never go back there again and, worst, you will badmouth your experience to all your friends, who will definitely never go there either.
When we decided to start Quanta we spent some time looking at our strengths and weaknesses (a short example below):
We soon realised that our weaknesses were only our weaknesses to the extent we tried to replicate the high street business model. But, if we built a business model around our strengths, we could overcome our shortcomings.
For instance, we knew we could deliver outstanding work. If we know that the great chef is in every single day, then the likelihood that the customer will have a bad experience is drastically reduced.
We also realised that conventional consultancies charge very high prices – generally in the high triple figures, per person, per hour – because they need to pay for a lot of things that do not actually benefit their clients. Lavish offices in prime locations, business and first class tickets, five star hotels, a lot of food gatherings and drinks in great bars, taxi fares everywhere, three thousand pounds suits, fancy dinners etc. None of this actually adds value to the client, but the client will end up with the bill on its lap at some point. Actually, the majority of these things run against good and responsible citizenship, generating high carbon footprints and waste, creating unnecessary consumption, misaligning the interests of clients and consultants, generating financial losses to shareholders etc.
The traditional consulting companies were all created before the 1970s, well before cloud computing, telecommuting etc. Their laggard business model was established during a time when they needed to incur a very heavy fixed cost to exist, and then spread those costs to clients as they came through the door. We were a new organisation and could create a much lighter and Spartan cost structure, so we didn’t need to start finding ways to start transferring those costs to the client as soon we said ‘Hi’. Not only because we didn’t have the money to pay for it upfront, but also because we were building our business from scratch and therefore were much freer to determine how it would look like.
Those same consultancy companies were also generalists. That meant that they had to keep a small army of professionals with diverse backgrounds because potential clients could require their specific set of expertise at any time. Worse, because they need to do something with those resources while their specific expertise is not required, they deploy them on projects on which their skills do not add value to the client (if anything, it might reduce the value to the clients). It was like the restaurant keeping caviar ready for deployment at any time because every six months a client would ask for it. But because he also needed to justify keeping the caviar in the fridge, he would often use it on fruit salad and ice cream. And charge for it! The poor client, once again, would pay for something that is not adding any value. If anything, it is reducing it. So, by focusing on CSR, which what we want and know how to do, we can avoid keeping unnecessary costs.
Furthermore, any company who has ever hired a consulting company has gone through the experience of closing the deal with a senior partner, but on the first day of the assignment a young just-out-of-school undergraduate shows up for the project. It is like being welcomed into the restaurant by the top chef and finding out that the busboy is cooking for you tonight. The normal consultancies need it because of their 1950s military style structure with very high turnover, preparing the next generation to replace those constantly leaving. So we developed a model that evolves around only working with experienced professionals and only working on a partnership basis: we all share the outcomes of our work, and save for the future. And that also eliminates the possibility of free riders within our organisation. If our personal income is 100% dependable on the quality of our outcome, we all focus 100% all the time. All chefs are in the kitchen all the time.
The result is that we can transfer the power back to our clients so that they can decide whether to pay and how much after they have finished their meals. And because we are confident in our skills, the likelihood that they will pay is very high. And because we are running a very Spartan operation, we can take the risk of having a discontented client who might decide not to pay. Furthermore, we mitigate the risk even further by only partnering with clients to whom we can deliver great service. We try to triage clients who will appreciate the quality of our cooking.
Because during the whole engagement we are constantly checking with the client that we are on the right track, the risk of us finding out at the very end that the client is dissatisfied is at a minimum. An attentive waiter will know when the food is not up to the client’s expectation during the meal, and not when the bill is presented to the client.
Yes, it is true that a few clients might decide not to pay or to pay very little. That is a risk we take in the name of generating high impact to our clients and to our society. If that happens, our first approach is to take it as an opportunity to learn and fine tune things for the future. And, of course, if we are convinced that we delivered a great service to a client and it decided not to pay, we will think twice in the future whether we really want to work with them again. At the end of the day, the reason why we adopt this unique charging structure is because we want to establish true partnerships with our clients, as only with true partnerships we will be able to help them to become great corporate citizens.
-- Gus
For instance, we knew we could deliver outstanding work. If we know that the great chef is in every single day, then the likelihood that the customer will have a bad experience is drastically reduced.
We also realised that conventional consultancies charge very high prices – generally in the high triple figures, per person, per hour – because they need to pay for a lot of things that do not actually benefit their clients. Lavish offices in prime locations, business and first class tickets, five star hotels, a lot of food gatherings and drinks in great bars, taxi fares everywhere, three thousand pounds suits, fancy dinners etc. None of this actually adds value to the client, but the client will end up with the bill on its lap at some point. Actually, the majority of these things run against good and responsible citizenship, generating high carbon footprints and waste, creating unnecessary consumption, misaligning the interests of clients and consultants, generating financial losses to shareholders etc.
The traditional consulting companies were all created before the 1970s, well before cloud computing, telecommuting etc. Their laggard business model was established during a time when they needed to incur a very heavy fixed cost to exist, and then spread those costs to clients as they came through the door. We were a new organisation and could create a much lighter and Spartan cost structure, so we didn’t need to start finding ways to start transferring those costs to the client as soon we said ‘Hi’. Not only because we didn’t have the money to pay for it upfront, but also because we were building our business from scratch and therefore were much freer to determine how it would look like.
Those same consultancy companies were also generalists. That meant that they had to keep a small army of professionals with diverse backgrounds because potential clients could require their specific set of expertise at any time. Worse, because they need to do something with those resources while their specific expertise is not required, they deploy them on projects on which their skills do not add value to the client (if anything, it might reduce the value to the clients). It was like the restaurant keeping caviar ready for deployment at any time because every six months a client would ask for it. But because he also needed to justify keeping the caviar in the fridge, he would often use it on fruit salad and ice cream. And charge for it! The poor client, once again, would pay for something that is not adding any value. If anything, it is reducing it. So, by focusing on CSR, which what we want and know how to do, we can avoid keeping unnecessary costs.
Furthermore, any company who has ever hired a consulting company has gone through the experience of closing the deal with a senior partner, but on the first day of the assignment a young just-out-of-school undergraduate shows up for the project. It is like being welcomed into the restaurant by the top chef and finding out that the busboy is cooking for you tonight. The normal consultancies need it because of their 1950s military style structure with very high turnover, preparing the next generation to replace those constantly leaving. So we developed a model that evolves around only working with experienced professionals and only working on a partnership basis: we all share the outcomes of our work, and save for the future. And that also eliminates the possibility of free riders within our organisation. If our personal income is 100% dependable on the quality of our outcome, we all focus 100% all the time. All chefs are in the kitchen all the time.
The result is that we can transfer the power back to our clients so that they can decide whether to pay and how much after they have finished their meals. And because we are confident in our skills, the likelihood that they will pay is very high. And because we are running a very Spartan operation, we can take the risk of having a discontented client who might decide not to pay. Furthermore, we mitigate the risk even further by only partnering with clients to whom we can deliver great service. We try to triage clients who will appreciate the quality of our cooking.
Because during the whole engagement we are constantly checking with the client that we are on the right track, the risk of us finding out at the very end that the client is dissatisfied is at a minimum. An attentive waiter will know when the food is not up to the client’s expectation during the meal, and not when the bill is presented to the client.
Yes, it is true that a few clients might decide not to pay or to pay very little. That is a risk we take in the name of generating high impact to our clients and to our society. If that happens, our first approach is to take it as an opportunity to learn and fine tune things for the future. And, of course, if we are convinced that we delivered a great service to a client and it decided not to pay, we will think twice in the future whether we really want to work with them again. At the end of the day, the reason why we adopt this unique charging structure is because we want to establish true partnerships with our clients, as only with true partnerships we will be able to help them to become great corporate citizens.
-- Gus
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