Second Nature

Founding a consultancy is one thing. Moving on to the next stage is quite another. Martin Beck advises on how to consolidate and evolve your business. Martin Beck is chairman and chief executive of second-generation consultancy Fitch

Historically, many design consultancies in the UK and the US have been shaped and managed around the personalities and visions of their founders. These individuals have typically been strong, charismatic people who have built very successful organisations from scratch and, in the process of doing so, created almost mythical reputations for themselves in the minds of their clients and their staff. In fact, it has sometimes been difficult to separate the image and reputation of these singular icons from the skills and capabilities of the consultancy itself. And as these design groups matured, everyone from major clients to junior associates would expect (and, in some cases, demand) a certain level of interaction with these first-generation leaders. There simply wasn’t enough to go around.

While this business concept has spawned some of the most creative, well-known and successful design ventures in history, it does not easily facilitate growth, nor does it naturally create an environment that is highly receptive to change. Yet markets and clients have changed. And indeed, design consultancies must also change and adapt to a more flexible business model – one that celebrates the values and philosophies of its first-generation founders, but at the same time, aligns everyone’s interests and capabilities more closely – from clients to staff to shareholders, and even suppliers. We call this the second-generation design consultancy.

Perhaps one of the most positive attributes of the first-generation design group is its ability to think and act like a small company – typically because it is one. A key challenge as the group grows, matures and begins to transfer management responsibilities to others is to continue to think – and, in some cases, act – like a small company. This means keeping organisational structures simple – not having an overly formal culture with complex hierarchies and operational schemes.

Communications among managers should continue to be hands-on and stay in touch with the business. Professional managers – those who describe themselves as pure generalists who no longer contribute at a project level – can be the death knell of a growing consultancy. It’s true that senior staff must take on more management responsibility, but not at the expense of client involvement and hands-on interaction with project or client teams.

In the second-generation business, the role of management must necessarily shift from one of pure leadership and vision to one of also serving everyone’s needs – client needs, staff needs and shareholder needs. Granted, leadership and vision are still critically important, but these can no longer be the sole responsibility of a single individual – they must be shared among the senior management team and then dispensed in a more decentralised manner. This requires thinking of management as a support structure, an underlying foundation upon which the weight of the group rests. This management model also reinforces a client-centric (versus founder-centric) orientation. If management’s primary role is to serve the people who serve the clients, then the people who serve the clients – consulting staff – are likely to serve the clients better.

The concept of management as a support structure may not sound like a particularly radical idea, but, in fact, goes against many of the commonly accepted edicts of the first generation group, and must be carefully crafted as the transition occurs.

As an example, consider for a moment what we call the trappings of management – those perks and niceties that typically come with more responsibility. Many of the newly appointed senior managers in a second generation consultancy spent a good deal of time observing (and often coveting) certain trappings that were bestowed upon a founder – everything from company cars to personal assistants to important-sounding titles. But a founder is a singular icon whose main role in a first-generation group is to provide leadership and vision. A second-generation management team must avoid the temptation of simply duplicating those perks for themselves as if these things are a rightful inheritance. Clearly, good managers should be remunerated in a manner that is commensurate with their value to the company. But it may be wise to structure that remuneration differently and create less obvious (but equally valuable) perks.

Another necessary shift in emphasis from a first- to a second-generation group is the external image of the business as seen through press coverage, marketing communications materials and other forms of self-promotion. In a first generation group, most attention is focused on the founder. And rightly so, because most founders have solid and widespread reputations, are charismatic, and are often seen as experts in a particular industry segment or aspect of design.

But as a founder changes to a less active or a less central role to accommodate growth, the image of the consultancy must shift as well. The business as a whole must adopt an image that transcends the individual founder and positions the company for future growth. And much of the promotion of the group’s activities will necessarily shift from being founder-centric to client-centric.

To some extent, the consultancy becomes less visible by bringing fame and fortune to its clients. But history has shown that, in most instances, the fortunes of most consultancies closely mirror those of their clients.

Perhaps the most important of all the factors to consider when managing a second-generation consultancy is flexibility. It is absolutely critical to develop flexibility as a core competence and live by the premise that change is the only constant. Second-generation management must build a culture that is open to change, a culture that never falls in love with its own ideas, and places a high degree of value on what comes next. For it is this ability to adapt and be accepting of new ideas, philosophies, and values that will enable all of us to soon be handing over the reins to create the third-generation design consultancy.

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From 20-23 September, London’s Designjunction takes place on the South of the River Thames, and will see installations, exhibitions, talks and its well-known fair spread across three venues including Doon