Ready to learn what goes into scaling a tech-focused consulting firm from the ground up? In this episode, Tommy Ogden, co-founder of Activera Consulting, shares the fascinating journey of launching and growing a multimillion-dollar consultancy within just one year. Drawing on his extensive experience in both boutique firms and global giants like Accenture, Tommy delves into the strategic decisions that have propelled Activeraâs rapid success. He offers a candid look at the challenges of balancing talent acquisition with business development, the importance of defining and honing in on core service pillars, and the key lessons learned from his transition out of the corporate world. Tommyâs insights provide a blueprint for anyone looking to build a successful, agile consulting business that can adapt and thrive in a competitive market.
In this episode, you will learn:
- How to strategically define and focus on core service offerings for business growth
- The importance of balancing talent acquisition with securing big deals in a small firm
- Insights into transitioning from corporate roles to founding a new consulting business
- The role of relationship-building in business development and client retention
- Effective strategies for managing project margins and maintaining profitability in consulting
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Welcome to the Consulting Success podcast. Iâm your host Michael Zipursky, and in this podcast, weâre going to dive deep into the world of elite consultants where youâre going to learn the strategies, tactics and mindset to grow a highly profitable and successful consulting business.
Before we dive into todayâs episode. Are you ready to grow and take your consulting business to the next level? Many of the clients that we work with started as podcast listeners just like you, and a consistent theme they have shared with us is that they wished they had reached out sooner about our Clarity Coaching Program rather than waiting for that perfect time. If youâre interested in learning more about how we help consultants just like you, weâre offering a free, no pressure growth session call. On this call, weâre going to dive deep into your goals, challenges and situation and outline a plan that is tailor made just for you. We will also help you identify where you may be making costly and time consuming mistakes to ensure youâre benefiting from the proven methods and strategies to grow your consulting business.Â
So donât wait years to find clarity. If youâre committed and serious about reaching a new level of success in your consulting business, go ahead and schedule your free growth session. Get in touch today. Just visit Consulting Success â Grow to book your free call today.
Tommy Ogden is the Director and Delivery Excellence Lead at Activera Consulting, a Houston-based boutique firm specializing in the future of energy. With 22 years of experience in roles like financial analyst, strategy consultant, and project manager, Tommy leads teams in delivering impactful, tailored solutions. His expertise spans M&A, AI & Tech Readiness, and Change Innovation. Certified in PMP, PSM, and SAFe, Tommy is recognized for his innovative problem-solving and ability to drive measurable business outcomes.
In this episode, youâll discover how to strategically define and focus on core service offerings to drive business growth, along with the critical balance between talent acquisition and securing big deals in a small firm. Youâll gain insights into transitioning from corporate roles to founding a consulting business, and understand the vital role of relationship-building in business development and client retention. Additionally, youâll learn effective strategies for managing project margins and maintaining profitability in the consulting industry.
Connect with Tommy Ogden
Discover more about Activera Consulting
Hey, Tommy, welcome.
Hey, Michael, how are you today?
Yeah, great. Great to have you on.
Awesome. Thank you.
You have a very interesting story, one that weâre going to get into because you were part of a smaller boutique firm, that firm was purchased, you work for a larger firm, then you went back out as a team to establish this new consulting business. That company is in an Activera where you are part of right now. And in the first year of business, youâve done well into seven figures of business, which is pretty incredible for within 12 months of launch. But thereâs a backstory to that, and I know youâre going to get into that. I want to have everyone kind of hear more of your story. So why donât we kind of go back in time a little bit? Can you describe the initial consulting firm that you had? Just high level, like, what were you doing? How many employees, how much revenue did you get it up to? And then ultimately who acquired it?
The firm was actually started in 2002. It was called Enaxis Consulting, E-N-A-X-I-S. It was started by two individuals who left Deloitte and decided, âHey, we want to give this a shot ourselves.â And so it sort of grew, I would say, pretty quickly at first, and then slowly started to scale and scale and scale. It was 2013 that I actually joined the company. It was a boutique management IT advisory firm for oil and gas. Say about 90% of our business was oil and gas or energy customers. We did have about 10% in airlines as well. And the reason for that is typically when oil and gas is not doing well, airlines are doing great because they have to buy all the fuel and theyâre buying it at a much lower cost, and so their margins are a lot better. And then conversely, when oil and gas is doing well, maybe airlines not so much. So we thought it was a good sort of balance of two industries to focus on. Now, when COVID hit and oil gas went to negative $40 a barrel for a very short period of time and nobody was traveling, it may have been a bit more of a challenge to have both of those, but who could have seen that one coming? And at the end of the day, we didnât have to worry about that because in 2018, once we reached about 100 people and $20 million in revenue, we became a company of interest to a larger firm. In this case, it was Accenture. They decided to come in and purchase us, and a large majority of us came into their energy industry practice, given the fact that our boutique firm was more focused on the energy and oil and gas space.
Before you go into the next step of you now being part of Accenture, Iâm just wondering, you came into the business, you werenât a founder of that initial business, but you came in a few years into it. What did that mean for you? I mean, did you get some good equity when that company was acquired, or how did that kind of impact your life?
They did have a partnership model. I was not a part of it. I actually came straight into an Enaxis from business school, and I was a career switcher in business school. I was a financial analyst previously and wasnât really truly aware of consulting and all it could potentially offer. But I discovered that in business school and knew once I graduated I wanted to get into it. I started at a lower level, a senior consultant. And typically it varies across consulting firms, but thereâs a typical ladder, right? I mean, youâve got analyst, consultant, senior consultant, manager, senior manager, director, partner, something along those lines. So I came in as a senior consultant, made it to manager within two years, made it to senior manager two years after that. And then I was a senior manager for three years once we were acquired. And so for me personally, I hadnât gotten a chance yet to get up to that equity level. But there were a number of partners that did have equity in the firm and there were bonuses, of course, once we were acquired, which essentially were meant to keep us around for a certain number of years. So once these larger firms acquire the talent and the clients and the networks, they want to make sure those folks stick around for three, four years to make sure theyâre getting the value out of that acquisition.
Lessons Learned at Accenture: Navigating a Corporate Universe
Accenture acquired that firm. You are now part of this much larger organization. But ultimately, you didnât stay there. So Iâm wondering first, letâs just actually explore. Iâd love to hear, are there any big lessons that you learned or anything that was very different for you when you started working at Accenture that you would just say, âYeah, this was very positive. This really opened my eyes to something,â or maybe thereâs some principles or lessons that you felt were very valuable and that you even took to the next company that you were part of starting.
Itâs a bit of an understatement for you to say itâs moving into a different world because itâs a different universe. I mean, we went from 100 people firm to, I think last time I checked was about a month ago, there were 743,000 people. So that is literally the largest consulting firm in the world. In fact, a funny tidbit. You know the Netflix show Stranger Things, I think most people have heard of that one.
I know the name. I havenât watched it.
Okay. Well, youâre missing out if you havenât seen that one. But a very popular show on Netflix. And actually, for the last season, Accenture did their visual effects.
Wow. Okay.
You donât think of Accenture as anything more than maybe an ERP implementer or digital transformation or whatever, but theyâre so sprawling and wide ranging that theyâve got operations folks and strategy folks and change folks. And, I mean, itâs just visual effects. Itâs all over the place. And so that was one big difference is trying to understand where do I fit within this broader entity and how do I sort of make a name for myself? Where can I go? Where are my boundaries? And those boundaries are actually clearly set because itâs a public company. There are shareholders, thereâs bureaucracy, thereâs hierarchy, and you have to be able to navigate those things. And thatâs, to be honest, just personally, not something that Iâm interested in navigating. I like the flat hierarchy of a boutique firm. Be able to pick up the phone and call the partner or the managing director and theyâll answer.
Is that ultimately kind of what led to you deciding to leave Accenture?
In consulting, finding the right balance between talent and business development is like being on a tightrope. Invest in both – or you’re going to fall. Share on X
Yeah, partially it is. And Iâll give you one quick, concrete example. Itâs a bit unconventional for consulting, I would say, but in college, I didnât know what I wanted to do in life. So I majored in Spanish, and I took Portuguese and French, and I studied abroad, and I liked it. I like languages, I like different cultures, and I followed my passions. So when I landed in the energy group within Accenture, I knew that one of the clients I was working with, as well as Accenture themselves, had a Latin American presence. And I started engaging with those folks, and I was trying to get on sales calls with them and trying to help build out their content. And just because I wanted to get involved. And about two months into doing that, I wouldnât say I got my hands slapped, but I was told bluntly by my People Lead at the time, âYou need to stop doing that.â Because if you make a sale in Latin America, itâs not going to help you. Itâs not going to help our business because weâre regionally focused. Weâre North America, weâre in Houston. If you sell something down there, it doesnât affect us in any way. So itâs not going to help you in your career. I didnât like that answer. I like to go off and do the things that Iâm passionate about, and I was enjoying that. And to be told âNo, youâre not allowed to do that,â is just personally something I didnât appreciate.Â
But going back to just the very first thing you said is like, âWhat did I learn? There was a lot of good. There was a lot of good at Accenture. Thereâs a lot of smart people. Theyâre approaching solutions to a lot of interesting problems that are happening across a number of different industries. And I would say overall, my experience is positive at Accenture. It just comes down to personally, how you like to operate and how you like to engage with people. And for me, that large firm culture and mindset was something I wasnât interested in continuing for an extended period of time in my career.
The Birth of Activera: Reuniting and Rebuilding
Right. So I know when we spoke before hitting record, you shared with me that within the first 12 months or so, because youâre just kind of getting that 12 month anniversary of launching the new business after Accenture, youâre already a multimillion dollar consulting business, and that might be very surprising to hear for some. But as you share with me, thereâs a bit of a secret to that or a bit of a reason for why you were able to do that. And if I understand it, itâs because a group of you who already built that previous company that was acquired by Accenture, then decided to leave Accenture and start again, another boutique consulting firm. Can you just explain that story a little bit? How many people founded an Activera, the new company, and what went into allowing you to generate that level of business within your first year?
Absolutely. And Iâll start with my own personal journey of it because I donât understand the inner workings of other peopleâs reasons. But there came a point at Accenture where I started doing some soul searching. What do I want to do? Iâve got 25 years left in my career. Something around there. Do I want to pound the pavement as an Accenture company man for the next 25 years? Do I want to go into industry? Iâve been in oil and gas for the last decade, right? Why not? Should I go independent route just become an independent contractor. Iâd been at a super major here in Houston for that entire decade.
Just to explain what does super major mean for people arenât familiar.
Yeah. So super major is typically like an integrated oil and gas company. Like they have upstream division, where theyâre trying to get oil and gas out of the ground, like drilling and completions, exploration and production. Thereâs a midstream, which is transporting, so letâs say pipeline or by ship or by rail. And then thereâs the downstream, which is actually getting it to the gas pumps. Thereâs also refineries and chemicals and that side of the house. And super majors are the really big companies youâve heard of that typically have all three of those segments. So the Chevrons and the Exxons and the Shells and the BPs. Those are considered the super majors of oil and gas. And so do I want to go work for one of those? That was one of the things I was thinking about.Â
After a lot of deep internal thought, I realized for me personally, again, itâs a personal choice, working at a boutique firm is just best for me. It gives me a lot of optionality to go to different clients and to work on lots of different problems. It allows me not to be alone. Iâm not one of those people where you can lock them into a room for three days and say, get really deep on a topic and be a subject matter expert. I have to have people to soundboard off of. I need to work with a team to be most effective. And Iâve just learned that about myself over years and years of working. And a boutique firm allows me to do that effectively. And so it seemed to me to be the right choice. And it just so happened that at that time, one of the original founders of Enaxis back in 2002, who had left Deloitte, had left Accenture a year previous. He had a non compete, and couldnât do anything in the space for a year. So after that year was up, there was a discussion. Itâs like, âHey, we have the opportunity now to get the people that we know that weâve worked with, that we like, with a varied skill set, pull them all together and do it again. And this time we can be collectively responsible for building out the culture and the community and ensuring that sort of camaraderie that occurs at a boutique firm.â Once I had that discussion, I realized thatâs it. For me, thatâs what I have to do. Thatâs what excites me the most.
Do you remember, I mean going back now I guess about a year or so ago, what did you all do actually before we got to that? So how many total people came together and as co-founders to start Activera.
This go round, itâs eight of us. We can talk about the pros and cons of that.Â
Yes.
In a minute if you like.
I do want to come to that. But before we do that, take me back to the year you got started. Thereâs eight of you, or maybe there was slightly fewer at the beginning, Iâm not sure. But what Iâm interested in is like, what did you do initially to bring on that first or second client? Because I just wanted to ask that question to people who are earlier stage or when they were earlier stage, but as a solo consultant or a very small firm, your situation is a little bit different because the group of you were very seasoned consultants who had worked both in a boutique then as part of one of the worldâs largest consulting firms, now going back out into a boutique kind of situation. So Iâm interested, how did you go to market? What did you all do in terms of your specialization and focus? Who did you target? How were you actually able to win some initial business? If you take me back to that go to market strategy, that initial push, if you will.
As you mentioned, weâre a year as of last week. As of last week we are technically at a year. But since we have that 20 year plus pedigree in the market over that time, each of the co-founders has built up a resume, some experience, some networks across a number of different companies. And when we decided to launch, that was the first thing we did was, âHey, we are going off. Weâre doing our own thing.â Most people already knew about Enaxis and that we were acquired. And it was a very easy conversation to say, âWeâre doing it again. You already know us, you already trust us. So hey, weâre available, weâre open.â
Who were you going toâ Who are you targeting? Was it just anyone, any type of business? Or were you all aligned on, letâs be very intentional and specifically target a certain industry or channel or type of buyer.
So itâs twofold. The first is, yes, very focused on energy and the office of the CIO, CTO, CDO, because what we do is IT advisory in oil and gas and typically chief information officer, technology officer, data officer, theyâve got a portfolio of projects and programs that theyâre trying to make successful, whether thatâs analytics or cloud or IoT or integrations, etc. And we help accelerate business outcomes for those projects. Thatâs really our main focus. And so we did go back and target those general managers, directors, C suite folks to say, âHey, weâre available, we think we can add value. Where do you need us?â And that was sort of the initial foray into our target persona, if you will. But in addition to that, we donât have as a startup company the luxury of just focusing in that niche in order to grow the business. And so another thing that we did was go back through all of our LinkedIn folks, the people that we havenât talked to in a while, reactivating that network and ensuring that they know now, âHey, Iâve switched.â âHey, now Iâm available.â Youâre going to get that tier two consulting firm, that Deloitte, Accenture, KPMG, EY, whatever, youâre going to get that quality of person for a boutique firm because we donât have all the overhead, boutique firm cost, I should say, because we donât have all of that overhead.
So is that the initial value proposition, if you will, that you all were using when youâre going out saying, âHey, we can help you to do x. Youâre going to get the same value that you would get from a top tier firm, but youâre going to get it at a boutique price?â Was that the message or something different? Essentially, how did you go to market both in the oil and gas companies and the C suite of oil and gas, as well as just for broadly others that you targeted through LinkedIn and so forth?
If you want me to be candid with you, which Iâm assuming you want me to, the initial thinking was, yes, that makes sense to us, that boutique firm price, but the same level of quality. But as things evolve, you realize, isnât that what every boutique firm says? How is that a differentiator? And so itâs sort of evolved into trying to get people engaged to see our work. Iâll give you a couple examples. I went back and reactivated my network, somebody Iâd met at a PMI, which is the Project Management Institute. It was at a conference 10 years ago that I met this person. We kept in touch. This is 10 years of cultivating a relationship and I wasnât thinking of selling him anything at the time. He was just a good guy. Weâd go out to lunch, weâd have coffee, whatever. At some point, he gets promoted to the Director of the Enterprise PMO at a large utility. Thatâs about the time that Activera is kicking off. And so I go take him to lunch. Congratulations on the new promotion and getting all this. And we just naturally start talking about what things are you coming across? What challenges do you have? What problems? And so what we did in that instance was we actually ran a workshop just for free. Just to come in, talk to the PMO, talk to them about their challenges, where are they today? Where do they want to be? How do you fill that gap from a maturity perspective? And we provided deliverables to them as a result of that. And then we get the work. We get the work to come in and do that. And so in that case, price is taken into consideration. But that wasnât really the main way we went about promoting that. It was more, âHey, letâs get in there and us show you what we can do. And then youâre likely to move forward with us, given our strength of deliverables.â
Talk me through the thinking of, in that scenario, and Iâm guessing there were maybe similar kind of conversations that your other partners had with their own networks, but the decision to say, âHey, weâll do a workshop for you and weâre going to essentially invest time, energy, resources, money into doing this workshop, but at no cost.â Was that just very clear to you and the whole team right upfront, or was there a discussion around, âShould we charge for something like this, or should we just do it?â Open that box up for me and let me know how did you all, as a company approach and all that?
I think it was more of an individual basis. So the way that it worked out with the co-founders that we were talking about before is that some of them got staffed immediately at 100% of their time and they were fully dedicated to their client and accelerating their deliverables, whereas some of the other of us naturally were not put onto a client immediately or were at some small percentage of time and were therefore more responsible for business development. And so it was more up to the individual of how they want to go about it. Weâve always had this concept of a wedge offering, but as to whether or not you have someone pay for that versus you do it for free, I think itâs very situationally dependent. In this instance it just made more sense for me to sort of prove out what we can do. Being confident in myself, in my own deliverables, and in the team I was working with at Activera that weâre going to provide something valuable, that theyâre going to see that value and that theyâre going to want to spend money on future things. And thatâs what happened not only in that instance, but in an additional instance as well, where we ran a workshop last summer for a government contractor, actually, thatâs here in town, and weâre continuing to work with them based off of that initial workshop. But in both of those instances, the relationship and the trust were already there. And so for me, it made more sense to do something like that for free because weâd spent years building up those relationships and proving it out to the rest of their team of what we can deliver. Whereas if itâs a new sort of a colder client or you donât have that relationship, it might make more sense to charge some nominal fee for a workshop, letâs say $5000 for two weeks of work, letâs just say. And then at the end of that, we could then move forward with additional work. So itâs, itâs situationally dependent, and I think a lot of it has to do with relationships.
The Activera Sales Process: From Lead to Closed Won
So it sounds like the people that you already have an existing relationship with. itâs very relational, I guess the pun is intended there. But itâs about meeting them, going out for lunch, seeing whatâs going on, looking for opportunities to add value. And then in your case, youâve said that offering some kind of a free workshop or spending some time together without charging is maybe one of the go to approaches that work very well for you. If you look at situations where you have not had an in, there hasnât been a relationship. Youâve identified a very high value prospective client. What have you found in the past? But even today, just taking all of your experience into account, what is the go-to approach that you use when you have identified a high value, ideal client and you want to kind of get a seat at the table, you want to be able to have a meeting or appointment with them â how do you approach that?
So thereâs varying degrees of relationship. The ones that I mentioned with the free workshops, I mean, were multi-year relationships. But there may be other situations where I, youâve met someone at a conference, youâve known them for six months, youâve taken them out to coffee, but itâs a newer sort of relationship. In that case, you need to be okay with asking for that initial meeting. âHey, can we change it from a coffee? Can you introduce me to your boss? Can you introduce me to your team?âAnd letâs talk about some of the challenges that youâre having?â In that case, I think itâs sort of implicit that thereâs going to be some paid work. Weâre consultants. Everybody understands that business model. But again, I would go back to that situationally dependent. It might be helpful for you to understand how we run our sales process so that we could talk you through those stages. So have you heard of the Miller Heiman sales process? Is that familiar?
Yeah. Break it down, though, for everyone who hasnât.
Thereâs essentially these phases that you go through within a deal. We capture in our CRM- we have all of our leads. Okay. And that will be, âHey, Iâm taking this person out to a cup of coffee. This person is at this energy company and theyâre in this role. And this is one of our ideal clients.â That lead may be nothing and it may turn into just a coffee. And thatâs perfectly fine. But weâre at least targeting these folks.Â
Then, if we move into the next phase, that would be a qualified opportunity. And so thatâs, âHey, during that coffee, we talked about a challenge theyâre having. We need to learn more about it so that we can determine whether or not weâre a good fit to even solve the problem.â Do we have the experience? Do we have the availability? So letâs go have a more office-focused visit. And thatâs that one I was just describing with the boss or with the team or with others to get a better sense of the opportunity itself. And at that point, youâre just doing active listening. Youâre not trying to solve any problems whatsoever.Â
Then thereâs a proposal phase. Have we submitted a proposal? And that will be okay. We now understand the issue. And from what I had said earlier about the workshops, thatâs exactly what those workshops were designed to do. They were designed to help and provide some insight or guidance into what their problem is, and put a circle around it. But it was also to help us build the proposal. Because now, after having run that 90-minute workshop, which isnât a whole lot of time and effort, we understand very deeply what those challenges are. And so we can submit a much better proposal.Â
Once you submit the proposal, thereâs typically a lag, especially if you have to get, like an MSA, a Master Service Agreement at a company to do business. And then after that is the Statement of Work itself, which is essentially that proposal we were talking about. And then thereâs a lot of legal Ts and Cs that need to get ironed out. And so thatâs the next phase, is that we have a verbal from the client based on our proposal, our submitted proposal, but itâs going through the legal process, and so weâve got a bucket for that.Â
And then finally, once it makes it through there, we have a closed won and a closed loss. It can go to closed loss at any point at any of those phases. But then if it makes it through verbal and legal and we get the signed, executed Statement of Work, then that will be a closed one for us.Â
And so how things make it through that process is just so widely variable based on the different types of discussions that were having, the different sizes of companies, the people with whom weâre engaging the relationships that we have cultivated. But if you keep in mind that general flow, it can help you at least stay on track to try to get to a closure.
If we were to look at averages, I know that averages arenât always the most valuable or helpful to look at, but your sales cycle, on average, what would you say that it might take for a typical client from just laying out what you just shared? What does that look like from the first meeting to or first interaction to getting somebody to closed one? What does that generally take?
And I do think itâs best to talk about that in averages because Iâve seen closed ones take a day and Iâve seen closed ones take two years. So it is variable, but on average, I would say thereâs usually, if we do like a workshop sort of thing, letâs say that happens in summer, mid summer, July, maybe August, that kind of thing, the expectation is that weâll close on that work in October and then begin working on it in November. So what is that? July to August, September, 3 to 4 months, I would say, to make it through the MSA and the Statement of Work and the rewrites, and then getting the team together and picking a start and a kickoff date and getting everybody on board, I would say three to four months is reasonable.
Thatâs pretty good. Is there anything that maybe youâve worked on that you feel has helped to speed up or accelerate the sales cycle?
Having templates already ready is actually super helpful for especially smaller companies when you donât have to deal with big procurement departments who want everything on their paper and all of their stuff. If youâre working with smaller or even mid sized firms, we have a copy of our standard mutual non disclosure agreement, an MNDA. Thatâs usually our first pass even before- thatâs like after a lead. Like, âHey. Letâs get an NDA in place so we can talk openly about your challenges.â Then the MSA, we have a template. Weâve used it in a couple of cases for smaller companies and jettisoned it if the larger companies say ânoâ. And same thing with a Statement of Work. We have a baseline template that we use and we will submit our proposal in that Statement of Work, which has some legalese in it as well, related to things in the MSA, etc. But we have a standard way of going about submitting, creating and submitting those documents. We also have a pricing sheet, so weâve got a list of all of our different levels. We talked about that ladder before, like the analyst, consultant, senior consultant, and we have what we call a loaded cost rate, which is basically salary plus benefits plus vacation plus whatever. And we sort of say on average, the senior consultant is this. Thatâs that loaded cost rate. And then we understand what the client is willing to pay for that level, usually within a range. And so we have templates that allow us to create something very quickly, a pricing structure that will show our margin and how we can build our team most effectively to provide to the clients so that we can turn things like that around very quickly. So I would say thatâs a best practice would be having some standard templates that allow you to move quickly because you want to be as a small boutique firm, you want to be agile, you want to be easy to work with because the bigger companies canât do that.
Youâre bringing elements of productization to the model, even though it sounds like your services might be quite highly customized for clients, but elements of the sales process, you definitely productize. When you talk about pricing, so ultimately, when you are going to the client, is most of your pricing, is it like a project-based fee? Is it an hourly fee? Is it value based? What is the method that youâre using or the structure that your pricing strategy is kind of based on?
The large majority of itâs just time and materials. Weâll say this person for the next six months will be billable at 40 hours per week at this hourly rate. And thatâs kind of how we come up with the total cost. If there are travel expenses or others, we usually have something in the contract to say that we can bill those back to the client. Personally, I would like to get more into the value based deal stuff, and weâve talked about it in a couple of different scenarios, but have yet to pull the trigger on those. But weâve got some discussions coming up in the generative AI space that I think might be better suited for something like that, rather than a typical hourly rate. But at least the way that weâve done things so far, itâs just a time and materials contract.
Whatâs the main thing holding you guys back or the reason why you have not moved more into, letâs say, value pricing and have stuck more with time and materials?
A lot of the things that we do â and I can talk to you a bit more about like our top line businesses and our services and how those have evolved over time if you want to go that direction â but a lot of the things we do are project based, running projects, running programs, and itâs more challenging to attribute and assign specific value, even if the program itself saves $300 million for the client, how do you go about saying, âWell, this project manager made the team .03% more effectiveâ? And therefore itâs just the type of work that we do. Itâs a bit more challenging, which is why I mentioned the generative AI stuff and the analytics. Because if youâre helping run a proof of concept or a pilot, and youâve done something similar to that in the past, which we have, we have a better sense of once we get in there, if we qualify the opportunity well and we understand the problem theyâre trying to solve and itâs one that we have previously solved, then weâre going to have a sense of what the value is associated with that and would be then more comfortable doing something where we get a base fee, but if we hit certain milestones or thresholds then we will get more money or if we donât hit them, we get less money. And so weâd be more comfortable doing something like that where weâve done it before and itâs a bit of a different type of engagement.
Finding the Right Balance: Talent Acquisition vs. Business Development
Got it. Okay. So today you are at about 20 people and Iâm wondering how you go about staffing or hiring and bringing people on. Do you hire people and kind of build a team and then go out and hunt for that work? Or are you out there already working on, letâs say, larger deals and feel comfortable that when those deals land, youâll be able to find the people that you need to staff them? Whatâs your approach to that balance of hiring versus taking on work?
And my gosh, is it a balance! Itâs like being on a tightrope on a unicycle. Itâs very challenging, especially for a small company to have that right balance because if youâve got too deep of a bench, then youâre cash poor. But if you donât have a deep enough bench when you land those new projects, you canât staff them. Thereâs this ever existing challenge internally for balancing that and what weâve done to positively affect those outcomes is invest in both the supply side as well as the demand side. And so what I mean by that is we have 20 people. Not all of those are billable consultants.Â
We did go out and hire a dedicated business development manager or executive and his focus is getting work. And if he does his job, then weâre going to have that demand coming through and we expect him to do his job. And he just joined three months ago, heâs already doing a great job. So if we can get that demand, thatâs perfect.Â
But thatâs only one side of the house. We also invested in a talent manager and she not only does our recruiting and has recruited for some of the biggest tech firms, even FAANG before. So sheâs got a really good sense of how to bring the right type of resources into the technology space and sheâs controlling our entire hire to retire cycle and sort of building out what that looks like and the cultural aspects and the onboarding and the engagement and all of that stuff. And thatâs really the supply side, thatâs finding the best people, bringing them in, making sure that we can stand behind that quality we talked about earlier.Â
And so if those two people are doing their jobs very effectively, weâve got the demand, weâve got the supply, and we can keep those things in balance. If one of them doesnât do their job, weâve got a problem. So you have to invest. At least we think you need to heavily invest in those two things. Even as a small company, maybe youâre a bit cash strapped. Those things are both very important.
Yeah. So it sounds like those two need to have beyond regular communication to make sure thereâs the right balance of do we have something coming in potentially soon? Do we need the right people? So that makes a lot of sense.Â
I would like, Tommy, if you could give just a quick, high level, concise breakdown of the typical services that you provide and also a range of what does that typically look like? So if youâre doing x type of work, what does the average engagement look like? Is it 50,000, is it half a million? Is it 1.5 million? Or maybe significantly more or less? But kind of just give us a sense of the lay of the land when it comes to your current offerings and price points in general.
Let me just at least talk to you slightly about the evolution of our services because I think thatâs important for your audience. When we first started, we put four buckets of things that we do, and that was strategy, execution, change, and data and analytics. Thatâs everything. In the world, literally from strategy all the way to any sort of execution to change management and adoption and then all the data. So we felt like weâre just being too broad in that respect. And we had examples of things that we did in those buckets in the past and there was a story there.Â
But what weâve really been focusing on this year as weâre coming up and just past that one year mark is letâs get more focused on our service offerings. What are we really good at? What are we really, really good at, and where do we want to develop a little bit more? What weâve done now, and this is sort of hot off the press is coming out in May, so itâs actually even a little bit before itâs on the press, is weâre Merger Integration, thatâs something that we do very well. We have a playbook where youâve probably seen oil and gas, M&A is going wild right now, but we donât do any of the strategy work up front. What company am I going to buy? Why do I want to buy it? Oh, theyâve got that good acreage.We donât do any of that. After the announcement has been made and you go in and you do an assessment of the acquiring companies or the acquireeâs IT systems and the acquiring companyâs IT systems, and how are those things going to talk to each other? What sort of applications are duplicative? Understanding that landscape and then actually executing on the project of doing that integration, thatâs something where we have really deep knowledge and experience. So thatâs one pillar that weâre now really focused on.
The second one we call Delivery Excellence and thatâs that project program and portfolio management that I was talking to before about. And itâs Waterfall, traditional project management, five phase sort of Waterfall stuff. We also do Agile, Scrum, Kanban, and the Scaled Agile Framework. And we can set up PMOs and LACEs which are lean agile centers of excellence. So anything in the project space, weâre really good at. And then we also lump change management under there because organizational design, behavioral change management, setting up a change management office, those sort of go part and parcel with effective projects. So thatâs Delivery Excellence. Thatâs that second pillar.Â
And the last one is a bit of a hodgepodge. We had thought about calling it like digital or digital transformation, but thatâs so wide ranging. Again, we wanted to focus more. So weâre calling it our Cloud, Data and AI pillar. So we do have good experience in cloud migrations, like understanding, âHey, weâre an on prem shop right now. Do we need to go to the cloud? If yes, is public okay, or do we need a private cloud? What about heavy seismic workloads? Does it make sense to maybe keep those on premise with the GPU cluster?â Just, just giving you some examples. Making those decisions and helping with that migration. We have some good experience on the data side of the house with data strategy, management, and governance.
Tommy, just to jump in, sorry to interrupt, but I want to understand one thing. So, I know you mentioned you started off quite broad. Now, youâre starting to really ask that important question of where can we create the most value? Where are we kind of world class? And youâve identified these three pillars. My question is why not just have one pillar or two pillars? Why three pillars or why more? Not that thatâs right or wrong, but just from the conversations youâve had internally, Iâm wondering why not if youâve considered, and Iâm guessing that you have at some point, considered just narrowing even more and just saying, weâre going to only do this one thing, just the post merger piece, and thatâs all weâre going to do and build a business around? So can you just walk me through the thinking of why still have these other pillars?
We did have that conversation. Itâs like, âHey, if we want to focus, letâs just be the merger integration play. We are that boutique firm.â The problem with that, the way, and this circles back to something that we talked about earlier, was that those eight co-founders, not all of us have deep merger integration experience. Two or three of us really do. Weâve got playbooks, weâve got accelerators, we got whatever. But if we did that, thereâd be three subject matter experts and a bunch of folks trying to figure it out. So what we did was we took a view of our landscape, our skillset landscape, and said, âWhere are we deep across this group of people?â And thatâs how we got to those three pillars.
Pricing Strategies and Maintaining Profitability
And then just quickly give me a range of what the average project is, and it can be in each of those buckets if you want, or pillars. But just so people have a sense, I know right now youâre a 20-person firm. Revenue â how specific do you want to be in terms of people having an idea of where your revenue is at today?
So in the first year, our goal was at like a million dollars in revenue and we surpassed that a little bit. So that was our goal. Now, weâve got a goal of like $4.5 million revenue. And itâs too early to tell because weâre in April as of this taping, but weâre sort of on track, I would say, with growing our people. Because we have some expectations around how many people weâre going to add and how many roles weâre going to sell. And itâs just TBD whether or not that works out. We typically sell folks in I would say the 175 to 225 range. And so if youâre looking at that, somebody purchasing at that level, youâre looking at between, maybe $350,000 to $400,000 a year for bringing on a dedicated program manager, letâs say to run one of your merger integration. So thatâs kind of the range that we stick in. And again, itâs going to be variable. That would be if it was one individual. Sometimes we have a pod of people, weâve got a technology implementation that weâre doing where we have four folks on there and weâll do discounting or weâll bring in more junior folks to make it more palatable monetarily. But just to give you a sense, just to give you a sense of where we are.
And if you were looking at this just for people to have a good understanding of in this kind of an industry with this kind of a model, just talk about margins. What would be a margin that somebody would be happy with?
Well, in consulting, thatâs a wide ranging answer as well. But everybody knows that consulting is a business. You need revenue through the door. But if youâre not making any margin, youâre not making any money. And thatâs the way it is with any business. And so typically in the consulting world, something around a 30% margin is reasonable. Itâs not to say that it canât go higher than that. And, certain firms that will go unnamed would probably like to push more in the higher direction. But, for me personally, I think at some point it gets a little greedy. Itâs like maybe thereâs this concept of capitalism and supply and demand. Itâs like, âOh, well, the service is what theyâre willing to pay for it.â But you know, youâre pushing the boundaries of ethics just personally. Everybody has their own ethics. But if youâre not making at least 25, I would say 20 is probably the bare minimum, then youâre just not able to support your business. Because you do have those back office folks, you do have those business development managers and the recruiting folks and all of those people make the firm that youâre dealing with more effective and better at serving you. So in order for the ecosystem partner that youâre bringing on to help you out, in order for them to do well and not have to worry about that stuff and just focus on your problems, thereâs an expectation of something around a 30% margin.
Listen, Tommy, I want to be conscious of the time that we have set for today. I really appreciate you coming on. I know weâve kind of started peeling back a little bit of the story. And I mean, you guys are so early in this business, even though youâre quite senior with a lot of experience in past businesses and working for larger firms. So I first want to just thank you for coming on and sharing some of that story. I also want to make sure that people can learn more about what you and your company are working on. So whereâs the best place people should go to either connect or to learn more?
So we have activeraconsulting.com. Very easy to Google. Personally, Iâm on LinkedIn at www.linkedin.com/in/tommyogden/, also fairly easy to find, so please feel free to reach out.Â
It was a pleasure being on, Michael. Really appreciate it. And hope some of the things that we were talking about are of interest and help to your listeners.
Awesome. Thanks so much, Tommy.
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