So I’ve started a new firm, Arcus Partners, with my friend and former colleague, Gregg Svingen. Admittedly, until quite recently I wasn’t sure I was going to do it, and it’s all gone scarily fast. What I’m fairly sure about, though, is my view on what it takes to run a decent consultancy in this space. Below is a summary of how we’d like to run Arcus. Warning: much of the first half is rather inside baseball, as Gregg might say, as it’s about how firms like ours work. I may well be wrong on some of it, and if so, do let me know before the market does!
Run it like a big firm (boringly)
Most small firms start with a couple of people and a laptop and worry about the rest later. We’ve done it the other way round. Before we had a single client, we had a Director of Operations (Jessica Fernandez, who has run operations at far more complex organisations than ours) and a business plan on its seventh version. Written down, it looks either very sensible or slightly nuts. I’m hoping it’s the former. Poor financial management is usually what separates the firms that last from the ones that don’t (apart from being bad at consulting, clearly!) Invoices go out late, nobody quite knows which accounts make money, and consultants spend too much time on admin instead of client work. So we’ll be set up on great business management software and track all sorts of things from day one, like revenue per person, margin by account, and share of recurring revenue. We have rules on how much of our revenue any one client can represent, and on when partners are allowed to pay themselves (later than I’d like :)). We’d rather be small and nimble on the outside and boringly well run on the inside.
Keep good people
The one thing we’ll obsess about most is staff churn. Staff turnover at consultancies can run above 30% a year. Clients pay for counsel from specific people, then watch their team rotate and people they’ve never met end up running the account. Institutional memory is lost with every departure. Our aim is to keep attrition below 5%, once we’re big enough for that number to mean anything. The plan to get there isn’t especially original: pay above market, pay bonuses by a transparent formula rather than at a partner’s whim, offer a genuine route to partnership, invest properly in personal development, train managers to manage, and operate a strict no-arseholes policy, regardless of seniority. The numbers we’ll watch most closely are the ones that tell us whether people stay. Staff attrition, employee net promoter score and tied to that, average client tenure, which we’ll happily share with anyone curious enough to ask. If clients and colleagues keep leaving, the topline catches up quickly. The hard part, I suspect, will be sticking to all of this when things get busy.
AI without fanfare
We’ll use AI a lot, and already have fancy enterprise accounts and external partners, but only with clients’ agreement, and we’ll be open about how. In the spirit of transparency, this post was cleaned up and edited by Claude (the thinking and the bad attempts at being funny are mine). It clearly affects the business model, in what we charge for and how we staff work. But we won’t bang on about it as if it were revolutionary. By now, it’s a bit like bragging that we have fast wi-fi. Woo-hoo.
More doing and less saying
Geopolitics is now most corporate affairs teams’ biggest worry, and reputation is increasingly shaped by forces outside an organisation’s control. I’ve written before about communication not being magic. It’s even less so now. The advice that matters comes earlier, before a decision is made or a claim goes out. It joins up policy, politics and reputation, and it’s often about what an organisation should DO rather than what it should SAY. That’s where we want to spend most of our time. Easier said than done, and we suspect we’ll still spend most of our time on SAY, but one lives in hope.
Specialise by situation, not sector (yet)
Firms in our space have traditionally organised themselves by sector. That is usually still very valid of course, but it worked a bit better when most issues were sector-specific. Many no longer are, and clients often need support because of the situation they’re in. A surprise move by a competitor, a looming regulatory battle, a deal under political scrutiny, a crisis nobody saw coming. That’s why we’re not focusing on a sector (although after a couple of decades each, we know where to find sector experts fast, and are eager to team up with other consultancies). Having said that, we suspect frontier technologies like AI, drones and autonomous vehicles will keep us busy, since the rules governing them cut across sectors and change quickly. And we’re keen to spend more time with general counsel and the law firms advising them, as deals and disputes with political and reputational dimensions are on the rise. Brussels is home, but we’re happy to work wherever the situation takes us. Ask me again in a year whether any of this was wise.
The people you meet do the work
Last but not least, the simplest principle of the lot. The people who pitch are the people who do the work.
None of this is groundbreaking, admittedly. Most of it seems fairly obvious once it’s written down. The trick, as ever, is doing it consistently. If I’m missing anything, do let me know. I’ll gladly steal it.
