The Insights Supplier- Part 2: Organizing for Success
The canopy of the insights industry includes many different branches of the value chain such as consulting and professional services, data collection and sample access, secondary data market, and increasingly, technology integration considerations. It’s hard to put forth a one-size-fits-all model to address the different suppliers. Instead, the attempt here is to set out some general models and go-to-market approaches based on the firm’s specific market offer.
Editor’s Note: Here is the next edition in our serialization of the book Into the River: How Big Data, The Long Tail, and Situated Cognition Are Changing The World Of Market Insights Forever. by Tony Cosentino. you can first the post here: The Insights Supplier- Part 1: Choosing a Direction
As I said before, this is one of the best deconstructions of the transition state that market research is in that I have ever read. Tony clearly and concisely explains the shift that is occurring within our industry and lays out several models for designing the successful MR firm of the future. In this post the focus is on helping organizations define the right business model for their enterprise based on organizational goals and culture.
In essence these posts are designed to serve as a primer for organizational change. As the needs of clients change and dictate the evolution of suppliers to meet those needs, in many cases firms will find themselves having to reinvent not just their value proposition but also their organizational structure to support an evolving new mission. Our hope is that this will help you as you undergo that journey within your firm.
By Tony Cosentino
Organizing for Success
The canopy of the insights industry includes many different branches of the value chain such as consulting and professional services, data collection and sample access, secondary data market, and increasingly, technology integration considerations. Different support functions are often provided in-house within a major supplier, or completely outsourced by a small start-up supplier. For these reasons, it’s hard to put forth a one-size-fits-all model to address the different suppliers. Instead, the attempt here is to set out some general models and go-to-market approaches based on the firm’s specific market offer.
Classic Consulting Model
The classic consulting model is a natural fit for the purely professional services organization and is the de-facto model in most law firms, traditional-consulting firms, and accounting firms. In the insights industry, this structure is ideally suited for a firm whose advantage is based in niche knowledge and employs a project based approach (i.e. more ad hoc studies rather than tracking studies, syndicated work, etc.). The structure is generally a partnership with the most senior consultants sitting on top of their respective pyramids. In this position, they act like their own CEO with operational, as well as new business development, responsibilities. As the organization grows, more levels are inserted into the pyramid and the junior partners start to manage their own book of business; thus, they begin to build their own hierarchy. The traditional consulting model may look something like what is outlined below.
Classic Consulting Model
The strength of this model is that resources are generally focused on one agenda, and advancement opportunities and career paths, or lack thereof, are relatively clear. There is no tension between a business development team (tasked with acquiring new customers) and the client services teams (tasked with implementation) since everyone is part of the same hierarchy. The client also knows exactly who they are speaking with in terms of organizational level, and by and large, roles and responsibilities are clearly understood to all involved.
On the downside, there may be issues to scale this model if the senior partner has a hard time ‘letting go’ of clients and feels the need to oversee every detail of his organization. Resource utilization can be an issue as well if one group is busy, but another group is not. This is particularly true where organizational communication is weak or one partner has a hard time sharing their underutilized resources. Furthermore, if the client becomes dissatisfied with the service, there is usually only one escalation path and no alternate avenues for the firm to resolve client issues. Finally, there can be significant productivity issues if powerful senior partners decide to face off against each other.
The difference between the matrix services organization and the traditional consulting model is that, in the matrix model, the account managers have client service and business development responsibilities, but they each draw from an indirect resource pool of program or project managers; rather than managing those resources directly. These resources likely report through an operations department or COO, and have only a dotted line to the account managers. A basic representation is presented below.
The strength of this model is resource utilization as the pool of managers is shuffled around based on demand. Individuals get to work on a variety of projects and exposure across industry or project type is much more prevalent. This model seems to work better for tracking study businesses since the operations, technology and quality control (imperatives for a good tracking study) can often be managed better within the domain of operations. The model is also quite scalable assuming good communication between account managers and their project management counterparts. Client escalation of issues can be easier to handle, but again this depends on solid communication between the two departments.
On the downside, lack of communication and trust between the operations side and the primary client services team can spell disaster for the organization if the two groups start to fight at the expense of the client. If this does happen, the client becomes dissatisfied with the lack of communication and confused on whom they should approach in order to resolve the issue. The other risk with this type of model is that employees may get discouraged by the lack of career growth; though this attitude may be correlated as much with the type of work as with the organizational structure (i.e. tracking work versus ad-hoc work).
Business Development Models
On the operational side, the Business Development (BD) model may be similar to the matrix model or the traditional consulting model, but the distinction for the BD model is that there exists a separate department primarily responsible for on-boarding new accounts. Hunting versus farming is an oft-used analogy. The two groups, operations (a.k.a. client service) and BD can be peer groups that report to executive management of the company (e.g. the company president) or BD may report to a partner or client services.
The BD model works well if an organization has high growth targets (e.g. demand creation is a primary focus) or if the offer is more transactional based (e.g. off-the-shelf software sales where the design and client service team isn’t as integral to the offer). The overall BD model may be further broken into two-types which might be called “Subordinate BD” and “Prominent BD” (See Figures 5 and 6 below). The downside of either BD model is that it can be resource intensive. If the company does not align expectations appropriately, or if the company does not subsequently begin to see significant revenue growth, profitability will suffer.
Subordinate BD Model
The Subordinate BD model is more akin to a direct sales force model where sales people are valuable in terms of prospecting new accounts and managing the sales process, but they generally control no resources and are somewhat powerless within the context of the broader organization. In the Market Research world, these are the door openers, but seldom the actual door closers. The reason for this is that they generally do not own the design of the research program and unless one owns the design, it’s very difficult to negotiate the complexities of the deal. Furthermore, their perceived value to the client may be as grease in the machine. This is not to say that introductions and the sales process management is not key for success, but the client does not perceive the value to them of the Subordinate BD person; rather the client feels that they are buying the services of those individuals providing the program thought leadership and the overall program design.
Prominent BD Model
In the Prominent BD model, the business developer is usually a multi-faceted industry veteran and is fully empowered by the organization to bring on what one might call the ‘new’ logos. These insights professionals excel in matching business needs with a research solution. Such business developers take part in key management discussions so that they can adequately represent the company, but also so that they are able to directly represent the voice of the marketplace to management. Other roles might include oversight of key relationship building campaigns, presenting leading ideas at industry conferences, and designing client programs. In order to do this, the company culture puts the business developer in a role of thought leadership. It isn’t to say that others in the organization are not providing thought leadership, but the business developer is well respected in representing the best thinking of the organization. In terms of process, the Prominent BD manager takes the lead role in on-boarding the account and securing a trusted relationship between the two organizations. Once such a relationship is established, there is handoff to another senior-level manager on the client service team.