Dr. Russell F. Henke -- Business Consultant
Case #22 -- Leveraging Henke Associates' Independence
One day during Q1 2009, Henke Associates received a call from the founding CEO of a successful, privately held Company of several hundred elite hi-tech employees. The Company has thrived by doing esoteric scientific research projects for both the private and public sectors in the U.S.A. The Company enjoys an enviable record of attracting as employees, some of the brightest technical minds over the years from many of the world’s leading universities and industrial laboratories, both here and abroad.
In several cases, the Company has addressed this shortfall by reaching out to external firms that represent themselves as successful “consultant advisors” in taking innovative ideas and products to commercial markets. While certain of these “cooperative commercialization projects” have worked out well, several other such projects have not and were soon shut down by Company management, and the associated outside consulting/advisor firms dismissed. In the latter cases, the problems were relatively obvious to all concerned after a short time period.
Limbo Projects…
As one might expect, however, a few of these cooperative commercialization projects occasionally fall into the “limbo” of remaining “very promising” while simultaneously consuming both internal overhead as well as hundreds of thousands of dollars of precious out-of-pocket Company cash paid to the outside advisors, with no end-point in sight.
While top Company execs worry about the ongoing internal and external expenses involved in such limbo projects, the execs’ interim judgments on ultimate project viability are often clouded by periodic minor project successes, by the ongoing positive testimony of optimistic internal project champions, by the natural desires of the outside advisors who are recipients of the ongoing largess from the Company, and by the lack of Company executive time and possibly skill to dig through the specific project’s history and render a timely judgment of continuing or not, with said judgment having everyone’s support.
This time, the CEO decided he wanted to resolve the ambiguity of the situation, once and for all.
What to do?...
Henke Associates was known to the Company's executives from past acquaintances and from Henke Associates' case histories of consulting assignments at other clients.
The CEO quickly decided to go forward with the Proposal, not only because of Henke Associates’ professional credentials, but also because of the reputation for complete independence and fairness enjoyed by the members of the Henke Associates team.
Henke Associates’ president Dr. Russ Henke went right to work on the agreed Review Assignment the day after Proposal approval. Henke first met with the senior internal project manager of the target project, an individual who had been in charge since the beginning of the original R&D effort years earlier. The purpose of this first meeting was to gain the project manager’s confidence and cooperation, which to his credit, he freely provided throughout the following two weeks of intensive reviews and discussions.
Two Intense Weeks…
Dr. Henke and the project manager immediately proceeded to work in earnest on the Review Assignment. Laboring side-by-side, the twosome toiled tirelessly over two-plus weeks through all the written and oral project history and records, interviewing all available internal project personnel, sifting through all the materials regarding the outside marketing consultant/advisor’s involvement over the years, and thoroughly studying the outside consultant/advisor’s most recent new proposal. Throughout, the twosome kept in mind the Company’s overall 2009 personnel and financial constraints. Precise interim written documentation of review findings were prepared by Dr. Henke, and opinions of all participants in the Review Assignment duly noted along the way.
Having reached agreement on the way-forward, Dr. Henke and the project manager then presented their Conclusions & Recommendations to the Company CEO a few days after the 2-week Review Assignment was finished, in the forms of a written final report and a PowerPoint presentation.
The Conclusions & Recommendations boiled down to three serious choices:
1. Continue the limbo project uninterrupted and accept the consultant/advisors’ latest proposal as is, fund it, and proceed; or
2. Shut down and mothball the limbo project efforts entirely unless and until financial conditions or other events warrant re-evaluation; or
3. Offer the outside consultant/advisor firm the opportunity to license the subject Company technology and, on its own, take the limbo project forward, but with no additional funding from the Company.
After suitable discussion of the pros & cons with Henke Associates and the limbo project manager together, the Company CEO agreed with Henke Associates that the choice #1 above was not advisable at this time. Accordingly, the CEO is prepared to implement choice #2.
Before he does so, however, Company CEO is following Henke Associates’ recommendation to offer choice #3 to the associated consultant/advisor firm.
Choice #3 would keep open the possibility that the Company might eventually realize some commercial benefit from the limbo project, while simultaneously conserving Company cash and reducing overhead. Choice #3 was made possible solely because the outside consultant/advisor firm had recently strengthened its team with several subject-matter and market niche experts. Should these individuals be brought to bear on the project by the outside firm working on its own, and other factors resolved, it’s feasible for the first time, that commercial success can be achieved.
Whatever direction is chosen by the consultant/advisor firm, the Company CEO, his executive team and all associated project personnel are delighted and relieved that the future of this limbo project has finally been resolved, and to a person, believe that the choices were cost-effectively and thoroughly examined with skill and independence.
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