For Sale: Management Expertise from Small Companies
BY Jerry Useem
Entrepreneurs are following a new trend that leads from their areas of expertise to a new business in consulting.
Ed Laflamme never planned to become a consultant. But every time the CEO of Laflamme Services, a 125-employee landscaping business in Bridgeport, Conn., spoke to an audience about his marketing strategies, "we'd be bombarded by calls," he says. "People were asking, 'Can you help me with my marketing?' "
Pretty soon, his pro bono advising was eating up a big chunk of time. So Laflamme chose the route taken by an increasing number of business owners: he decided to sell his company's expertise. Grass Roots Marketing, a separate business entity he formed in 1995, now peddles Laflamme's marketing know-how to other companies, helping them design marketing plans, write advertising copy, and print brochures. "The landscaping business is like an incubator for ideas that we can use in the marketing business," he says. "We can see which ones work and which don't by trying them ourselves."
Despite their rich tradition of disparaging consultants, entrepreneurs now find themselves joining the ranks of the consulting class in burgeoning numbers. But these consultants actually walk their talk. "There's been a substantial shift away from the pure idea person to the consultant-practitioner," says Ralph Stayer, CEO of Johnsonville Foods, based in Sheboygan, Wis. Stayer speaks to management groups about Johnsonville's management practices, and floods of corporate tourists come to learn about them at seminars run by the company. "There's a real premium on knowledge these days," says Stayer. "At the same time, there's a real distaste in people's minds for academics and people who haven't done it themselves."
At Zingerman's Deli, in Ann Arbor, Mich., owner Ari Weinzweig leads a flock of rapt spectators past the store's busy counters, critiquing signage and displays of corned beef. All want to know how they, too, can provide the same superior customer service Zingerman's is known for. All have forked out $350 for a one-day seminar or $695 for two days of enlightenment. Many of them are owners of other specialty-food retailers, though attendees have run the gamut from health-care providers to the University of Michigan Museum of Art. ZingTrain, the company set up to run seminars and provide one-on-one consulting, pulls in annual revenues of close to $80,000. Sign up and you'll get a workbook and dinner in the pastry kitchen.
The prime motivation for most of these ventures, of course, is to wring some extra money from those assiduously cultivated in-house skills. But companies tout other benefits. Besides providing extra visibility for the deli, says ZingTrain manager Maggie Bayless, ZingTrain "has forced us to refine things internally. We've developed training tools that are probably more sophisticated than they would be otherwise. Plus, we learn a lot from our clients."
Fair enough. But not everyone agrees on the strategy's benefits. "I wouldn't recommend it," says Al Ries, a marketing consultant in Great Neck, N.Y. "Sure, these operations can make a profit that writes off some overhead. But what isn't measurable is how much management time it takes."
Robert Olson, president of on-line wine marketer Virtual Vineyards, concurs. After building back-office ordering systems for a few other Internet vendors, he toyed with the idea of launching the service as a formal line of business. "But we realized it conflicted with our primary mission," he says. "It didn't make sense for a small company to be in two businesses at once."
Holding oneself up as a model poses other problems, too. "Once you're selling your area of expertise, you become a target," says Bayless. Some disgruntled customers, she says, have suggested that Zingerman's send its own employees to its seminars. "But when we realize we're not living up to our own standards, it provides yet another incentive to raise the bar for ourselves."
Resources: If you're considering spinning off your own consulting services, take a look at some of the resources recommended by those who have traveled that path before you.
Ed Laflamme recommends Guerrilla Marketing: Secrets for Making Big Profits from Your Small Business, by Jay Conrad Levinson (Houghton Mifflin Co., 800-225-3362, 1993, $12.95), and The 22 Immutable Laws of Marketing, by Al Ries and Jack Trout (HarperCollins, 800-242-7737, 1994, $13).
Ralph Stayer, in addition to suggesting the book he coauthored with James A. Belasco, Flight of the Buffalo: Soaring to Excellence, Learning to Let Employees Lead (Warner Books, 212-522-7200, 1994, $13.99), also recommends Thinking in the Future Tense: Leadership Skills for the New Age, by Jennifer James (Simon & Schuster, 800-223-2336, 1996, $22.50), and Co-opetition, by Adam M. Brandenburger and Barry J. Nalebuff (Currency/Doubleday, 800-323-9872, 1996, $24.95). Stayer uses the latter all the time in his consulting work. There is much in Co-opetition that is applicable to small business, he says, especially regarding the value of products and services.
While ZingTrain's Maggie Bayless isn't willing to sell training materials directly to readers ("That's the course!"), the two books she most highly recommends from the course's reading list are The Empowered Manager, by Peter Block (Jossey-Bass, 800-956-7739, 1991, $20), and The Great Game of Business, by Jack Stack (Currency/ Doubleday, 800-386-2752, 1992, $15). The latter is about Springfield Remanufacturing Co., which has spun off a new company to teach its own brand of open-book management.