The Transparency Economy Was Incomplete – Until Now
Fueled by data and crowdsourcing, the “transparency economy” has arrived. Imagine you’re a business leader who wants to impress your client. It’s possible to find the tastiest restaurant to dine them or the best wine to gift them simply by reading reviews. You’ll have high confidence that the location or goods you chose will be of high quality because there’s so much information available in advance.
Yet what about when you need to select the right consultant for a bet-the-business digital transformation? Or the right lawyer for an important commercial negotiation?
There’s actually very little information publicly available and it’s nearly impossible to tell good from bad based on available opinions. You’re left to swim through the stories your lawyers and consultants tell you – in person, through their marketing, and through their branding – about how great they are. At best, you might be able to get a recommendation from someone you trust.
The technology solutions which have brought transparency to most of the economy have not solved the selection of the most important business advisors. This is mind-boggling when you consider that businesses spend $2 trillion per year on professional services; many companies spend $1bn each.
The wrong consulting or legal provider can destroy your business. A failed strategic engagement or loss of a major lawsuit can trigger an unrelenting squeeze on resources. It can lead to perpetual reorganisations. It can create an opportunity for a competitor to outmaneuver you. It can lead to your investors losing faith in your business.
But what if you choose the right partner for growth – one that is an intuitive extension of you, that augments you, that takes initiative to do more? That would help you outpace the competition. That would alleviate budgetary pressure by returning many times what you’ve spent on their services.
The wrong consulting or legal provider can destroy your business.
From Flying Blind to Flying High
So why are so many businesses flying blind when it comes to consulting and legal provider selection?
First, much of the data you’d want to consult when you’re choosing your provider is hard to come by through crowdsourcing. Posting that a hotel is filthier than advertised has little downside and might even earn some positive benefit via social media.
But posting that you hired a bad lawyer might invite more lawsuits. Posting that you wasted a million dollars on a bad consulting engagement might lead to questioning your business judgment. Thus, few people share their experiences.
But there’s a more pernicious cause for this. Many professional services relationships are protected under such restrictive confidentiality clauses that you would actually be in breach of contract to publish the details of the relationship. It’s hard to imagine something worse for transparency than forbidding a customer to discuss what they bought, how much they paid for it, and if it was useful. No wonder different buyers pay radically different prices for the same knowledge services – even, sometimes, buyers sitting down the hall from each other.
Second, most companies fail to access their own historical data about what has worked and what hasn’t at the point of purchase. Let’s say you’re about to hire a consulting firm for a $50mn multi-year overhaul of your customer interface. You would probably want to know which of the firms competing for your custom have successfully delivered projects for you before. You’d benefit from knowing if the firm was easy to work with. And you’d want to know if the firm aligns with your values – for instance, if diversity is critical to your business, you might prefer providers that value diversity too.
Yet even companies that know some of this information can’t surface it in real-time to assist in choosing the right provider. Sure, some of this data is trapped in procurement systems but most of it is trapped in employee’s heads. Thus when you – the executive in charge of delivering the game-changing outcome – have to make a choice, you’re looking primarily at how the provider presents itself rather than what you could know about them.
Because this data is siloed, comes in many formats and is often incomplete, you probably resign yourself to a certain lack of control. You rely on word of mouth or tick-the-box diligence exercises, which only de-risk failure in a very small way. After all, even though this decision is mission-critical, you don’t have the luxury of time. You can’t crowdsource the answer externally and you can’t get to the bottom of it internally, but you still need to decide – so you make the best choice you can with the limited information you have.
Businesses will do better if they have the right partners and they will fail if they don’t.
At Hence, we don’t think the status quo is acceptable. Businesses will do better if they have the right partners and they will fail if they don’t. Firms will pay mediocre providers too much money if they can’t tell good from bad. Companies will fall victim to marketing ploys and relationship politics if they don’t strive for control through transparency.
Yet we know it is possible to shine the light on your provider relationships, pick the right partners for growth and ensure you work in lockstep to meet your critical business outcomes. So, we created Hence, our data-driven platform, to empower you to take control of your provider relationships.
Hence makes sense of your disparate data and makes it easy – perhaps even fun – for your colleagues to leave quick notes and reviews about your providers in a confidential space just for your own companies’ use.
After a few weeks of running the system, companies typically identify providers that are charging them retainers but providing middling service as well as those who are slow to engage, and those who engage in a culturally unfit way.
Users of Hence then take actions that save money and drive value immediately.
They cut low performing providers and deepen their relationships with high performing ones; they deliver feedback that leads to refunds and cost reductions for the worst providers and an acceleration of impact for the best; and they show up to negotiations with detailed information about their providers and themselves, enabling them to obtain better deals and more aligned partnerships.
With Hence, gone are the days when a professional service firm can fool you into thinking they are an excellent choice when you could have known better. And with that, gone is one of the last opaque corners of the economy.
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