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The IMC USA Value
Proposition
By Dennis J. Schumaker
(dschumaker@schuco.com)
For the last several years, IMC USA
members have all fixated on the lack of a value
proposition as the basic problem with growing
IMC USA membership and CMC certification. In a recent
survey conducted by the Chapter Presidents Council, the
overwhelming response (92.4%) to the question “What are
the biggest obstacles to increasing the numbers of
CMCs?” was unclear value proposition. I
have lost count of the number of times over the past
several years that this topic has been discussed on
conference calls and at various IMC USA meetings – both
local and national. And yet, no one has put forth a
proof, or much less the framework for a proof, on the
value proposition of being an IMC USA
member or a CMC.
I am reminded of a television commercial
that United Parcel Service (UPS) had run several years
ago in which two consultants are sitting in front of a
senior executive presenting their findings and
recommendations on work just completed. They
presented recommendations to increase inventory
turnover, accelerate shipments, and other
recommendations using the appropriate “consultantese,”
which, of course, makes them sound impressive. The
senior executive ponders their recommendations, pounds
his fist on the table, and says “Great ideas, let’s
implement immediately.” At which time the
consultants back pedal from the implementation of the
recommendations and are seen walking out of the building
having a discussion between themselves saying “Can you
believe that guy, he thought we do implementation!
We only make recommendations, we don’t implement our
recommendations!” Although the ad was a plug for
what “Brown could do for you,” it also took a mean swipe
at the consulting profession. Fortunately, UPS is
no longer running this ad. Unfortunately, our
identification of the lack of a
value proposition as the problem – with little
thought on how to fix the problem – is about as
constructive as the consultants in the UPS
commercial.
So, what is value
proposition and why should it be measured?
The dictionary defines value as:
-
a fair return or
equivalent in
goods, services, or money for something
exchanged
-
the monetary
worth of something : marketable
price
-
relative
worth, utility, or importance <a good value at the
price> <the value of base stealing in
baseball> <had nothing of value to
say>
-
that which
renders anything desirable
or useful, worth
And, according to the Association of
Proposal Management Professionals (APMP) value proposition is an attempt
to specifically address how aspects of the proposal
impact on the customer’s business, where value
essentially is what the offer is worth to the
purchaser. Although it is rarely quantifiable by
the purchaser, it is an important concept to recognize
that value is perceived by an individual and each
individual will have different criteria for determining
value.  If this were not the
case, there would only be one type of car built in this
country. We would not have all the different makes
and models that are designed to appeal to different
individuals, with different criteria for determining
value. The manufacturer implements certain design
features in each car that are offered to appeal to
different types of customers, making them willing to
purchase that particular model.
The above illustration is also why, when
IMC USA members are asked to rank certain items or
services in terms of relative importance, we get a
variety of responses. It is difficult for a small
organization, like IMC USA, to appeal to all the
different criteria and be successful.
While I recognize that
certification/recertification, professional development,
the IMC USA website, national conferences, flash
opportunities, etc. are all of some importance to IMC
USA members, my own value
proposition is such that those items are of
little importance if somehow my IMC USA membership does
not help grow my business – i.e., $$$.
Schumaker & Company has
been in existence as a consulting firm since 1986.
Our firm has grown our business along several industry
lines – state regulatory commissions, utilities
(electric, gas, water, and telecommunications), state
and local government, and local private
businesses. Our consulting projects typically
required a team of two to ten consultants and projects
ranged from one to twelve months in duration. Our
firm originally worked primarily in the utility industry
and had developed a cadre of mostly independent
consultants that worked on our assignments.
However, as time passed, our ability to sustain business
in this segment alone diminished, necessitating our need
to develop business in different industry
segments. Our firm began to experience the need to
expand and augment our cadre of consultants to pursue
these other opportunities. That is when we began
to recognize the difficulty in finding senior,
experienced consultants compatible with our own
consulting culture. Most of our earlier
independent consultants had been associates at our
previous consulting firms and, by that very fact, had a
somewhat common consulting culture to build on. If
you do not quite understand what I am saying, just place
an ad in your local paper looking for someone to do
“management consulting” and you will be amazed at the
variety of responses. I would bet that less that
1% would fit within your organization or would even be
capable of working with you on an assignment. That
is when you begin to realize that “management
consulting” is a very specialized field.
Growing the Business
Therefore, several years ago, my partner
and I joined IMC USA for the stated purpose of growing our business and, simply
put, if our business had not grown as a result of our
IMC USA membership, our firm would have already
left. Okay, it’s one thing to say, but another
thing to put forth the proof.
Our firm thought that the local IMC USA
chapter could help us grow the business by:
¨ Meeting local consultants who really practiced
consulting, thereby bringing special skills to our
organization or joint venture opportunities on proposals
and, eventually, work.
¨ Learning more about local consulting
opportunities. Our focus had not been on local
work, in fact, being in southeastern Michigan one would
assume that our firm works in the automobile industry –
but we don’t.
¨ Getting the Certified
Management Consultant credential. Our firm
felt that would assist in our selling
process.
Our firm recognized from the very
beginning that it would not be enough to just join an
organization; our firm would need to participate in the
organization before our firm could achieve the
benefits. There is an old saying that “You have to
give before you get.” Our firm initially began by
attending as many of the local meetings as
possible. We also attended several of the national
conferences. We became local Board members.
In short, we invested our time. In our profession
time is money, so our investment of time was an
investment in money. All investments can be
measured. This measurement (the cost) is one part
of the value
proposition.
The other component of the value proposition is the
revenue. Simply put, as a result of our IMC USA
membership, we have submitted many additional proposals
with other IMC USA members and in industries other than
our original focus. Proposals are the first step
to new work, but obtaining new clients and new projects
is the goal. Our new work as a result of IMC USA
membership was approximately $115,000 in 2004 and
approximately $525,000 in 2005.
To put all of this into perspective,
most business managers would think in terms of return on
investment, internal rate of return, payback, etc.
As management consultants, we should be no
different. Consequently, to perform an analysis of
our IMC USA membership’s current value, we need to make
certain assumptions, such as:
¨ For
most consulting firms, incremental revenue that you
would not have realized is almost the equivalent of
profit. If you sell more work in a year than you
can perform with existing personnel (yourself or
others), your cost to perform that additional work is
minimal and therefore your profit is quite
high.
¨ What is the value of your time to do marketing
and business development activities? Is it your
normal billing rate? If you are always billing
(100% utilization), then one could argue that your
opportunity cost is your normal billing rate. If
your utilization is less than 100%, then your
opportunity cost would be less than your billing
rate.
¨ How
much time do you invest in IMC USA activities?
This model is based on 40 hours a year to attend
meetings and 80 additional hours per year if you are a
local Board member – for a total of 120 hours per
year.
¨ Participation in national conferences, including
Confab, is 32 hours for each conference attended.
In addition to time spent participating in a conference,
the model also assumes $2,000 in expenses for each
conference.
¨ IMC
USA membership is included in the business model for
each year; however, it is almost insignificant.
$295 per year for a professional membership is the
smallest cost associated with IMC USA membership if you
value your time.
Working
Together 
In our case, three members of the IMC USA
Michigan chapter went together to pursue new business as
a group. We met and established our relationship
through the local chapter. Our model calculates
each individual’s hours based on participation at the
local chapter level and attendance of national
conferences. Therefore the numbers on investment
cost are actually for three members over the five-year
time period. Local chapter participation costs
increased over time has we all became Board members –
committing more time to IMC activities. Conference
participation varied each year based on the specific
conferences that were attended by each
individual.
The analysis spreadsheets presented in
the remainder of this article provide the proof of current
value for our IMC USA membership.
If our time is valued at $75 per hour,
our value proposition from
IMC USA has been incredible. The amount that
revenue exceeded costs was $479,375. In terms of a
payback, it was 4 times. Using other financial
terms, our net present value at 10% was $288,083 and the
internal rate of return was 108%. All of this
information is shown in Exhibit 1.
Exhibit 1: Opportunity
Cost - $75/hour
If we
value our time at $200 per hour, our value
proposition is still quite high, as
shown in Exhibit 2. Most
investors and business people would take an IRR of 40%
any day.
Exhibit 2: Opportunity Cost -
$200/hour
At $300 per
hour, the value
proposition still
exists; however, consultants
that can bill $300 per hour 100% of the time probably
do not have any time for IMC
USA.
Exhibit 3: Opportunity Cost -
$300/hour
Summary We recognize
that our criteria may be
quite different from other IMC USA members. In
particular, we recognize that to do the type of
consulting assignments that we most desire requires that
we collaborate with other
management consultants. Collaboration is a key
element of our business model. Collaboration
permits us to not only pursue the type of work that we
are most interested in pursuing, but also lets us pursue
much larger
projects. Our past experience has shown that, in
many cases, we had expended the same level of effort to
pursue smaller projects as we had pursuing much larger
projects. As a result, it is more cost effective
for us to pursue larger projects. Furthermore,
collaboration permits us to pursue projects for which we
might not have as strong a set of qualifications or
experience – if we had not involved our collaborative
partners. Our feedback on some of the projects
that we have been awarded has confirmed this fact.
In many cases we have been awarded projects based on the
composition of our project team – i.e., the
collaborative team members were instrumental in our
selling process. Last but not least, collaboration
has permitted us to be competitive against much larger
firms. We are capable of providing more senior,
experience personnel on our projects than many of the
larger firms at a much better price point – a value proposition to our
clients. As a result our revenues/profits have
grown through our IMC USA membership. In our final
analysis, a compelling value
proposition for IMC USA membership exists.
We recognize that taking such a harsh,
business approach to IMC USA membership might be foreign
or bothersome to some IMC USA members. Many might
believe that it taints our
status as a professional organization. I say that
is not true. One of the primary goals of any
professional organization is to “look out” for the well
being of their membership. If IMC USA were a
larger organization, such as the American Medical
Association (AMA) or Project Management Institute (PMI),
IMC USA might even employ lobbyists for those very
purposes.
I recognize that many IMC USA members
are sole proprietorships that do not have any interest
in collaboration. As a result, their criteria for
determining value are justifiably different from what is
put forth in this article. In short, although IMC
USA has provided value to our organization as shown
above, each member has to identify their own criteria
for determining their value
proposition. |
