Management consultants come in for a lot of stick, varying from the jocular 'A consultant is someone who borrows your watch to tell you the time' to rather more pointed assaults. An altogether more interesting charge is that if they were any good, consultants would be out starting businesses themselves: 'those who can, do; those who can't, consult'. But do the qualities that make a good consultant make a good business creator?
'Advising people is very different from making things happen,' says Adrian Atkinson, founder of business psychologist Human Factors International. He divides money-makers into four groups: technical/professional, corporate, enterprisers and entrepreneurs. Entrepreneurs, he says, are usually lone players, the kind of people who get out there and do it, and often are not particularly well educated – in other words, not a bit like most consultants.What's more, he says, consultants may be able to write a great business plan, but that represents only about 5% of what running a business is about. 'We coach McKinsey and Accenture consultants, and very few of them could run their own business – they just don't have that entrepreneurial flair. They're good on corporations and harnessing the power of the organisation. A much more natural route for them would be to go in to a large business.'
John Bates, professor of entrepreneurship at London Business School, takes a broadly similar view: 'Consultants can look at an awful lot of opportunities and do good analysis on opportunities – it's a great helicopter position to be in and I never discourage my students from becoming consultants.'But, he warns, life on the ground is differ- ent from life in the helicopter: entrepreneurial life is very uncertain, and consultancy can engender arrogance. 'Consultants like to come up with theories and try to fit the world around them, but they don't like it when the market turns round and says "your theory sucks".'
It's not just the mindset either: it's running a company in a practical and social sense too. Let's say you go from a strategy consultancy to running a tool-hire business: you will not be working with the best and brightest of your generation any more. Says Andrew Wileman, a consultant and former MT columnist: 'Often you're dealing with people who are not as interesting and are not of the same intellectual calibre – you have to be interested in managing them and getting the best out of them.'
What's more, he adds, much of what you're doing won't be that stimulating either. Indeed, starting a new business involves an awful lot of mind-numbingly boring work, and it is for this reason, says Bates, that many ex-consultants are happier trying to make troubled existing businesses work than starting new ones.
Perhaps the greatest contrast, though, is that what makes a good consultant is usually analytical ability, whereas what a good entrepreneur has is grit. 'You need tenacity,' says Wileman. 'It far outweighs intellectual smartness.'
Atkinson takes a similar line: 'As a consultant, resilience is not a big thing. You don't ever really fail – clients just stop using you. But if you're running a business, you can fail every day – and you have responsibility. Being tough is a must; it's a totally different experience.'
Where consultants fare rather better, says Atkinson, is when they are enterprising rather than entrepreneurial, and start companies in pairs or small groups. This lessens the absolute responsibility and provides support. It is also interesting that many consultants seem to have done well in the high-tech sphere – possibly because it is an area where most of the people you work with will be... well, more like you.
Even so, it certainly isn't a path to choose if you're looking for an easy life. What it offers, though, is the chance to own the results of the decisions you make and the strategies you devise, and, if things work out very well, rewards beyond the dreams of even McKinsey partners.
That is what attracted ex-McKinseyite Adam Balon, who co-founded Innocent, the smoothie-maker. 'For me, McKinsey was a very comfortable, interesting life with good security. Life is more difficult on the outside – I sold my car and lived off credit cards for a year. But I knew that ultimately what I wanted was to see the results of my thinking – how it all worked out. As a consultant, you don't see the solution going into play.'
The five consultants featured on these pages crossed the line; all agreed that running a business was better than telling others how to improve theirs, and none wanted to return to consultancy full-time. Some of those who consult, it would seem, can also do.
HENRY DIMBLEBY and JOHN VINCENT Consultants, Bain & Co from the mid-90s; founded Leon 2003Henry Dimbleby (above right) and John Vincent must have been an unlikely pair of management consultants. Dimbleby looks like a cross between a chef and a Daily Telegraph diarist, which is precisely what he was before he joined top-notch strategy consultancy Bain & Company. It was there he met his business partner Vincent, and last year they went out on their own to launch restaurant chain Leon.
Vincent is also hard to envisage in a sharp consultant's suit and wielding a £1,000 PDA. He is far too rangy and noisy, married to a starry ITN news anchor and engagingly indiscreet. 'Yes, I suppose I was one of the more exuberant consultants there. I did get told off once when I accused a client of "ducking" a decision. My excuse was that I used a "d" at the beginning of the word rather than an "f".'
Both of them thoroughly enjoyed the time they spent in their early twenties doing 70-hour weeks at Bain and say that their former employer produces the most practical and entrepreneurially minded consultants.
'It gave me a brilliant grounding to go into business on my own,' says Vincent. 'People are bamboozled by business and how difficult it seems. What Bain did was demystify and deconstruct business. It took away the fear for me.
'For some people, consulting is a vocation and they are happy do it for life,' he continues. 'But I always knew that ultimately I had to start my own thing, to be a decision-maker rather than a recommender. I didn't want to be a professional servant to anybody for ever.'
Before the move, Vincent had been getting itchy feet: 'I had to get outside, to get wet, get snowed on, get covered in birdshit. And enjoy it.'
Dimbleby agrees. He had worked on Bain projects in telecoms, bookshops and flat-pack kitchens, including a year-long stint in Japan. 'My plan was to leave after two years and I stayed for six. As time goes on, you feel the silk handcuffs tightening, but I knew I had to get out when I felt I was learning more about how to manage clients than how to be a businessman. 'Bain taught me two big things that have helped create my own business: first, you learn how to think constantly in multiple dimensions, from strategic direction right down to the nitty-gritty. Second, you really learn how hard you can push things, and it's always quicker than people think.'
Now up to their elbows in organic Big Breakfasts and chicken with shallot and rosemary salsa verde wraps, the pair have two restaurants in London, with a long-term plan to expand to 150 outlets. They are backed by Robert Tchenguiz's powerful Rotch Group and have managed to hang on to a third of the equity despite two rounds of funding.'
Being on your own makes you feel a whole lot more human,' says Vincent. 'You can get too comfortable having that huge back-up system behind you. Not having a monthly pay cheque actually made me feel more alive.'
ALYSSA LOVEGROVE< consultant,="" mckinsey="" 1986-1993;="" founded="" the="" great="" little="" trading="" company="">
The idea for Alyssa Lovegrove's business, The Great Little Trading Company, came with the birth of her son. She had left McKinsey to start a company and with her business partner – a lawyer on maternity leave – she had had a number of false starts, 'ideas that just didn't work out'. However, inspiration arrived from friends in the US, who sent her 'incredibly cool baby things, and I discovered a world of stuff that – at the time – just wasn't available over here. I was lucky to stumble on an idea that had some real need to it.'
So the pair set up The Great Little Trading Company (TGLTC) to import from the US, although it soon became broader-based. 'For me,' explains Lovegrove, 'it was fantastic to be hands-on. When you're running your own business, everything is on a very different scale. As a consultant, your clients tend to be blue-chip, quite large organisations, whereas initially everything my partner and I did was around the kitchen table.'
There is, she adds, none of the infrastructure you're used to. 'There's no secretary – you're doing everything yourself. It's a bit weird to find yourself licking envelopes. But then again, what you're doing is also very tangible and very easy to measure.' From consultancy she took the ability to write a business plan and look around for money, she says. 'It made that side of things much easier. I came in with a set of skills that made an enormous difference.' However, she missed the companionship. 'At McKinsey, I had a fantastic group of peers, whereas in a start-up there aren't a lot of people.'And, of course, in any sort of normal business, you have a much more representative cross-section of society. That is, it's easy to take the social and intellectual stimulation from your colleagues for granted. Most people in other companies aren't like that – although Lovegrove's husband remains a McKinseyite.
Over 10 years, the business pair took the firm as far as they could with a 50/50 self-funded business – it now employs about 20 staff and has a turnover between £10 million and £12 million. But what they really needed was an injection of cash. So, nine months ago, they sold a majority holding to a private-equity consortium, and Lovegrove is now a non-exec director with a substantial shareholding. Overall, she says, 'it has been a fantastic experience and something very few of my peers have done – I'd do it again tomorrow'.
As TGLTC no longer takes up all her time, she's been doing a bit of consultancy – 'not McKinsey-type stuff, but for smaller businesses'. She has also joined an angel network and is looking at doing the same again – 'building, starting or acquiring'.
SIMON MOTTRAM Interbrand 1991-98; founded Circus 1998-2000; Sapient 2000-01; freelance consultant 2001-03; founded Rapha 2003
Mottram comes from a mixed background. Not only does he have the consultancy that many 'real' businessmen like to disparage, he's a former beancounter to boot. His CV includes a stint at PriceWaterhouse as an accountant, three brand consultancies (one of which he founded) and a spell as a freelance consultant. Eventually, he says, 'you get to the stage where you either decide to be a consultant for life or you do something mad.'
Luckily, Mottram was mad about something: road cycling. When he was at Circus, he says, 'I used to go to Condor [one of London's best-known cycle shops] every week'. It struck him that cycling clothes were not terribly well designed and notably unstylish. 'Clearly, there was a gap in the market, but – as they say – I needed to find out whether there was a market in the gap.' He learned that men in their thirties were taking to road biking in increasing numbers, and that they had a great deal of money to spend on their hobby. Moreover, his consulting work in luxury brands gave him an idea of the kind of space he wanted to occupy.
Mottram's kit is not for the faint of wallet. The gloves, for instance, share their build quality and leather with the army's sniper gloves – and this is reflected in their price, typically 50% more than anything else on the market. 'If money's no object and you want the best, then we're for you,' he says.
He named his brand Rapha after a European racing team from the '60s on the grounds that it sounded right and spoke to the cognoscenti. 'This business is all about what I usually advise people about – positioning and brands. I've taken my own advice, and for once it was right.'
Mottram hawked his business plan around and obtained enough backing for a launch by the summer of 2004; all told, outsiders now own 60% of the business. It's early days yet, but he aims to be net profitable by next year; turnover this year will be in the region of £400,000.
Clothing is a little different to consultancy, however. 'I didn't know the rag trade. There are some people who are deeply dodgy and they will let you down and not care.' The hardest thing, he adds, is keeping a sense of perspective. 'Keeping some remove is the most difficult thing: it's my business and my hobby – road cycling's the love of my life.'
Has the effort been worth it? 'When you see guys doing some of the hardest climbs in the Pyrénées wearing your product, that's just fantastic.'
Consulting still takes up about 10% of Mottram's time, though, largely because start-ups are not especially well paid – but he has no wish to return to it full-time. 'I don't ever want to not do this, but I'm commercial about business. One of the reasons I'm doing this now is that there's strong demand for brands in up-and-coming sports.'
SEAN PHELAN Yankee Group 1991-95; consultant, KPMG 1995; founded Multimap 1995
Sean Phelan is one of that rare breed, a dot.commer who has survived and flourished – although, when you see what his product is, you realise why this might be. He is the founder and chairman of Multimap (MM), one of the world's big three online mapping services.
Phelan's background is in technology consulting and he had worked for KPMG's technology convergence practice, but he always felt he had that entrepreneurial gene. 'Both my parents were small-business people,' he says. 'It was inevitable that I'd do it too.
The idea that was to become MM started out as something rather different. In fact, prescient as it sounds back in 1995, Phelan was more interested in the convergence of GSM data, GPS and the web. He wanted to put maps that told you where you were onto mobile phones. 'But,' he says, 'although we have always done mapping for phones, it was the web that took off exponentially.'
Leaving KPMG was a shock. 'The last project I worked on before MM was a $400 million fibre-optical infrastructure project. Then it took 18 months at MM to get our first customer invoice out: that was for £60 – a culture change.'
But things have grown considerably since then. 'Every couple of years,' says Phelan, 'we add another zero.' The company's main competitors are now Map Quest, which is owned by AOL, and Map Point (Microsoft). MM is used by dozens of blue-chip names, and from a start-up with a couple of people, it now employs 70.
Phelan is particularly proud of the fact that MM was never a flaky dot.com. 'Even when the bubble burst, we never laid off and never downsized. I went to the parties at Home House, but I wasn't the one throwing them.'
This, he explains, is where his consultancy background was most useful. 'I applied the same kind of due diligence and rigour to my own forecasts as I did to consultancy clients.' Indeed, during the mad dot.com years, quite a few VCs turned him down because his forecasts were so modest. But modesty clearly pays: MM has been profitable for the past three years and Phelan still holds a stake of 55%-70% (depending on the exercise of options).
For the time being, he has no real interest in exiting. With increased regulation such as Sarbanes-Oxley, he sees an IPO as fairly unattractive. As for any other ideas Phelan might have, 'I can't think of a better environment to develop them in – we have a great mix of people and skills'.
MM, he believes, is well placed to take advantage of new developments and he wants to create 'an environment for intrapreneurship – somewhere that keeps the start-up spirit'. As the company gets bigger, this is a challenge but, he says, 'I am at heart an entrepreneur.'
Phelan still works with plenty of consultants. 'All four of the main management team here are former consultants.' And MM also uses a huge number of outside advisers. 'My advice is to use these people; they want to help. It's good to contract stuff out; it helps you stay agile. I was a consultant for five years and now I'm really enjoying being a customer.'