Those are all really good points, thanks for sharing your views. I just want to add a couple things.

Accenture does have aspects of a body shop, but they do quite a lot of corporate bonding, training etc. so thay also have aspects of a kool-aid type of culture. It is difficult to pigeonhole a company that big into one category.

You’re also right about the fact that strong leadership can often mean success, but you also give the key to this in that you always have to remain open to outside ideas and be aware that the leader is not the be-all end-all.

It is fine to productize things, infact I would encourage it, but don’t fall into the trap of seeing your shiny product as the solution to any problem every client might have. Accept the fact the your product will only be a good fit some of the time. Many companies try to make their products everything to everyone.

There is nothing wrong with starting as a band of freelancer, but you always have to keep your primary goal firmly in mind. If consulting is just a side gig for you, then make sure it doesn’t become your primary one. If it IS your primary gig, then make sure you’re aware of it from the outset. And I completely agree with you that you need a strong leader(s) or organizer to make this model successful.

One recurring pattern I see in consultancies is the “Trading in our reputation for cash” cycle.
It works like this:

1. Small consultancy starts with a group of friends, or some other clumping of smart people. They focus on quality, they hire carefully, and they may even talk sincerely about product development: “Consulting is just to pay the bills until our product line takes off”

2. After the inevitable slow start, they find that word of mouth is spreading, and their skills are in demand. Folks will pay significant dollars for their people, and their reputation grows. As a result:

2a. The best people are constantly in demand – in fact a few get “embedded” at big firms on long-term contracts

2b. They need to hire more people – but it’s hard to go through an arduous interviewing processs, especially when the best people are unavailable to do it. It’s also hard to turn down merely average developers, when you know you can send them to big-faceless-corporate for $1000+ a day. So hiring principles slip, and the quality slowly slips

2c. Product development? What’s that?

3. Slowly, the good people leave – they have no corporate culture, they know the folks they are embedded with better than the folks they left behind.

4. The quality starts to definitely slip at this point – but a good reputation is hard to kill; someone will always say “Hey, those FnordCo guys were great, can we get a few of them in for this next job?”. And there will be good folk amongst the dross for a long time, so the reputation won’t hit zero, it’ll just drift down from “awesome” to “ok I guess”.

5. Eventually, you will have yet another bodyshop. Probably containing none of the original team of friends – those who were managers will have cashed in a pile of money and moved on, the rest will have just moved on. Some of them will have gone off to form a new consultancy, “this time we’ll do it right”…

Sound familiar? This of course relates to none of the awesome consultancies I’ve worked in, or worked with, in the past…

once again, great post :)

1. When starting out you probably dont know what does your service cost and get priced at. Do you first couple of gigs, take what you can get, sit back, analyze your cost, the market conditions, and attach a new price to your service. Constantly review your pricing. Never sell per diem services, and always charge for the value. It is not bad idea to get started with some introductory prices, but within first year, learn and renew. In my culture there is a saying, “it is not a sin to start as a clerk, it is a sin to retire as one”

2. Body shop style consulting firms have done well. It provide a huge value for the client. Clients can take in experts where they are not strong, and absorb in their own culture. Certain type of consultants love going from Client to Client and enjoy have a taste of a different culture every now and then. Accenture has done well for itself being a Body Shop.

3. There is nothing wrong with placing client in a highest priority. As a consultant your reputation is what you got, and most business you will get is through a word of mouth. If you are not in the business of making happy clients, you are a in wrong business. Go get a job somewhere, just not in consulting firm.

4. A good number of really good consulting firms started around a personality of its founder(s) and have done well. People want leadership. There is nothing wrong in joining a strong leader in her or his practice and learn along the way. Booze Allen, BCG, Mackenzie, and some of the new ones like HashRocket are good examples of this. As long as the leader is not a tyrant and completely closed all outside ideas..

5. Having pre-backed products and offering them as configurable solutions to the clients has an amazing value for clients and consultants. Imagine if you had to develop CMS from ground up every time client contracted you for content based website, vs. taking Sharepoint, or Drupal off the shelf and offering as a solution. Domain expert consulting firms find themselves repeating the same solutions for many clients, and eventually productize their solution. As a developer if you picked learning customizing the right kind of solution (like SAP), it could mean a revenue stability for you.

6. Many successful consulting firms started as band of so called freelancers and developed their own product, and did really well. You need a strong leader(s) or organizer to be head of the group and really committed people to make this sort of thing work. If everyone is working on their own little startup, and get their own little gigs, there is a little chance you will be able to put product out. 37 Signals is a shining example of success in such category.

Hope this helps.