It is one thing to build a network; it is another to make it world-class. In this episode, Michael Zipursky sits down with keynote speaker and author, Kaihan Krippendorff, to share with us his journey from working at McKinsey & Company to founding his own growth strategy and innovation consulting firm, Outthinker. At the core of his story, Kaihan shares some strategies that helped him build his world-class network, Outthinker Strategy Network. He talks about the models they have in place to bring together the community of strategy executives and how he has been moving the needle by putting clients first. He further taps into generating leads and navigating your consulting business in the midst of this pandemic.
I’m here with Kaihan Krippendorff. Kaihan, welcome.
Thanks for having me. It’s great to be here.
You are a keynote speaker, an author, and Founder of a consultant firm that’s created over $2.5 billion in revenue for your clients. You’ve worked with organizations like Johnson & Johnson, L’Oréal, BNY Mellon, and dozens of others. You’re a sought-after authority on strategy, transformation, growth, and innovation. Let’s get started with how you got to where you are. Take us back to your days of working at McKinsey & Company. What did you learn there? What still is top of mind for you that you took away from the time at McKinsey that you’re applying in your own consulting business?
Mainly, in two areas. One is in client management. I walked away with the value of putting the client first of, doing good work, and proposing what is right for the client. I like to work with people who have a similar upbringing, not necessarily McKinsey only, but look at consulting as something to take seriously, like an obligation. On the other side, the thinking tools. McKinsey had the term MECE, Mutually Exclusive Collectively Exhaustive. Everything you break down into MECE chunks. Breaking down a problem, going through the problem-solving process, and that I apply to lots of other areas, including my consulting, but beyond.
When you mentioned putting the client first and how you think about engaging and supporting your clients, is there something that you do that maybe it’s more tactical that you could offer to people that you don’t see a lot of other people doing it, but for you, it moves the needle?
I studied some Neuro-Linguistic Programming, NLP. That process of getting into a state of empathy with your client when you’re talking and modeling them. That puts you in the mindset of being in their shoes. From there, we are always asking, “Am I suggesting this because I’m a consultant and motivated by things like selling the next engagement, or is this something that if I were them, I would say it’s the right thing to do?” I may be wrong, but at least in my opinion those two things keep me honest.
Your background was at one of the best known consulting firms on the planet. You run your own consulting business, which you’ve been doing for many years. What do you see as the advantage for a small consulting firm like yours, that you have over a large consulting firm? When you’re going head to head in looking to win a client that might be thinking about engaging McKinsey, Accenture, Deloitte, or PwC, what stands out to you as the advantage that a small firm like yours is able to deliver above and beyond what they can?Value putting the client first by doing good work. Click To Tweet
I’d start with the disadvantages. The main disadvantages are that brand and the credibility that brand carries with boards of directors and investors. I’ve often worked with a firm and we’re working with them on strategy, but then when the board wants a new strategic plan, it’s difficult for us to say, “We’ll do that for you,” if the board wants a name on the report. Recognizing that and playing around that we or I’ve focused on more of a niche when it comes to very creative strategies, disruptive strategies, big innovative ideas, as opposed to operational strategies, change management plans. We’re not well-known, but for the people that know us, that’s what we’re known for. We’re the natural choice for that. We can do that better than a big firm because that’s what we specialize in.
I want to make this valuable for everyone reading. If you were counseling a consultant who knew that there are going to be larger firms, also going after a piece of business, maybe it’s even an incumbent that’s been working with that client before, what advice would you offer them? What would you tell them to look for or to think about when communicating to that client that would give them a greater chance of winning that business?
I would say show that your approach is customized and is informed by a deep understanding of what the client wants. Because often what a large firm will do is do a dog and pony show and put up their good big partners, and then staff it with more junior people. You can show that, “You’re going to be at work,” even this is going to be worked on by the people who crafted the proposal. Doing that extra work to show that you’re replicating their language when you’re describing their needs. You’re not following a cookie-cutter process that you’ve run a bunch of times.
Some of our clients have said that one thing that they appreciate about our approach and that of smaller firms, in general, is they’ll say, “When I’m working with a big firm, I know I’m getting the similar advice that they’re giving to my competition.” It’s showing that you are fully committed. Another selling point that has been very effective and it’s true is they are an important client for me. We’re a small firm. Even if they’re a smaller company, they are our number one client.
Is that communicated in the proposal itself? Do you speak those words to your client? Do you send an email? How do you communicate that to your clients or to the buyer?
I find that they ask questions to probe for that like, “Who’s going to be working on the project?” “How much time are you going to be spending on this project? Are you working with other companies in our area?” The last question is a little double-edged sword because they want people that know their industry, but they also want to be number one. You’ve got to dance on that a little bit. “I have worked in the area before, but you’re one of the five clients we’re working with now.”
You’ve been running your consulting firm Outthinker for many years. You’ve built this up to over a dozen employees or team members or something in that range.
We pivoted our model a couple of years ago. We had five people and then we had other consultants that we work with that are independent, but we’re using a significant amount of their time so that they feel like part of the firm. In 2019, we pivoted the model a little bit. That’s one thing that’s helpful for consulting firms to think about are all the different revenue models that exist. One of our clients, they were the head of strategy, they asked us if we could pull together some heads of strategy of other companies in other industries.
We pulled them together, we had a meeting and a round table lunch. They loved it and it expanded from there. They said, “Let’s pick a topic ahead of time so we can be prepared.” They said, “Why don’t we find a thought leader that could talk to us about that topic?” We started going to these thought leaders, and we were surprised that we could get thought leaders that would otherwise charge a lot of money to come in and talk for free because of the business development opportunity for them, the chance to engage with this group. An increasing amount of our revenue comes from membership fees.
Is this called the Outthinker Network? It looks like it’s for heads of strategy of companies that are generating over $1 billion. It’s invite-only. What does the model look like? How many people are typically in those groups?
It’s going to change because we can’t get groups together due to COVID-19. When we come out of that, it’s going to be a while before you can get sizable groups together. We’re starting to do it virtually and that works well because these are busy people, it’s easier for them to engage. I do find that Zoom is what we’re using. If you manage it well, it can create a sense of being there with them. The model was half a day, once a month, a thought leader and fifteen heads of strategy. We limit it to fifteen so it can be a dialogue and create some peer-to-peer learning. We’ve started implementing long before this was shorter, 1.5 or 2-hours virtual sessions. That’s what we’re going to continue growing.
Essentially, it’s building a mastermind type of format. Someone might think, these are all heads of strategies at different companies, are there competition issues? Why would a head of strategy at one company want to be in the room with a head of strategy from another company? Are you vetting to ensure that there are no competing businesses or is that even not an issue? How does that work?
It’s less of an issue than we thought it would be. We thought we were going to have to take the Bain model that we only work with one company in each sector. I don’t know if they still follow that model, but that was the original model. For example, we got Viacom, ABC, and News Corp all there together, and they were happy to learn together. They might be filtering a little bit more on what they’re sharing, but they know that who’s there. If we’re talking about how is blockchain going to impact media? They all want to hear from each other. We do have one mechanism where before we invite someone, we check if it’s on the blacklist of anyone else. If they are a direct competitor and that person said, “If this person was at the table, I don’t know if I would feel comfortable talking or being there.” Then, we filter out.
How many of these meetings take place on an annual basis?
Ten in-person meetings and we have another series of virtual meetings.
What does that look like? When someone comes into this and they’re invited in, what fees are they paying to be part of the membership?
We’re charging $7,500 a year for fees. Two clients of the same size are $5 billion in revenue. When they ask how much it’s going to be, we say $7,500 and they say, “I thought you were going to say a $100,000.” The other clients, the same size will say, “I don’t know if I can get support for $7,500.” One of them has a margin of 40%. The other one has a margin of 7%. It’s interesting that the price sensitivity doesn’t correlate with size. $7,500 is something that some authority can even put on a credit card. They can get approval for it. Once you go above a certain threshold, we’re finding that to be about $10,000, then they have to go through an internal process and that can take longer.
Do you find that by bringing these people together, essentially, your company and you are the facilitators that obviously would boost your authority and your credibility in the eyes of all these heads of strategy? Does that also generate leads for your consulting business?It is helpful for consulting firms to think about the different revenue models that exist. Click To Tweet
It generates leads for our consulting business. What’s interesting is those leads come from requests that are diverse. It’s not like that they only come to us for strategy and innovation, which is on the content side is what we’re deep in. They come to us and say, “I want to recruit some people to my strategy team, can we do attempt to hire thing where you help us find them and then they’re your consultants. We then hire them if we like them?” We’ve been doing a lot of that. That wasn’t on our radar at all of something to do. That matrix of product and customer segments, you can either be product-focused or customer segment-focused or both. We’re very much customer segment-focused. These are our clients and whatever they need us to do, we’re going to bend over backward to try to help do for them.
How do you manage that? For a lot of people, that sounds like a lot of complexity. If you build different systems and different processes. There are lots of customization involved in that. More customization often means greater value, therefore higher fees. How do you manage all the different requests that your clients might have and still keep your sanity and profitability?
We have systematized our core product which is the peer meetings, the peer groups, and the information sharing. We’ve pressed outside of that. We’re still handling in an artisanal manner. When Airbnb started, they had an Excel sheet and when people had requests, they would match them with people. Behind the scenes, they were manually tying people up and only after they found that it was a model that was going to work did they systematize it with technology. I don’t think that we’re there yet on some of the other requests. We’re doing it by hand.
Are you finding it to be easy to approach essentially new perspective, ideal clients, or people that you’d like to come into this network? They’re typically very receptive because it’s not like you’re trying to sell them consulting services. You’re inviting them into something that would be of great value for them.
The work is in finding the right person and there’s not only a role. You can’t just go on LinkedIn and look for anyone who has strategy in their title because sometimes they don’t have strategy. Sometimes, they do have strategy. It means something else. For example, if they’re in a marketing or advertising firm when they have strategy in their title, that doesn’t mean that they do strategy for the firm, but they do media strategy for clients.
You’ve got to do a good deal of work to try to isolate the right person. Also, we try to look for people that have a certain socio-demographic profile. If they’re smart enough to be humble, lifelong learners, forward-thinkers, and generous. We have to do the interviews to make sure. After you do that filtering, then I find the offer is very easy for them to say yes to. What we like about it is, your client is also your product because you’re bringing to them access to clients.
Aside from inviting people to your network and you’ve worked with some well-known brands, what’s worked best for you to get a seat at the table to be able to set appointments and generate leads?
For me, it’s been mostly through my speaking because I’ve written several books that give me an anchor to do public speaking. That is about 50% of our revenue. There are no public speeches happening at the moment, but I’ll give a speech and then someone contacts me. They invite me to do a workshop. From there, they invite us to do some consulting. That’s been a great source for us.
For everyone else out there who either planned to get you to do a lot of speaking or has been doing a lot of speaking, what are you thinking about? What advice might you have or what’s going through your mind? That obviously, is a big chunk of your revenue. How are you planning to deal with that now and also in the future? There’s no speaking happening live and in person, but who knows how long it will be before that opportunity comes back and how quickly it will come back. What are you currently thinking about when it comes to speaking and to generating more business and opportunities from it?
Honestly, we don’t know yet. There’s such uncertainty. The speaker’s bureaus that we work with, their businesses completely dried up, scrambling, trying to figure out what’s going to happen. It’s going to take longer for it to come back. When it comes back, it will be in a different form. People are looking at ways of delivering virtually, but there are organizations, associations, and corporations that depend on events. The tech companies that need to do their big developer event that’s critical to their business, they are going to have to find a way to replace that with something. They’re going to need content. We’re thinking about what that would look like, but also keeping an eye out, but we’re getting better online. We quickly pivoted and launched this online summit with 22 speakers over two days, all profits to charity and we’re learning a lot about how to deliver online. That could be exciting if we can get good at delivering online. Consulting and facilitation can be delivered very effectively online as well.Your client is also your product because you're bringing to them access to more clients. Click To Tweet
I appreciate you coming on. I want to make sure that people can learn more about you, your books, and everything that you have going on. Where’s the best place for people to go?
For consulting, it’s Outthinker.com.
Kaihan, thanks so much.
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