Practice Development: Honing Your Value Propostion
Friday, July 27, 2012
Posted by: Jack Jennings
is rapidly changing and our deliverables and areas of expertise are constantly
changing. Many consultants are either
working in an industry that did even exist a decade ago, or are certainly
utilizing new techniques and methods.
The sophistication of deliverables seems to double every few years. If one could compare the consulting business
today versus the formative years of a century ago, the comparison would be
sometimes such a comparison can offer new ways to both communicate with clients
and to increase our value proposition.
Like old friends, seasoned approaches can deliver value because of their
familiarity and simplicity.
approach is to revisit a highly useful tool from the early part of the last
century - the DuPont Model. The DuPont
Model still has a lot of value after all these years and is useful in helping
to focus our deliverables. It is both
timeless and timely. It can help
consultants to both understand how their services have an impact on results and
in communicating those results with clients.
Model is a system of financial analysis that is a visualization of the basic
building blocks of a business, like a genome of a business’s DNA. Donaldson Brown, an engineer, developed the
system while working in the finance department of DuPont in the early
1900s. After DuPont invested heavily in
a fledging General Motors, he was asked to work with GM to straighten out their
financial condition. In essence, he was
one of the early consultants working on a turnaround. Following this successful application, the
DuPont Model was a mainstay in MBA programs for decades.
the model has been expanded and enhanced to include more detail and sometimes
adapted to include ROE in addition to ROI as a measure, but the value of this
simplistic tool is unchanged.
Basic DuPont Model
(This is the most basic DuPont Model, it is
much more effective to greatly expand and enhance the presentation to include more
consultants, we are all working on one of four goals:
improving operating margins,
improving asset utilization, or
improving a firms potential.
successful, all of these efforts result in one primary objective: Increased Shareholder Value.
suggest that we all suddenly become financial analysts, but it is a suggestion
that this visualization tool can be productive in honing our offerings. A simple method is to just start at either
side and work through the chart asking basic questions:
Why are we
How does it
affect shareholder value?
How can we
easily expand each block to its logical conclusion and list the potential
deliverables to improve shareholder value and
your value proposition. This helps hone our offerings and is useful in client
perfect and some may say that it is not complete, it can and does add to a
consultant’s value proposition.
Jack Jennings is the Principal of
Jennings and Associates based in Dallas and is a member of the Dallas/Fort
Worth Chapter. His practice areas are in
corporate finance and in conducting complex feasibility studies. He may be reached at firstname.lastname@example.org.