We concluded some years ago that traditional consultancy was a poor business model for long-term wealth creation, with its regular peaks and troughs and constant resourcing challenges to manage.
As evidenced by large consulting, legal and audit firms, the best way to manage a consulting firm is to operate a pyramid model where expensive partners leverage the efforts of many juniors. This maximises value on exit, but we know it doesn’t work well for most clients as they tire of paying over the odds for inexperience.
Further more, most of the innovative, creative businesses that sell-out lose their spark, or their leaders, or both. We know why. We sold to a publicly listed e-consultancy just before the dot-com bust in 2000 and ended up buying the company back a year later. Chastened, but not deterred, we set about defining another model; one where we could participate in the value we created, enjoying the best bits of consulting (learning, creating, doing great work for great clients) but avoid relying on selling the business as the only exit strategy.
After experimenting with value-based pricing (we were bought out of every risk/reward contract we entered), acquiring Equire the managed services business and Nucleus IP our trade mark attorneys, we concluded that we needed to participate in ventures to be able to really exploit our own IP.
This we have done successfully with two ventures and less so with a third, which we sold to a partner.
Luxury Explorer and sQuid were both start-ups invented while working with consulting clients. By practising what we preach, we not only demonstrate conviction and confidence in our strategic, tech and design skills, we also learn how to operate successful next generation businesses.
We have learned a lot. Without doubt, we are better business people having experienced how difficult it is to create something from nothing. Our consulting clients value the learnings this approach brings to their own projects, differentiating Nucleus from competitors, because we know not only the theory, but also the pressures of day-to-day business reality.
In time we will invest in more ventures, but for now sQuid, our smart transactions platform and Luxury Explorer, the world atlas of luxury travel are keeping us sufficiently busy...