Many consultancies stall because they confuse individual brilliance with organisational strength. While exceptional people drive momentum early on, long-term success depends on replacing heroics with systems that others can follow. Firms that codify knowledge, formalise development, and balance entrepreneurship with management reduce risk and increase value. By shifting focus from “who delivers” to “how value is delivered,” consultancies create scalable, dependable businesses that buyers trust and teams can grow within.
Key Takeaways
- People vs. Systems: Over-reliance on key individuals can increase strategic risks for a firm. Transitioning to system-based processes is crucial for sustainable growth.
- Growth to Scaling: Start-ups benefit from entrepreneurial talent, but as they scale, systems and processes become essential to maintain efficiency and reduce dependency on star performers.
- Risks of Key Personnel: Key individuals, while initially beneficial, can become bottlenecks and create vulnerabilities within the firm if their knowledge and skills are not documented and shared.
- Structured Development: Implementing structured recruitment, training, and mentoring systems helps capture and distribute essential knowledge, reducing the reliance on any single person.
- Management Balance: Balancing the roles of entrepreneur, manager, and technician is critical for growth, with a strong emphasis on systematisation and efficiency.
- Systematisation Benefits: Systems are more reliable and consistent than individuals, offering stability and predictability without the risks associated with personal issues or demands.
Contrary to the trite nonsense on LinkedIn and the CIPD magazine, people are not your greatest asset. Indeed, this blog argues, acting this way can devalue your firm and increase strategic risks.
It examines when a founder should switch from an entrepreneurial focus, where a reliance on individuals is crucial, to a system-based firm where talent processes are the primary asset.
“Mark’s got me over a barrel” – The Paradox of Key Personnel in Business Growth
During my PhD, I found myself studying a company called Johnson & Sons, which was establish in 1667 and, to be honest, hadn’t changed much since. They employed highly skilled craftspeople who made buttons, breastplates, insignia and headwear for the military.
Unsurprisingly, their warehouse of moulds and diecasts was enormous as it contained the templates for pretty much every button, medal or badge for every British military force (not to mention royal ranks).
A Taiwanese businessman bought the company and gave it to his son, a recent MBA graduate, to make it more efficient.
Zhìqiáng, the bright and ambitious son, introduced several innovations to drag the firm into the 20th century. He also created its first marketing strategy and plan and began offering cheaper, more standardised, mass-produced products.
Zhìqiáng also made much of what he called the ‘old guard’ redundant, including Mark. He was an old hand I liked greatly, and he seemed to have been with the company since about 1967. Mark didn’t mind leaving, he told me: ‘the company isn’t what it used to be. There’s no art in what we do anymore’.
My PhD examined these types of stories in the context of the 1990s, when Britain’s deindustrialisation continued despite economic growth. During this period, ‘Business Process Re-engineering’ was hollowing out middle management—often with little real improvement to show for it.
A few weeks later, I was back at Johnson, interviewing. I was surprised to see Mark walk past my room. More surprising was that he was smiling. Mark rarely smiled. After the interview, I caught up with him, and he told me: ‘they’ve got me back on treble the money. I’ve got Zhìqiáng over a barrel’.
Mark, it transpired, was the only person who knew where to find the relevant moulds or dies in the warehouse. Indeed, some, sotto voce, suggested that someone had hidden the most important ones.
Production had nearly stopped until they brought Mark back to locate the warehouse inventory and properly catalogue everything stored inside.
Moving Away From Mark – Rethinking the Value of People in Consultancy Firms
Consultancies (and many other firms) across the globe endlessly regurgitate the phrase, “Our people are our greatest asset.” Whilst it’s a jolly (if trite) marketing slogan for recruits, believing and acting on this can do your firm serious damage.
Great people are the lifeblood of a start-up. During the growth (working out what you do) phase of a firm, you need entrepreneurs with creativity, energy and vision. These will help the firm find its niche, establish its clients, and deliver great – if varied – work. Long hours are a feature of start-up life, especially if the first few people have an equity stake in the firm.
However, in order to move from growth to scaling, you must stop relying on the extraordinary effort and individual genius of key people. Instead, you should build systems and processes that recruit, develop, and promote the behaviours that drive value.
Transitioning from Growth to Scaling: The Role of Systems Over Individuals
Indeed, whilst even a scaling firm needs to still innovate and explore, too many entrepreneurial midnight oil burners or know-it-alls will actively harm your firm.
This is because you will tend to rely on them going ‘above and beyond’, often to the extent that there is no point constraining them with processes and systems. After all – why make them follow a process when they’re performing so well?
You probably know someone like this in your firm. They’re a star performer in many respects—delivering sales, assembling the perfect team for a crucial project, or flying across the world to rescue an 11th-hour delivery. Wonderful, but……
….In the long term, what the Marks of the world are doing is creating a dependency, and thus a risk, for your firm. Worse, as you grow, they will become a bottleneck for your firm, which can only go as fast as Mark lets them go.
In the worst situations, like at Johnson, Mark will know his power and fail to train others up or capture his knowledge, because it weakens his position.
We have probably all experienced that amazing rainmaker who won’t fill out their timesheets, never have time to mentor or capture their sales insights, and instead demand an ever-higher set of pay, bonus and equity to prevent them leaving. Perhaps it’s not the partner – perhaps it’s you, the owner?
From a buyers’ perspective, these types of people are of course, very risky. If your cornerstone can, metaphorically, pack its bags and depart, how robust is your building?
Reducing Key Person Risks During Consultancy Growth
Michael Gerber’s oddly-named “The E-Myth” offers a strong critique of over-dependence on key personnel. Gerber urges us to view growth as building a franchisable firm—one built on clear systems and roles rather than individual people.
For professional service firms, this means:
A Competence System:
Implementing structured recruitment and training systems is crucial. This ensures a steady influx of talent aligned with the consultancy’s vision and goals.
A Mentoring System:
This helps tacit knowledge—skills that are hard to teach—flow from seniors to juniors. It mirrors an apprenticeship model and suits capabilities like trust-building, leadership, and relationship management.
Knowledge Management:
Knowledge can’t remain in people’s heads. It must be captured, stored, searched, and shared so juniors can approximate seniors’ work without burdening them with constant questions.
Balancing Hats:
Gerber talks about the Entrepreneur, the Manager, and the Technician as different roles necessary for firm growth. In professional services, practitioners often fall into the Technician role and for growth, this needs to be balanced with Entrepreneurship.
However, what is often forgotten is the manager – that role essential for the systematisation and efficiency of the company.
Of course, this is not to say that star-performers need to be constrained or removed. Simply that, for the firm to increase in value, it must capture and share what it is that makes them star-performers. When set up right, these systems consistently bring in and develop the right people, ensuring stability, predictability, and growth.
Compared to individual employees, systems don’t quit or ask for raises. Their performance isn’t based on daily feelings or personal issues. They’re the backbone of a business that’s built to last.
Contrary to what McKinsey & Co. argued in The War for Talent, a scaling firm should not seek to give these individuals free rein in the firm. Instead, we should focus on getting them to help us build systems and IP that will allow others to emulate them.
Conclusion
The transition from individual talent to systematic processes represents a critical evolution in the consultancy industry. The case of Johnson & Sons and the argument of the e-Myth underscores the importance of developing reliable systems.
These systems, rather than individual star performers, form the backbone of a consultancy’s growth and stability, ensuring that the organization maximises its value and reduces its risks.
