Looking for substantial tips

Consultants usually have a difficult time with small and medium-sized business owners and managers. Because they prefer to settle everything on their own

It can be so simple to lure businessmen from small and medium-sized enterprises to the consultant – for example with the following advertisement: "You have the wrong strategy!", a black boldface headline calls out to the reader; a full page of explanatory text follows. Its author is Wolfgang Mewes. The trainer and consultant wants to teach entrepreneurs to become really successful. His Engpasskonzentrierte Strategie (EKS –bottleneck-concentrated strategy) advises its users to focus energy on the client's biggest problem.
Since Mewes wants to gain the largest possible number of users for his method, he does not go into business operations. That would take too much time. Instead, he had marketed his consulting knowledge from the start in 1971 until 1989 as a correspondence course. Today, the enterprise Studiengemeinschaft Darmstadt is offering the course. Entrepreneurs wanting to use EKS will receive a 1,200 page package of reading material. Many take the bait; since EKS came on the market, 15,000 participants completed the course. Among others, the screw dealer Würth, the fitness studio chain Kieser and the industrial kitchen provider Rational had battled for first place in their markets with EKS knowledge.
The Mewes strategy thus is successful in a market otherwise not exactly considered the dream turf among consultants. Because many of the SME owners and managers are averse to consulting. "Too expensive, too academic, too arrogant", these are common prejudices by company owners and managers towards consultants. That's also evident in the figures: Altogether 43 percent of the SMEs never had a management consultant on their premises, as established by the Institut für Demoskopie (Institute for Public Opinion Polls and Research) in Allensbach (IfD) in a survey of companies with a workforce of fewer than 250 people. In terms of larger SMEs with a workforce of more than 1,000, still 18 percent of the companies are doing without consultants. At times, the rejection can be quite blunt – one out of five surveyed managing directors says: "I don't believe in management consulting."
That kind of a statement most likely comes from people who rather rely on what they have always done: They will use their own knowledge. And company owners actually did not fare badly with it, says management thinker Reinhard Sprenger: "Family-owned enterprises have often been criticized for their organizational backwardness, but we can see more clearly now than in the past: It's an advantage, not a drawback!" That type of company had weathered the last crisis better precisely because it had not followed every management fashion, often had done without consultants – and instead had used its own resource: Sound common sense.
That often works out well but it can also be a complete washout: Bankruptcies like those of the retail chain Mäc Geiz, the nursing home operator Hansa or the shipping company Deilmann show that SMEs are not exactly inundated with good management concepts. "Some firm owners or managers putter along with what's available on board until it's too late", says Georg Kraus, management consultant in Bruchsal. Thinking of external help would sometimes come up only when nothing will work anymore. "They have their own defense mechanisms and don't want to see any unpleasant truths."

Not being too pushy
Of course, it's not only a matter of an extremely conservative leadership style and strategic autism why many a seasoned and experienced owner opts out of consulting. Reasons can also be found in the demeanor of consultants. Day rates of over EUR 2,500 are considered rather incompatible with SMEs; moreover, company bosses shy away from an invasion of helpers: "If the project team is so large that they want to go to the client by tour coach, that's not an idea that would instill confidence", says Heiner von der Laden from Porsche Consulting.
Such practice will go down badly in companies where the apprentice had worked his way up the career ladder to become boss. Down-to-earth company owners will hang up on a consultant who offers him on the phone a product like 'lifetime value optimization strategy'. The latest fad in business school knowledge won't wash here. "Consultants must speak the language of the SMEs owners and managers", describes Gerd Kerkhoff, Managing Director of Kerkhoff Consulting, a simple market rule, "but most of the 25-year-old Harvard graduated top strategy consultants are just unable to do it." For them, he says, the world of small and medium-sized companies is as far away as the Earth from Mars.
Gerd Kerkhoff learnt his lesson well: Listen ten minutes to the boss of the procurement optimizer and you'll know how he'll make the benefits of a consulting project palatable to the SME manager or owner. Sure enough, Gerd Kerkhoff also has his university graduation certificate on the wall, but any aloof and grandstanding behavior of academics is alien to him. Instead, he cultivates his Westphalian accent, explains strategy processes with words from colloquial German and does without anglicisms. Moreover, laughs are also allowed in his talks with clients. That provides closeness which is not possible with just smart PowerPoint slides alone. His success is confirmation that his strategy is right: Kerkhoff Consulting is among the market leaders of purchasing consultancies.
How consultants use this procedure to open up small and medium-sized enterprises can be illustrated by the example of Bernard Krone: For some years already, the head of Krone – manufacturer of agricultural machines and utility vehicles – has been a staunch consultancy client: "I get the perspective from a bird's-eye view. Outsiders are not professionally blinkered. We get access to the latest specialist knowledge", he itemizes what he values and appreciates in consultants. Moreover, the outsider's view would provide added value because consultants address subjects which the client's staff would steer clear of because they rather shy away from changes.
In the concrete case at hand, company Krone – currently with sales of EUR 1.2 billion – had been looking for better terms in purchasing. "We had the feeling of not getting the best prices from our suppliers", the head of Krone describes his requirements. A consultant was to provide help. Three consultancies were allowed to bid on the job; Kerkhoff Consulting was awarded the contract. A team of six people of Krone employees and consultants set up the project, worked on it for a year – and was able to bring in the targeted improvements. "The effort was worth it. We restructured our purchasing department and obtained better terms with suppliers", Mr. Krone is pleased.
Heads of SMEs want practical help, no 'mothware' as it's called in consultant lingo – because such thick-volume expertises collect dust on the shelves where straightforward SME owners and managers put them. What they like instead are consultants who put on overalls, aren't afraid to get their hands dirty in the factory and – get results. "According to my experience, clients are interested primarily in two things", says SME-consultant Kerkhoff, "measurable results and a cultural fit of the team. Only then will consulting be possible on the other side of large-scale industries."
Vistage has also proven well in this format – consulting services are here, however, rendered according to the do-it-yourself method. Vistage organizes groups of twelve to fifteen managing directors each from SMEs who will meet every four weeks. In these discussion rounds, every one of them presents his or her current problem. Once they'll talk about sluggish incoming payments, another time about quality outliers, yet another time about still vacant apprenticeship places. Under guidance of a host chairing the meeting, the entrepreneurs are jointly working out a solution to the problem. That such consulting without any consultant works well is something the service provider has shown already in over 50 years of its existence: In Germany alone, there are ten managing director circles in which the heads of companies mutually consult each other – and thus render many a contract to a consultancy unnecessary.