Earlier in the month, I had the chance to speak to the leadership team at Paladin Associates, a boutique consultancy that works with middle market companies. What makes Paladin unique is not just its business model -- pricing its services based on the implemented returns they deliver versus a day rate -- but how it staffs its projects. In this regard, Paladin is not parachuting twenty or thirty something MBAs to deliver results. No, quite the opposite in fact. Their consulting team is comprised of, as they term it, "semi-retired folks who have a lot of experience."
How much experience you ask? Well, Paladin has less than two dozen consultants in its arsenal, yet it claims over 500 years of experience. Do the math. There's a lot of grey hair they bring to the table from a sourcing and procurement perspective -- Spend Management and supply chain initiatives form the majority of their revenue -- which allows them to step back from individual opportunities to look at the big picture for their clients.
For example, Paladin worked with one middle market organization who wanted to transition from having a largely tactical procurement model to a more strategic one, yet they lacked the funds to make this happen. Because of the returns Paladin was able to achieve for a "very large telecom buy" they were also able to develop a procurement transformation mode for this organization at no charge.
Flexibility like this in working with the middle market comes from a business model which, by nature, is never set in stone, but rather aligns the client's interests directly with those of its advisors. In other words, it's the opposite of how lawyers and accountants typically work with the same client base, and it is precisely why cracking the middle market code has proved so challenging for many larger services companies who are used to charging on a non-value basis for engagements.
The good news in this case is that sourcing and supply chain consulting often lend themselves to a gain-share type of revenue model that can make such work highly rewarding for both firms and their clients. Of course it also depends on a bit of creativity and flexibility on behalf of the provider -- not to mention the confidence to put one's fees at risk. But if I had 500 years of experience myself, I'd probably have a good feel for what deals made the most sense for both parties.