Adapting big business consulting services to social enterprises
IN PRAISE OF LOW BONO – WHY CHEAP IS SOMETIMES BETTER THAN FREE
I work for EY (Ernst & Young), running a programme which sends our consultants, both local and international, to help promising social impact businesses grow. We help solar companies understand their customers better, WASH businesses build scalable franchises, and ag enterprises improve their cashflow. Our projects are full time, hands-on, mostly in sub-Saharan Africa. EY is a $30bn global organisation; EGS clients are usually small and operating on very tight cash flows. And yet we don’t work for free. We charge low fees sufficient to recover a proportion of our costs. Why? Is EY a rapacious vampire squid on the face of humanity, charging for services we could easily afford to provide for nothing? Or do we have good reasons for choosing the ‘low bono’ approach?
Firstly, let me say that we’re not anti ‘pro bono’. In fact, EY does a lot of it. It works very well in the right circumstances: when support can be delivered (1) in chunks rather than continuously, particularly where this can be done to accommodate the ‘day job’ of the pro bono provider; and (2) where relatively little time is required. A good example is legal services, eg support in negotiating or writing a contract. Another is mentorship of a CEO/COO/CFO by an experienced business professional, say from Silicon Valley to Nairobi over Skype.
But the sort of work we do through our Enterprise Growth Services (EGS) programme, with very few exceptions, can’t effectively be done in chunks or remotely. We don’t write reports telling management teams where they’re going wrong. We help them drive sustained improvement into their businesses. That means changing how they and their staff work in ways which will stick after we’ve left. That can’t be done down the phone, and it takes time - most of our projects are 3-6 months. We need to work closely with CEOs and their top teams. We need them to dig out data for us. We need their valuable time in workshops and review meetings. We need interviews set up with customers, suppliers and staff. And we need managers to persuade their teams to change how they work. All of that is a pain, which is why it’s generally the case that good intentions to work closely with consultants evaporate if you’re not conscious of what they’re costing you. Free consultants often end up standing in the corner being ignored. If you’re paying for them, you’re much more likely to make sure you use them effectively. And you’ll point them at problems which are genuinely strategic for your company. Many people take up the offer of a smart, experienced consultant for free, but actually use them for peripheral, even random tasks which don’t get to the heart of what it takes to accelerate growth, reduce costs, and better understand customers.
Here’s another generalisation, but I think a valid one: pro bono work is rarely done purely out of the goodness of the corporate heart. Companies need a commercial value proposition for CSR programmes – it may be subsidiary to a primary intent to create social value, but look hard enough and it’ll be there. In many cases it’s to do with employee engagement. Give your staff a slightly warmer glow about their employer, and your recruitment and attrition costs noticeably improve. But any programme which starts with the needs of the provider rather than the client is much less likely to be truly focused and effective. So we start with the client’s problems, and use standard EY contracts for every project, just with much lower fees. Our clients, quite rightly, expect that we’ll send people with the right skills and experience, and that we’ll run the project to the same high standards we would for any mainstream commercial client. If they’re paying for us, they feel they have a right to demand the best from us, in a way they wouldn’t if we sent them someone for free. We absolutely welcome those expectations, because they lead to focused, effective projects which solve their strategic problems.
Finally, multi-month projects involve significant salary costs, and often accommodation and travel expenses. That has to be paid for somehow. The structure of professional services firms - lots of small teams with their own P&Ls – means that it’s immeasurably easier to get our best people released by their tribes if their cash costs are covered while they’re away. Wishing it was different won’t help, so that’s what we work with.
I’ve been running EGS for over three years now, and have come pretty firmly round to the view that the most effective model for it is low bono. (A term which still grates, but it’s so neat I can’t help using it…) Others may feel differently, and I’d love to hear opposing views.
This blog is part of the September 2016 series on Inclusive Business Development Services, in partnership with the Inclusive Business Accelerator. Don’t miss the whole series on support available to inclusive business from practitioners, donors and intermediaries including Afrilabs, DFID, Endeva, EY and many more…