In this session, Danilo discussed:

  • What is IP, and how it benefits your consulting practice;
  • The three categories of IP for micro consultancies;
  • How different kinds of consultancies can look at each category;
  • Practical tips for creating and managing IP.

Links and resources mentioned include:

Video Recording


Right, so we're back. It seems like we had a problem here. There were people who were trying to to join and couldn't join, some people were kicked out. So let's start again. I'm sorry for this guys. I'll share the recording with the ones that could not join back, ok? Let's start this.

Today's topic is IP. I wanted to to start the BCC bites with this story about two friends that work outside the consulting space. They are both in sales, have similar background, a similar age, were both ambitious when they got their first job. And they went to different companies. One sold more than half a million dollars in his first six months, became a best performer in his team, had a great run in his first job. The other one went to another company in the same industry, similar size, but he couldn't even schedule a couple of free consultations a month. He was really struggling. And the question when we see these kind of situations is "why?" Why do the results vary so much? They were both young people, smart, motivated, and after talking to them it became clear that their performance was directly correlated with how much attention each company put into developing, managing, and using their assets.

A salesperson that works for a respected brand, for example, will sell much more than someone working for an unknown startup. If a company has a great website full of content, relevant marketing material, clear service offerings, they will sell much more than people on a similar company that doesn't even have a website. If you have a CRM, for example, with thousands of relationships, and you frequently contact them, nurture them, the CRM is updated... any salesperson would sell more in this case then if you ask them to go find their own leads and and cold call them. And this is what we're talking about today. Business assets, and specifically speaking IP, allow you to decouple the results you get of your activities from the people who perform those activities.

Let's start with a good old definition. What is IP (intellectual property)? There are several good definitions out there but the one I love the most is this one from from Prof Joe. "Codified knowledge which adds business value". I like this because it points to two important things here. First, you can't create IP out of thin air. We're not talking about documenting "stuff", documenting "things". We're talking about documenting knowledge, and this knowledge needs to come from somewhere. We will talk about this. The second thing is it should add business value. This means that it needs to create some kind of benefit for you, for your team, for your clients and/or for other partners of your consultancy. I know for example a consultant who worked for a decade in tech, in the tech space, before launching his own consulting practice. He has dozens of templates, checklists with best practices for tech startups to set up their HR departments. The problem is: his consultancy only works with manufacturing companies. That's his focus, working with manufacturing companies. In this case it's obvious that that IP that he brought, those templates and checklists are worth nothing to his practice. Because they are not relevant to his clients, or his firm, or his team.

So before we talk about the benefits of IP and where it should start I want to present you a simple classification of types of IPs. There are many ways we can classify IP. I like to split them this way, by desired outcome. Clients find it helpful.

So we have Business Development IP, which enables you to market and sell more, better, faster, and at lower cost. Examples: Outreach scripts, content creation processes, account planning processes (how you're approaching existing clients) CRM processes, case studies, sales brochures. All of these are examples of Business Development IP. These are assets that will help you market and sell more effectively.

The second type, offering delivery. So delivery IP, it enables you to standardized client work. Standardize your services. These are your methodologies, frameworks, you might have questionnaires, onboarding processes. All of these are examples of delivery IP.

And the last category, administrative IP, admin IP. The goal is to improve internal processes. So, for example, how you bill clients. How you work with your external accountant, send documents, share documents. How you hire people, how you hire contractors. How you manage your internal projects. How you develop IP, which is the topic here. How exactly you document that IP, how you store it, how you update it. How you report your KPIs, how you report your internal activities. These are all admin IP, it fits into this category.

Now, of course, these categories are overlapping. So, for example, CRM processes - which I added here as a BD IP. Having accurate and updated information on your relationships is a must for marketing and sales initiatives. But you also need updated customer information for admin tasks, for example sending invoices. Or you also need an updated CRM to communicate with different people inside the same organization in a project, for delivery. So these categories, they are overlapping, ok?

Some benefits that go beyond these ones that I mentioned... they include these five points here.

Leverage. Once you codify the knowledge that exists in your head, you don't need to personally perform certain tasks and certain activities again, right? So the leverage can come from two places. It can come from people. You hire a junior consultant or a contractor to perform client work that only a partner could. Or you delegate tasks to an external agency, for example. This is leverage that comes from people. Or you can also get leverage from technology. You can use systems to accelerate or to automate the execution of some of those tasks. So IP gives you leverage.

Consistency. If you deliver the same service in 10 different ways, some clients will be happier than others right? We can also think about it from a Business Development perspective. If you perform your business development activities without following any standard procedure, if the way you market your firm doesn't follow any clear guidelines, any clear structure... it will be very difficult to find out what works and what doesn't work. Because you're doing different stuff all the time. So documenting processes allows you to sustain a higher standard of quality in your activities.

Differentiation. Without IP, what happens is - and this is especially true among solo or micro consultancies - when we don't have documented IP we tend to follow best practices. And they might work or might not work for your consultancy. So what happens is, when you codify the unique knowledge that you have you find out what are the things that you do different that work well, and you can double down on them. It might be, for example, a new methodology you created for clients. It might be a different marketing approach. It might be a better way to to perform an internal task. Something that goes against general best practices but work for you and your team. If you don't codify those things, they tend to get lost. The moment you start to document IP, it's easier for you to highlight where and how you're different.

Better training. Without IP, every person you bring to your team will have to learn everything from another person. Either you or someone else. With IP they have written procedures, manuals, videos, checklists. They have all of this material to consult so they not only get get better training, that can be done asynchronously, they require less time from other people.

Now, new revenue source. For most consultancies, and we'll talk about this, but for most consultancies the service offerings, the services they provide, they are the most valuable IP. Once you start documenting IP, there are many ways you can turn them into a source of revenue. For example, you can package them as online courses. You can license a framework or a methodology. You can turn certain processes into software. Now, I'm not saying that you should. But there are many ways you can monetize IP, and it can create new revenue sources for your consultancy.

If you want to start creating and benefiting from IP, where do you start? That's the question. If you have attended to any other BCC bites before you know what I'm going to say. It really depends on what kind of consultancy you run. And there are many ways we can look at this. Two weeks ago, in our last chat, I used an interesting framework that divided the professional service firms into evergreen, acute, and optimizing service providers. This is one way to categorize. Now I want to use another classification, from David Meister. He divided firms into these three categories: brains, gray hair, and procedure firms. These categories are based on the type of problem that you solve.

Brains are firms that solve complex and relatively unique problems. Examples can be strategy consultancies. Firms that work with disruptive innovation. Creative design. These are all complex or unique problems. There's no manual to follow here. Gray hair firms, they solve problems that are uncommon for the client but common in the industry or market segment. This is where most of you are, probably, if you're a subject matter expert. Risk management consultants, for example. You can help companies mitigate financial risks. Mitigate regulatory risks, cybersecurity risks. You're solving problems that other companies in the industry or a niche have, but these are problems that are uncommon for clients. These are not recurrent problems. Finally, procedure firms. They solve common and frequent problems. Here is where most consultancies that do implementation fall. Many IT consultancies fall here. For example, doing system integration. ERP support.

These are the three categories that David Meister came up with. and what's interesting is we can use this to to look at IP to kind of give us a first hint of where we could start. So here I just wanted to add some thoughts on each one of them. This is nothing new, just a reminder of what clients look for and what you need to provide for each kind of firm.

So, for example, Brain firm clients are mostly looking for expertise. They focus on providing new and and innovative ideas. So as a consequence, these consultancies tend to employ bright people, talented people, creative. They tend to command higher fees. And they tend to have low leverage, right? By leverage here I'm talking about the ratio of consultants to partners. Since the solutions are innovative, are new, are complex, the partners are much more involved in the delivery. There's a limit to how much you can delegate client work to junior people.

So gray firm clients are mostly looking for experience. This is mostly... this is a simplification. Again, we have a specific workshop where we discuss how clients value consulting services, how subjective that is, and the different dimensions of value. Typically the solutions they are customized. You have tailored, specialized services but they are not innovative. If you're a cybersecurity consultant in the healthcare industry, for example, you will have specific service offerings. But it's nothing that is completely new to other people in the industry. As a consequence, you tend to employ other people, other experts who have worked with similar organizations in the same industry. And you have a medium leverage, with at least a few Partners. So the delivery of the services can be somehow delegated to junior people.

Here you have procedure firms, and clients are mostly looking for execution. So their solutions are productized, standardized. And, of course, they command lower fees. But they can employ a large number of of junior people who can get the job done efficiently.

Now, how do each of these firms prioritize IP development?

Brain firms will tend towards strong marketing IP. It's more about marketing IP than sales IP. And especially in the form of thought leadership. If you think about it, these are people solving difficult, complex, unique problems, so you need to demonstrate your expertise right? And thought leadership content is a great way to do that. You develop a unique point of view, can position yourself as a complex problem solver. The buyers of these kinds of services are usually top decision makers. Often C-suite executives, or the leadership team. And this makes your network of relationships - and how you nurture that network - even more important. Since the problems you are solving are relatively unique, the solutions they tend to be creative, they tend to be bespoke. And this means there are lower levels of delivery IP. Projects are usually delivered by flexible teams, there's always the direction or the supervision of a partner.

Now, at the other end, procedure or IT-led firms should have um strong levels of IP throughout the firm. They should have clear service offerings, strong operational processes, strong sales IP. When you position your firm as an implementation provider, most of your opportunities will be competitive deals. And this means your focus will be much more on sales than marketing IP. In terms of delivery, the goal here is to delegate, outsource, or automate as much client work as possible. Because this is what will allow you to work on the business. Of course, you need space to innovate, you need space to create new service offerings, because otherwise your whole company will commoditize, it will be very difficult to compete. But it should be informed by your value proposition. If you're leading with implementation, whatever it is that your value proposition is focusing on - you're delivering a faster service, or you're delivering a safer service, or simple solutions - whatever it is this is what will inform your IP priorities.

And in terms of administrative IP, it will really depend. We're talking about internal processes. I don't think there's much that we can take from this categorization here. It will really depend on your business model, positioning, industry. Because these will influence your internal processes.

I just wanted to close this with some practical tips. It's a short chat today, it's not a workshop. I want to leave time for questions.

First thing that we've learned from working with consultancies is that the creation of IP, it should be led by a partner. If you're not a solo consultant or solo advisor, if you have two or three other partners, I recommend you to separate IP priorities. So one is responsible for internal processes and the other one is responsible for external processes. if you're the only one - I see there are quite a few solo advisors here - if you're the only one leading the consultancy, I would pick only one of them to start. So either internal processes or external processes. There's a big risk of overwhelm here. You can say, "ok, this next quarter I'll dedicate time to work on internal processes , on documenting IP and make them more efficient, more effective". Or "I'll invest time in documenting business development IP, or client work IP", whatever it is. I would pick one for the next quarter. It will make things easier for you, reduce overwhelm.

Second thing, start from desired benefits. To prioritize, I recommend you and your team to ask those questions. What activities do we need to perform faster? What are we spending too much time with? What activities do we need to perform better? What are the sources of recurring problems, recurring complaints. And that might be coming from clients or coming from your team. These questions are the starting point of the process of prioritizing IP. Once you list the benefits that you want, you start brainstorming ideas for solutions. We have a list of suggestions for IP creation that I'm sharing here in the chat, but you can also find in our tools and templates collection in our website.

Third thing, block time. Block time to work on IP. How much time will depend on your specific situation, it's impossible for me to give advice here, it's very contextual. But as a rule of thumb, 5% of your working hours is what I consider a minimum for micro consultancy partners to invest in IP. If you're doing 50 hours a week, that would be two and a half hours a week dedicated only to IP.

Fourth, add incentives and accountability. So again, this is basic management best practices. You can set goals for IP creation, and you can review them once a month. For example, you might say, "I will try to to create five SOPs, five standard operating procedures for client work every month." Or 10 SOPs, or 20 SOPs, it depends on the size, on the complexity... You keep track of that, and if you have partners you can consider using this to calculate compensation or bonuses - which is why I put incentives here. It's an important part of your job, IP development, and it should be rewarded.

Finally, prepare for AI and/or new technologies. We're still understanding all of the ways AI can help micro consultancies. Things are moving extremely fast. Your practice will be affected, no matter your specialization. And you can benefit from it, most probably. Now, AI deserves a specific workshop, which will probably organize very soon, but I just wanted to add one recommendation I'm giving to all my clients. It's to record everything you can. Record team meetings. Record workshops. Record client meetings - of course, respecting the NDAs and being aware of confidentiality clauses. Record your presentations. Record brainstorming sessions. All of these they may or may not be used with AI tools in the future. It's a resource. You might be able to use these to perform tasks for you, to communicate with clients, or even to duplicate yourself as a consultant. We don't know yet, we're still discovering what can be done and what can't. And what are the most probable paths here for adoption. But it costs virtually nothing for you to record everything you can, ok?

Now, a few words of managing IP, then we open for questions.

Managing IP is as important as creating it. Because one of the main ideas behind IP is that it should be continuously updated, and improved over time. You might find a better way to solve your clients problems, or those problems might change over time. Your marketing and sales channels might change and force you to shift the focus of of your business development. There will be new tools in the future, such as AI tools, that will extinguish some of the internal admin tasks you do now. So these are some tips for consultancy partners.

First, look at it as an asset. You need to take your IP system seriously. It's not an afterthought. It's a strong point of differentiation. It's a strong competitive advantage.

Second, add a DRI. Make someone responsible for maintenance. DRI is a direct responsible individual. You need to make someone responsible. If everyone's going to do it no one does it. Your IP system, it needs to be simple, it needs to be fast, it needs to be useful for you and your team to use. You don't need to to build something fancy. You don't need fancy software. There are many softwares that can help but you don't need them.

Third, request frequent feedback. And this comes back to the idea that IP needs to be updated over time. I highly suggest that you create a form where people using the IP can add suggestions of improvements. Especially for SOPs, checklists... Every time someone uses it, you need to give them an option to find mistakes, or find blind spots there and continue to improve it.

Fourth, use version control. This goes without saying, basic stuff really. Each time a revision is made, you save the document as a new version. The idea is do not keep overwriting the previous version. There might come a time (and it always comes) where you want to see how the process was. So it's important to use version control, so you can keep that history, that change history.

Finally, think about protection and ownership. And here what you want to ask is: "who can access what?" What can be downloaded? What do I need to protect behind a password? Especially if you use assistants or junior people. They don't need to access all of your IP. Think about protection. Think about who can access what. And who can download what. Also, if you use external contractors... for example, I had a client who had problems with that. He brought in a contractor for a single project, they worked well together, but the contractor got access to all his IP - which he later took on to use with his own clients. Yes, it's unethical. Yes, you could potentially sue that person. But the damage is done. It's better to prevent those situations from happening, right?

Yes, so I tried to summarize main points. Things that could be useful if you're just starting to think about IP. But let's look at some questions here.

Right, question from Tim:

"Does every consultancy need to have standardized services?"

From my experience, absolutely. Now, that's not to say you can't offer bespoke solutions. Chances are your biggest and most exciting engagements will need to be tailored for your clients, they will be bespoke. But that's typically not how the ideal purchase path of your clients will look like. Typically, they will start with smaller projects, shorter projects, to test the waters, to see how it works, see how you work together, whether you deliver the results you promise or not. And only later they may bring you to tackle more expensive, or more complex problems. And these are the ones that require bespoke solutions. That's why I think every consultancy should have at least one standardized service. I can expand on this.

The traditional service strategy for for consulting firms is based around leveraging people, leveraging junior consultants. So you document the processes, you document the frameworks, the templates. And these things allow junior consultants to produce work that is as good as a senior consultant would produce, but on a lower salary. So you win the margin there, you get the difference. You're delivering work that only a senior person could but employing junior consultants. Of course, there are many different consulting business models in the market. This is the traditional one, which we call the "cost plus model". But it's still alive, it's still alive and well.

But even if you're not adopting a cost plus model, even if you're following a different business model for your consulting business, I think the benefits of standardizing your services are too big to be ignored. When you standardize your service IP, you get a more consistent service - so higher client satisfaction, better client experience. It's easy to train new people to deliver it. It's easy to use junior staff or automation to win back some of your time and improve margins (if you need to). Once you have a standardized service, you know how you're going to perform it. You know how long it takes you to perform it. How many people it takes it to perform. It's much easier for you to price the service.

So my answer is yes. I thank every consultancy needs to have standardized services. At least one standardized service.

Ok. Another question:

"When and how should I protect IP?"

I'd say that, in general, it's difficult for consultancies to get legal protection for IP. Of course, it depends on on the country you're in. You can get some protection of the name of your consultancy, your logo, some brand elements using trademarks. You can use copyright for some original contributions. If you're in doubt it's always wise to consult an IP specialist (which I'm not). From my experience, IP lawyers are too expensive for micro consultancies to hire. Unless you're talking about a huge financial and brand loss, damage, I'd say 95% of the time it's better to keep creating IP and stay ahead of of competition instead of suing them. It's simply too expensive for small consultancies.

Yes, good discussion. Thanks for the questions. I appreciate your understanding, we had a small problem here with the zoom meeting. The next BCC bites will be in two weeks time, 6th of July, and the topic is the freelance consulting ladder. It's a super interesting framework for any solo consultant or advisor, so feel free to share it with friends or peers who are freelance consultants. Thank you again, wish you all a great week.

Thanks for watching or reading. You can get more specialized and actionable growth insights for micro consultancies in our newsletter. Every Tuesday, you get one idea from Danilo, one quote from other experts, one number you need to hear, and one question for you to level up your consulting practice.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.