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Week of 19 September 2022: The Eclectic Management Series, part 3

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When I was relatively young in the independent consulting business, I would sometimes get the rejoinder to my proposals, "You need to give us a (price break) (free consulting) (etc.) so we can see what you do." I stupidly fell for this a couple of times.

Unscrupulous companies or unscrupulous buyers will try anything to get the freshly minted consultant to spill their knowledge for free. Root them out and spend your time marketing yourself to the entire universe of prospects rather than wasting your time with such characters.

In the end nothing is free, the value is coming out of someone's pocket.

I was asked to attend a conference hosted by a group of equipment providers several decades ago. I was the executive vice president of a major engineering company at the time. The hosts also asked my peers at two other engineering companies. The subject they asked us to speak about was whether equipment suppliers should provide engineering.

The three of us did not collaborate, but we all delivered the same message: all parties should do what they do best; don't attempt to get into businesses you know nothing about. Now, I am certain the genesis for this idea did not come from the equipment suppliers; it came from the mills trying to find a way to reduce costs (read: get something for nothing).

When you are imagining getting something for nothing, get up, move to the other side of the table and think about how you would react if you were the supplier being asked for something for nothing. Should you agree to this, would you put your best foot forward and provide a solid product or service to the person that asked you for this gift? Highly unlikely.

So, when you are in the buyer's chair, what do you think would motivate a supplier to provide you something for nothing? Are you willing to promise, in writing, future business that will allow the supplier to recoup their costs? What are you going to provide?

I once worked in an engineering department in a mill that was always using this phrase, "You need to (give us) (give us a price break) on your goods/services if you want to do business with us in the future."

What a crock! I never used this phrase for I never thought it meant anything to me or to the supplier. If we had good relations, we had good relations. Period. It depended on the quality of their work which was tested on every engagement.

Nothing is free. Write it on the wall.

Be safe and we will talk next week.


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Members Opinions:
September 16, 2022 at 1:18pm
Jim, excellent column as usual.

Let me add that free advice, no matter how good it is, only has value if the recipient is willing to accept it.

About 20 years ago or so, I was asked to submit a proposal for a feasibility study for a stand alone 300-500 tpd wheat straw market pulp mill for the US Midwest (the study funding was coming from the state). The RFP made absolutely no sense to me so I spoke with one of the two university profs who sent the RFP and explained why this would be uneconomical at that time. I suggested that as an add-on line to an existing woodpulp mill it may have a chance. He said to just submit my proposal. Instead, I sent him a lengthy fax explaining why it would not work and declined to bid.

Long story short, they awarded the study to another (much larger) engineering firm. The results were presented by a VP from the engineering company at a conference and low and behold they ended up with the same concept that I had already given out for free. I sure gave him a hard time during the Q&A.

I spoke with the VP after the session and told him that I had been asked to bid but declined. And, that I had learned a valuable lesson - people do not value free advice even from an expert. The 2 profs were listening to our conversation and I hope they got the message but expect not.

Also, I mentioned that I estimated they were paid $300,000 for the study and that next time, I would bid the study and get it. Why he asked. Because I would also bid $300,000 but in Canadian dollars which were about $0.65 US at the time.

You may ask if I give out free advice today. The answer is yes but I am much more careful about what I give and to whom, especially if it is for a friend and colleague and doesn't require a lot of time to help him/her out.


Bob Hurter

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