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Episode #185
Nadya Zhexembayeva

Growing a Consulting Firm by 500% During COVID-19

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Summary

The COVID-19 pandemic has reinforced that disruptions will come again and again in business. You can only either learn to live in it or get left behind. Nadya Zhexembayeva has chosen the former. In fact, as the Founder and Chief Reinvention Officer of the Reinvention Academy, she has led her consulting firm to a growth of around 500% during this pandemic. What are her secrets? In this episode, she joins Michael Zipursky to share how she helped with the firm’s reinvention as they look out for potential disruptions. Nadya lists down some of the trends that she has observed, and we could take note of for future growth, and then gives advice to consultants on keeping relationships with clients, big and not, and more. While the COVID-19 pandemic has bare open the many vulnerabilities we have in our business, it has also shown us the parts we can improve. Join Nadya as she shares the learning experience we can all get from this as she helps us propel our consulting firm to success.

I’m excited to have Dr. Nadya Zhexembayeva joining us. Nadya, welcome.

My pleasure. Thank you for having me.

Nadya, you’re the Founder and Chief Reinvention Officer of the Reinvention Academy where you help companies turn disruption into opportunity. Your clients include well-known brands like Coca-Cola, IBM, Cisco, and many others. You’re an author, educator, and keynote speaker, and In Ventures magazine, which I haven’t heard of before, they call you The Queen of Reinvention. Let’s dive into that because I want to understand better how you got to where you are and hopefully, through your journey and lessons learned, everyone that’s reading can also benefit from that. Why don’t we start with the term Chief Reinvention Officer, where did that come from?

CSP 185 | Growing A Consulting Firm

 

That’s such a good story and it’s also the story of another consultant. I’ll backup a little bit. I am a recovering academic. Like a recovering alcoholic, you never quite recover. You always have relapses and you do research, you teach, and you write. When I was still a full-time Coca-Cola chaired professor, I taught strategy, leadership, and sustainability and I got this big honor. Chaired professorship means the highest honor I could get in academia.

One of my students dared me. He was an exec ed student and he was a CEO of a company. He said, “You speak nicely that I almost believed you, but you’ve never worked in business. You have no business experience. You’re a business teacher. What do you know? How about you come to do some real work and then I will see if what you say plays out in real life?” We started a consulting business on a dare and he was our first client. 2007 was the launch of the reinvention consultancy. By 2014, we couldn’t accept any more clients. We became clearly focused on figuring out how to teach people how to fish rather than fish for them. That was the move from pure consulting to blended consulting education.

We hired an amazing positioning consultant called Mark Levy. You probably know his greatest client is Simon Sinek. He was also a business practitioner looking for an intellectual framework on how to speak of his thinking. Mark is a tough person. He kept pushing me on calls like this. One time he said, “If your job that what you do in companies would have a title, what would be the title?” I said, “It’s not chief strategy officer because it lacks implementation. It’s not the chief transformation officer because it doesn’t have this uplift. It’s not this and that.” I kept calling different names and then I said, “It’s chief reinvention officer. That’s probably the closest I could call it.” He was silent for a while and then he googled something and he said, “The URL is not taken by it right now.” That’s where that title comes from.

We became clearly focused on figuring out how to teach people how to fish rather than fish for them Click To Tweet

Before we dive deeper into your story, I want to go back. I’m interested because you mentioned you’re originally from Kazakhstan. Can you walk us through when did you come to the US? What did that journey look like for you?

All of my journey is a story of amazing people who bolstered me, pushed me, and gave me amazing opportunities. I was born in the Soviet Union. In ‘91, Soviet Union collapsed without any warning and Kazakhstan was unprepared that it took us almost three years to develop our currency. We had no specialists and no national bank to know what it means to have your own currency or what it looks like to have a treasury at the government level. I had a huge luxury. I was part of a youth organization that brought me first in the US in ‘95 and ‘96 as a youth consultant to the California Association of Student Councils. That’s where I got introduced to leadership.

I came back first for my graduate school and then for my PhD in Organizational Behavior at Case Western Reserve University. Every step of the way, somebody said, “You must do this. I am pushing you.” In terms of my doctorate, I was a cocky young 22-year-old and I was like, “I’m going to New York City. I’m going to be in Wall Street.” My professors crowdfunded money to buy a ticket for me to go to the interview for a doctorate program and said, “You will say no when they say no. Now you go.” They gave me a ticket and I’m thankful. I’m still in touch with all my college professors.

Why did you even have the opportunity to come to the US? I’m sure there are likely many young kids that wanted an opportunity like that but didn’t receive it. What do you think was special about you that allowed you to have that opportunity?

It’s the opportunity that was given to me. I always came on scholarships. I’m a recipient of the Freedom Support Act scholarship, which is a competitive program that usually selects one person per million of the population from a country that needs support. Every time, I had somebody who pushed me. Also, I come from an amazing family. We are a family of descendants of political prisoners of every kind.

The last one was my grandfather, who killed himself in ‘75 after being tortured in prison and many people before were executed for political activism. It’s my parents who pushed education, thinking, open-mindedness, and many other things. It’s a combination of opportunity meeting preparedness. On one end, it’s being super prepared. I’ve studied English and so on. On the other end, it’s the grace of many mentors that truly cared when I was young, inexperienced, cocky, and all of that.

Do you play sports?

No.

I was born in Toronto and I lived in Israel from the ages of 2 to about 6.5, then came back to Canada. I didn’t speak English and I felt like an outsider. I was terrible at academics but sports is where I excelled. That mindset of pushing yourself and always trying to be at the top of your game, I see that a lot with people who play sports so I was wondering if that was your background. What was channeling that for you? Was it your family or past experiences? Where do you think you got that drive from?

CSP 185 | Growing A Consulting Firm

 

Part of it was the circumstance. Everything was collapsing around you and you have a choice to make at that point. Can you imagine one day you wake up and there is no government anymore? No police, no ministers, no anything. Nobody knows when they will show up. I started working at that point because we needed money. My first job was at thirteen. I was selling life insurance. I still remember learning the word leasing because, in the Soviet Union, there was no private economy, so we never used economic terms. Part of it was the necessity of either you choose to die or you choose to live. That’s a choice I and my family made.

I did dance. I dance professionally in the Kazakh president’s troop for 6 out of 9 years that I danced. If you can imagine a Soviet ballet school that looks like an army and maybe scarier than the army. I love my dance teacher to death. I quit the first moment I could quit because it’s an unbearable amount of discipline. That was also the sheer grit. You show up and you dance every single day and then you perform on the weekend. That’s part of the journey that what sports did for you.

Thank you for sharing that. I have a little more background into you and where you’ve come from. Let’s fast forward to what’s been happening in the world with COVID. From February or March of 2020, for a lot of people in the world, it started to have an impact in a challenging way. You are The Queen of Reinvention, as the magazine called you. Did you have to reinvent anything in how you operate as a consultant and advisor in running your business? If so, what did that look like?

It's going to be constant evolution and constant disruption, so we need to learn how to live in it. Click To Tweet

A lot of reinvention happened but I have to tell you, the start of my year was different from what you can imagine. We have two big arms of our business. We have traditional high-end consulting. We are working in partnership with McKinsey, Deloitte, and Boston Consulting Group and we are competitive in prices with them. We’re comfortable consulting niche. We have education where we do virtual courses mostly. Sometimes, face-to-face education. Our educational branch was struggling because we were selling reinvention, which is preventative. It’s a proactive approach to disruption. Everyone would say, “It’s unnecessary. The economy is great. There is no disruption. What in the heck are you talking about?”

In February 2020, right before COVID, started freezing the Western world. We had a big course launch happening and we lost so much money on that launch because the investment didn’t pay off in terms of all the ads we are running. We had a good course and we had a good number of students, but it didn’t recoup. There was no return on investment. We were in the minus. In February, I was this sad person because I’m like, “The consulting business is great but we’re doing something wrong in education and I need to rethink what’s going on.” In March 2020, exactly one month later, we went into overdrive with requests. We did a lot of pro bono events because people are losing their livelihood and everything. By May 2020, we already had paid programs and we were calculating this number. We are at around 500% growth in our business in one year.

That’s the education side of the business?

Yeah. We started with a huge loss and we end up with a huge gain, specifically because our specialty is how do you deal with disruption in a moment and how do you prepare for the next one? Before 2020, nobody could believe that disruptions will come again and again. Of course, it’s obvious it’s not going to be the new normal. It’s going to be constant evolution and constant disruption, so we need to learn how to live in it. This was a turnaround for us. We had to reinvent, grow the team, put out tons of new products we’ve never done, and speak in two languages. Suddenly, we had to go to few markets and learn how to speak a few languages and translate our products into different languages so that was an interesting journey. If you were to ask me in 2020, I would be in tears and saying, “I’m a failure. I don’t know what I’m doing,” and so on.

It’s amazing how things can change quickly. When you’re in that moment, pain or fear can almost paralyze you. If you keep going the next day, the next week, or the next month, things could be completely different. That’s a good example of that. Talk to me a little bit about the future. You spend a lot of time working with your clients, thinking about how to prepare for potential disruption, and how to reinvent themselves. When you look at especially the landscape for professional services providing advice, coaching, consulting, even education to the marketplace, is there anything that you see that if you are looking into 2020, 2023, or 2024 that you think will be more common then in comparison to now? Tell me a little bit of what you see in the future.

CSP 185 | Growing A Consulting Firm

 

I’ll speak specifically about consulting industry trends. The good news is that in 2020, I did a massive number of interviews with owners of other consulting businesses that are across different spaces, marketing consulting, IT consulting, super niche consulting, and also general management consulting. We prepared a big report on the key trends to understand what’s happening not only in 2021 but thinking about the next five years or so. In 2020, the data shows that the US alone consulting industry contracted almost 8%, the largest contraction in the revenue by far in many years.

At the same time, the big powerhouses, even the big ones, are still growing. Deloitte posted almost 6% growth. The medium-sized or boutique consultancies are growing times, not percentage. We would be in a boutique consultancy category. We are almost five times growth. The news for you is that things are bad and things are great. It is important that you understand what is working and what is not working. This is what we discovered. Trend number one is that even in the past, most consulting was about specific subject matter expertise.

You know the answer and you can deliver that expertise. It can be a complex answer, not just ten steps. It can be 500 steps, but it is a clear answer. It could be proprietary knowledge, past experience, or unique expertise, but there is an answer. If before we were people of expertise in a particular matter, now it’s much more about the process. “I don’t know the answer, but I know how to find the answer. I know how to organize quickly, test and prototype, and get feedback and get to the answer.” There’s a shift from content to process consulting.

Number two is that we are seeing a significant relationship to how we get paid. We’re seeing many more companies open to more creative partnerships in consulting, including result fees. You have a small fixed and a more bet on the result. We are seeing more of a blended variable and fixed. We are seeing insourcing and outsourcing of whole executive positions. We’re seeing more creativity and what it looks like to have a contract.

Finally, a big trend is collaborations. If before we would be considered competitors to many, we do massive projects with many consulting companies, big and small, because it allows us to be more reflective of the emergent and uncertain challenges that we will face once we enter the situation. Instead of holding fixed content expertise in our team and having tons of employees who know different pieces, it’s easier to partner and everyone shares the expertise. These would be the three trends that I would speak about, what is the offer? How do we get paid? Who are we doing it with?

Reinvention is an umbrella framework that aims to connect disconnected, often silos functional areas. Click To Tweet

Tell me a little bit more about the partnership side. You mentioned that McKinsey, Deloitte, and these other large consulting firms could be viewed as competitors to a degree and you’re partnering with organizations like these. What does that look like in a little bit more detail? Why are you partnering with that type of organization? How are you using that to build your business?

Reinvention is an umbrella framework that aims to connect disconnected often silos functional areas. In business, strategists usually don’t like operations people, and operations people don’t like sales and strategists. There are people-people. This is organizational development, communications, and HR. They don’t like money or numbers. All of these people represent different schools of thought. There is a theory of strategy, forecasting, innovation, design thinking, scrum agile, organization development, and leadership.

All of them are misaligned and they do not have an essential focus on value creation. Everyone is focused on whatever their personal preference is. Most often, how we started collaborating with big houses was not our choice. It was the client’s choice. The client would hire the big name for the calculations, forecasts, and business modeling. When it comes to getting it done, they’re detached from reality. Sometimes, what they propose, you come on the ground. It cannot be implemented. They’re just a nice PowerPoint.

We need to make sure that in the process, you serve as a breach between the real business and the theoretical framework that the big houses usually do. In the past, that was the start. After a while, we started liking each other. I was asked, for example, by some of the Boston Consulting Group partners to come back and teach their mid-level principals, consultants, and junior consultants some of the things around change management, prototyping, and design thinking. Also, around more of this nitty-gritty, messy part of business growth and transformation diverting.

That is not something you can do in Excel and put it into a nice PowerPoint. That’s how it started for us. Now, we’re doing different things. We are doing blended programs. In 2021, we are testing a lot of that Tesla for consulting. When we are thinking about creating a platform for consulting where we connect customers and potential providers and we keep a percentage of the contract, so we have a couple of tests running, we’re going into crazy ideas on what collaboration looks like.

I’d love to explore a bit more about this idea. You are working with a client and the client is also working with a large consulting firm. We hear a lot from our clients in our coaching program that they’ll often win business or go into working with a company because they’ve brought in maybe one of those larger consulting houses. It’s exactly what you said. It’s too high level or it’s great on the strategic vision, but the implementation doesn’t happen. There’s always a failure in being able to take those great ideas and turn them into reality, so that part makes sense.

What would your advice be? What are some best practices for navigating that relationship between you being brought in as the small guy into an environment where you have the client but then you also have this larger organization like McKinsey or BCG or whoever it might be? Any best practices or tips that you found to be helpful in navigating that relationship so that ultimately, you can still deliver great value to the client but you’re not stepping on each other’s toes or having potential confrontations on different viewpoints?

Part of it is the internal work on the mindset shift and part of it is the external fence around open discussion on starting assumptions, perimeters, and so on. The mindset part is to stop thinking of yourself as small. Because of the speed of change, we have study after study that shows the past success, the best practice of yesterday, not only can be unuseful now, but it can be dangerous. What are those big houses rely on? They rely on past successes.

I had a cynical conversation with one of the senior partners and I won’t name the company. It was a conversation in London. It’s in one of their main offices. The partner said that, “After meeting with the client, if we enter the taxi and we don’t know which template we’re going to use from the past, we don’t accept the client.” This is the actual quote. I admire the effort they do. They do a lot of new intellectual work. They are trying to reinvent and you can read their work and respect their work. You also need to understand what are their strengths and weaknesses. Their weaknesses, unfortunately, are over-reliance on past success. You have a unique capability to be free from a lot of weight of past success, the brand limitations, and a lot of inflexibility that comes with that.

I work with my husband, who is also CEO of a company and he keeps telling me, “Nadya, we are only as good as our last score.” He loves football and it was Super Bowl. “It’s a great equalization. We are all equalized. Big or small name, we’re only as good as our last score.” First and foremost, the mindset should be clear that there’s no better or worse right now. You’re only as good as what you can deliver right now, so go ahead and deliver and your reputation will be louder than anything you can imagine.

There’s, of course, a technicality which is entering into a conversation, there has to be a clear discussion on the scopes, responsibility, and way of cooperating and also clear discussion on how we work. We write a memorandum and it includes things like, “We are kind and gentle to the people. We are ruthless to ideas and decisions. If you get something from us, know that we are speaking about the ideas and decisions. We love you dearly and don’t take it personally.” We’ll arrive at a common memo that in plain language explains, “When you see this kind of email or text or whatever from me, this is how to interpret. It’s not an attack. I’m being ruthless to ideas the way I would be ruthless to my ideas but you as a person are never under attack.”

CSP 185 | Growing A Consulting Firm

 

Who do you send that to? Does it go to the client and the partner or is it only to the client? Who sees it?

It depends on who is involved in the process. Sometimes, if it’s a long-term client relationship and I know the client for many years, whether it’s the whole board or a particular sponsor, if we have a long-standing relationship, I don’t need to renegotiate anything with them. It is a negotiation and it’s a document co-created together with a new partner. If it’s a whole new situation, then we do workshops at the beginning to align. It can be virtual or physical.

We have a workshop to align and make sure that this is transparent. We speak about it from the beginning, “This is going to happen. It’s like a new relationship. We don’t know each other. We need to figure out who is sleeping on which side of the bed and how the pillow is preferred.” We try to make it humorous, relaxed, and not walk around that issue. Be open that this will happen and this is normal. This is the way we plan to solve it as we go along.

It’s important because often, communication is what breaks down relationships. People often think, “I wish I would have said that. It’s too late now.” Getting it out all in the open in a way where you’re showing kindness is powerful. The other thing that resonated as you’re sharing this idea is the idea of David and Goliath. A lot of smaller boutique, independent solo consultants, or small firms look at the big companies and go, “I can’t compete with them,” and so on.

What you’re saying is to think differently. Look at what you can do now. Don’t compare yourself to this bigger organization. How would you advise someone to communicate that? You can look at your score and not the whole past. How would someone turn that into reality? What will be the tactical implementation of that in terms of them being able to communicate more effectively, “I have some great ideas and I can help you to solve this problem.”

Is it in their messaging? Is it in content? Do they need to write a book? How would you suggest that if I’m saying, “I have great ideas. I help lots of people. I know I can help?” These other groups of organizations and they’re probably getting contacted by some of the large consulting firms or much larger than my consulting firm. What would you advise me as the consultant do to go in and get in front of them? I’m talking hypothetically here, but what might that look like?

I can only share what worked for us. By the way, if anybody knew this answer, I want to talk to that person as well because it’s been a long and interesting journey and it’s also a personal journey. You need to figure out what’s authentic to your voice because nothing inauthentic will work. What is authentic to your style of working? I discovered I hate prepared recordings. If you make me live, I have no problems but I avoid prepared recordings. I drag them. I drive my team crazy, rescheduling them, and so on. You need to know what your nervous system prefers, what you prefer, and so on.

You're only as good as what you can deliver right now. Click To Tweet

In my case, there are two different stories. One story is a long-term story and one story is a short-term immediate. What do you do at the moment of pitch? The long-term story should be there. The thing is few sticks at it. This idea of showing up what you are doing with your content, whether producing the podcast. It doesn’t need to be podcasts. It can be blogs, YouTube videos, or Facebook Lives. They have to be consistent and you have to stick at it.

The key to that is about long-term and consistent content that allows you to demonstrate your value to the ideal client to the marketplace.

As you know yourself, sticking with it even when at the beginning there is no significant response and you’re like, “What the heck am I doing and spending all this time?” This is why few remain because sticking with it and delivering week after week is part of your brand. It’s part of your credibility and trust. Would you stick through for 3 months, 4 months, 5 years transformation process that is required for it or even 5 months or 6 months extremely challenging transformation or will you say, “This is not for me.” This is what clients are testing. How resilient you are, how much grit you have, how much consistency, and also, what you’re thinking and what’s the content that you produce.

If you don’t like consistent content in the form of blogs, weekly podcasts, or more of this intense investment, there is, of course, a route of books, keynotes, and so on. We’ve done all of it. It’s important to understand it doesn’t come overnight. In 2021, we’ve been featured in Harvard Business Review, Wired, and The Wall Street Journal. Do you think that made a significant difference? It was sweet. More people know about us but did we suddenly overnight become a success? No. This is nice. Another thing, it confirmed that we’re doing something right but nothing magically will change your life. This grit becomes important.

The second thing is what happens immediately once you have a chance to have a coffee and any kind of conversation, which is do not try to push any content at that point. Shut up and Listen. The most important thing that happens in the early conversations is figuring out what is the pain of your client and deeply figuring out their mode of thinking. What’s important to them? What’s not important to them? What are the rules of the game in this company, not just intellectual game but political game, emotional game, culture? If you don’t fit all of that and your proposal goes straight against the culture of your company, you all know the famous Peter Drucker quote, “Culture eats strategy for breakfast.” Anything you propose intellectually viable will be eaten by culture if you didn’t pick up on some of these clues.

This is important to first figure out and listen to the client. That’s what I would advise. How would I combine both? This is what I do all the time and I advise it. Ask your potential clients for an interview for an industry report and produce a report that you can do in a PDF and no real cost of any kind. Interview 5, 6, 10, 25 potential customers and figure out an interesting piece of content. That allows you to both get the client, get a great piece of content, send it back to them, and then pitch something, then you have a foot in the door and you didn’t start with selling. You started with listening and you started with value.

It’s a great strategy. You can apply it to podcasts or interviews for a book or all different kinds of things. Where I see the value in that is that it allows you to build a relationship with someone that you want to have a relationship for the long-term. In many cases, that can turn into a business, but even if it doesn’t, they at least now know who you are and know what you do. You can continue to nurture that relationship going forward. That’s good advice. Nadya, I want to make sure that people can learn more about you, the work that you’re doing, and the content that you’re putting out. Where’s the best place for them to go?

The best place to go is Learn2Reinvent.com. You will get all kinds of opportunities there, which is starting with the 85-page free download of our book, The Chief Reinvention Officer Handbook. I’m happy to put that out because more than 3,000 people put together some tools and participate in writing that book. We have some cool stuff coming up. You’re welcome to land on the page, find new events, get some freebies, and see if we are a good fit for you.

Nadya, thanks. I appreciate the conversation.

Thank you for having me.

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