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10/12/2012

Strategy Talks at the Regulars’ Table

Colleagues instead of consultants. In organized meetings, ever more heads of companies seek advice from like-minded people.

 
 


Axel Gloger

Eleven men are sitting around one table. They are all heavyweights – at least when it comes to sales: Every one of them is the owner of a multi-million company. "I have to invest, the new hall is due", one of them presents his case, "but how do I go about getting financing from the bank?" His problem is presented within five minutes. Then, his business colleagues get going and tell how they had set up their own financing. One of them talks about a particularly effective strategy. Another one reveals how capital sources beyond the banking system can be developed.

Ninety minutes later, the financing concept is in place. What a consultant would normally have done was here put together by the heads of companies –on their own. There's method behind this practice. One of them presents a case, the others solve the problem. They meet every four weeks and every time, another head of company is entitled to consulting.

That looks like a typical self-help group: non-committal, arbitrary, unfocused. But the opposite is true. The meetings are embedded in an entrepreneurial concept, and Vistage International is behind it. In ten regions of Germany, the service provider regularly convenes a group of heads of companies – always with the same program. "Consulting by business people for business people", that's how Wolfgang Hartmann, Vistage Managing Director, describes the concept — "we are a genuine peer-to-peer event".

Peer-to-peer – P2P for short – stands for a business model that has conquered many sectors of the industry in recent years, from online dating services to used car sales. Ebay has been a pioneer in this type of enterprise – for a long time, a DIY mail order house by consumers for consumers. Those who want to offer any product or goods can take the direct route, via Ebay offer, to the customer without any go-between. "The platform saves the step via a dealer", says Bernd Skiera, e-business expert and professor at the University of Frankfurt am Main. The consequences are well-known – Ebay has drawn off a lot of business from classic senders because, today, any small sellers can start their own DIY catalog shop.

Basically, Vistage is doing the same. It's a consultancy, but without consultants. The service provider established in the U.S.A. only makes available the platform – precisely these monthly meetings. But the consulting service is produced by the entrepreneurs themselves as a mutual system. "Every participating head of company has changing roles – once as a consultant, then again as a customer", says Managing Director Hartmann.

Jointly tackling problems
The American founder of the company, Robert Nourse, had a rather simple idea: Every entrepreneur is mulling over problems which had once been elsewhere solved already. So he brought together a handful of other business managers at a table – for the regular exchange of views on topics like recruiting personnel, distribution and sales, financing, strategy. So that these heads of companies could talk openly with each other, Nourse picked the participants from non-competing sectors of the industry.

That's the way it was in 1957. What started as a small initiative in the U.S. state of Wisconsin, today is a medium-sized multinational consulting company with worldwide about 15,000 participating entrepreneurs. The P2P consultancy is present in 16 nations around the globe. The business managers are paying to participate in the organized meeting groups. Proceeds amount to projected small sales figures in the three-digit millions range for the consultancy – so they are a serious player on the consultancy market."

"In this business, there are sometimes dubious providers afoot. So quite a few company heads rather keep their doors closed."
TORSTEN STILLER,
Head of CEO Manager Circle (CMC)

What's the reason for this attraction? "Small and medium-sized enterprises are our target group. The typical member generates sales between EUR 15 million and 100 million", says Hartmann. He serves a market niche with his service – because many owners and managing directors from small and medium-sized enterprises are allergic to consultants. "In this business, there are sometimes dubious providers afoot. So quite a few company heads rather keep their doors closed", says Torsten Stiller, Head of CEO Manager Circle (CMC), a competitor of Vistage. Such reservations are further fueled by the case of Märklin, the railroad model manufacturer which got fleeced by consultants two years ago. Stiller also says that many managing directors were, moreover, Swabians at heart: too thrifty to spend EUR 35,000 for a consulting project. [Background: In Germany, Swabians are stereotypically considered excessively stingy.]

This aversion toward consultancy by consultants is also shown in a 2011 study by Kerkhoff Consulting and the Institut für Demoskopie (IfD – Institute for Public Opinion Polls and Research) in Allensbach. According to it, 43 percent of the interviewed company owners had never allowed a consultant in their business – that's the picture for companies with up to 250 employees. And every fourth company with up to 1000 employees never had any consultant, as ascertained by the IfD investigation.

This attitude is the breeding ground for the P2P concept. Altogether 100 entrepreneurs joined the Vistage network in Germany, and ten regional groups are working. Additionally, there are providers like CMC and other Vistage spin-offs which offer a comparable service.

But what exactly distinguishes P2P consultants from a loosely set-up regulars’ table of entrepreneurs or a discussion night at the local Chamber of Commerce and Industry? A trained moderator called chair manages the issues and interests of every group. The chair organizes the agenda, invites external speakers for topics requested by the heads of companies; and he also coaches the discussion when the group is talking about problem solutions. Furthermore, the chairperson also takes care that projects will also be carried out. "If a problem solution had been elaborated, we will ask in our next meeting: Where do you stand? How far did you get in your implementation? Where is advice still needed?", that's how P2P-consultant Hartmann describes the practical approach. Thus would be ensured that issues once started will also be implemented.

Entrepreneurs having once participated in a P2P network often stay involved for years. Yet, membership entails quite an investment: The meetings are rotated and organized by each head of company in turn, and these meetings will last a full day. In addition to the twelve meetings per year, there will also be individual talks between a member and the chair. And the annual membership will cost as much as a second-hand Smart – perhaps not much when the benefits are considered but, after all, that contribution still needs to be paid.

Especially family-owned enterprises are open for the network of colleagues: Instead of going to the bank, they often help each other: "Many entrepreneur families have known each other for decades", says Peter May from Intes, a consultancy specializing in family-owned enterprises, "that's a good basis for the trust and faith necessary for a loan or capital interest".