Getting paid by the insight

When breaking in new consultants (or new auditors for that matter), I have always found it most difficult to teach the business of insight.

It is even difficult to describe it here. So,I tend to fall back on quoting the dictionary definition.

Insight is...

• The clear (and often sudden) understanding of a complex situation.
• The capacity to discern the true nature of a situation; penetration.
• The act or outcome of grasping the inward or hidden nature of things or of perceiving in an intuitive manner.

I like the last one best because it rests responsibility for insight on intuition. However, in the consulting and analysis profession the definition is even more expansive. Indeed, the term takes on a product-like definition.

You see, to a huge extent (and possibly unlike the auditing profession) our clients pay us by the insight. They pay us to evaluate the situation, data, and people involved -- with the intended outcome that we share with them a grasp of truth that they never previously considered. No insights, no value, no revenue.

When I would work with new consultants and auditors, it was this last bit they found hardest to absorb. To identify a stunningly useful thing that your client has not previously considered, of course, requires that you have the intuition and background to anticipate what they already have considered. It also requires that you sort through dozens of lesser insights to arrive at the ones that can most move the organization ahead and provide competitive advantage.

A couple of interesting examples of actionable insights from my recent work with universities come to mind as illustration:

1. The university that concluded it could never attract students from the eastern part of the state, because the mountain range that divides them was an unassailable cultural and mental barrier. Yet, an analysis of competitor schools indicated that one other, of no greater quality, was getting 23% of its students from the eastern urban areas. They'd had this data in-house, but highlighting the insight shattered the barrier notion and opened up their market space.
   


2. The university system that wanted to grow its online programs and needed to understand the constraints. Initially believing the issue to be a problem of marketing, thorough interviews and data analysis showed that, to a huge extent, there wasn't enough capacity (courses, professors, classrooms) to support substantial growth. Capacity itself was being constrained by the financial reward structure. One key insight was that the reward system for routing revenue to Deans for developing online courses was too temporary. While money could be made, no Dean was willing to hire academic staff one year, only to let them go the next. The organization began moving immediately to address this issue.
   


3. The university, whose admit-to-enrolled yield rate was substantially lower than its aspirational peers at a time when it was vying for a top-tier market position. The admit-to-enroll yield rate describes the percentage of students who receive an invite to enroll, who actually do. A low yield here indicates that after doing significant work to get the student to be aware of the university, consider it, and apply; they lost them to some other institution. When this insight was coupled with data that indicated that the number of students for whom they were the 1st choice was dropping (and the number marking them as 3rd choice was rising) it became clear that the university was slipping into a “safety-valve” market position. Immediate action was taken.

The point, whether you are a consultant, data analyst, or auditor is that it isn't enough to present the results.

I have found this statement to be most difficult for internal auditors to accept because they tend to be stuck in a compliance mindset. Without a doubt, auditors have an obligation to declare things to be “out-of-spec.” It is in the job description. However, to be really worth your salt, you've got to provide insight. And this insight has to be actionable.

Tom Peters, the renowned management guru, coined a phrase a number of years ago that frames this nicely. He described it as, “work worth paying for.”

-- Prescott Coleman, CIA, CISA