Kenway Stands Firm Pricing Structure

GUIDING PRINCIPLE

To operate with maximum efficiency and strive to maintain a low cost structure with every decision made. To communicate swiftly and effectively through all channels, at all levels, internally and externally, regardless of whether the information is good or bad. To provide premium-level, consultative services at below market pricing.

THE SITUATION

The procurement organization of a long-term client requested that Kenway lower rates by 10%. Kenway already operates at a thin profit margin in order to ensure high quality, affordability to clients, and competitive salaries to employees. Kenway always gives it clients the best rate for the first hour of work, and therefore had no room for discounts. Despite the long standing relationship, the answer had to be “no”.

Kenway seeks to provide premium-level consultative services at fair market pricing. By keeping company overhead low, Kenway is able to charge significantly lower rates than many other consulting firms. The goal is to establish long-term, mutually beneficial relationships with clients while also minimizing unstaffed time for employees. This has resulted in steady growth throughout the company’s history as Kenway is providing significant value to clients. Furthermore, Kenway is very clear and upfront about their rates. Kenway does not present inflated bill rates only to give the façade of a discount later on.

STEPS TAKEN

Kenway said no to the rate reduction but presented details on why it was not possible given that the current rates were already the best rates. In addition, much information was provided on how Kenway does in fact provide significant cost reductions when compared to rates competing firms charge for similar caliber of consulting services. This response was not only sent to the group requesting the reduction but also to all end stakeholders using Kenway’s services.

THE OUTCOME

Kenway believes that inflating bill rates and modifying them simply to keep business is the wrong way to approach a collaborative relationship. After several discussions with the client, they decided to continue partnering with Kenway, even without reduced rates.

Kenway Displays the Value of its Services-Based Model

GUIDING PRINCIPLE

To maximize return on investment for our clients and for Kenway, and scrutinize decisions based therein. To encourage professional growth through challenging work opportunities, training and mentoring, and to provide employees the freedom to maximize their own potential by enhancing the aforementioned opportunities.

THE SITUATION

A long term client was beginning to make demands concerning the staffing of Kenway resources. They wanted to hold onto specific resources in a staff augmentation manner despite the fact that Kenway could support the needs of the client at a lower cost and high quality with a different approach.

STEPS TAKEN

The two parties began formal discussions on the situation. Kenway explained that their model does not provide people to fill needs but rather assesses the needs and provides the right mix of services for the current needs of the project. While the current resources had provided tremendous value, the phase of the project had shifted calling for a new set of skills to be mixed in with the subject matter expertise already gained.

The conversations were difficult and caused a temporary strain on the business relationship between Kenway and the client. The idea of Kenway leaving the client was even discussed as it seemed the fracture between both sides was irreconcilable.

THE OUTCOME

In the end, Kenway was able to communicate the value of their services-based model. Kenway continues to provide more services in this area with many more engagements on the horizon. By being transparent and objective, Kenway was able to lay out the value of a consulting company that delivers high return projects as opposed to working in a staff augmentation manner that while keeping the customer satisfied was not in their best interests.

Kenway Displays Integrity During Contract Negotiations

GUIDING PRINCIPLE

To generate revenue by being good, being truthful and spreading the word. To operate, think, demonstrate, speak and lead with integrity and emphasize it through all mediums.

THE SITUATION

Kenway had been pursuing work with a large client for several years. This hard work eventually resulted with an opportunity that had the potential to lead to a long term relationship. However, issues arose when it came to sign the Master Services Agreement (MSA). Generally, companies provide MSA templates, and the parties involved negotiate the final wording before work begins. This potential client had a unique clause in their MSA that prohibited vendors from doing any work on their premises that was not exclusively for them. Kenway could not possibly adhere to this clause, because as a small consulting firm, our employees, at times, are asked to provide knowledge and expertise for both internal operations as well as for other clients during business hours.

Kenway was completely open during the negotiation and requested that the sentence be altered to allow for such interactions, reassuring the potential client that they would not be charged for these activities. After some discussion, Kenway was given the verbal confirmation that the client would accept this structure. However, Kenway was then told to sign the MSA in its current state so that work could begin, because the modification could take several weeks to process through their legal department.

STEPS TAKEN

After discussing options available, Kenway quickly chose to deny this request and would not sign the MSA knowing that it would be violated. Kenway’s role as a trusted advisor would have been immediately compromised there by starting the relationship off in a negative position.

THE OUTCOME

Kenway eventually walked away from the work. Despite the potential for a strong relationship, the inevitability of violating the MSA was simply not the way to begin a mutually beneficial relationship in which trust is paramount.

To 100 Employees and Beyond … But??

During the interview process at Kenway Consulting, there is an entire interview devoted to culture – we call it the Critical Behaviors interview. During this interview, we ask questions probing to see how the candidate would act in certain situations. How does the candidate define success? What motivates and drives the individual?

On Day 1 for a new hire at Kenway, the employee goes through a full day of New Hire training. Part of this New Hire training is devoted to culture. It is a refresher and a reminder of the many things discussed during the interview and hiring process. We discuss the reason Kenway exists – our “Why” – which is To Help and Be Helped. We also touch on Kenway’s Guiding Principles. These Guiding Principles provide a beacon to help employees determine paths forward when navigating difficult situations and serve as guides for decision making in complex situations. They focus on integrity, quality, value and respect for each of us as individuals. They teach our employees to focus on the means, not the outcome!

The point I am making here is that culture is everything at Kenway. It is the main reason I joined the company. Post-training on Day 1 and through the first several months at Kenway, our “Why” and Guiding Principles are continually reinforced to a new hire, so the employee can see and, more importantly, experience these tenets in action. The new hire starts to understand that each employee not only “talks the talk” but also “walks the walk.” After the acclimation period, we ask our new hires to write a small bio about themselves. A few months after I started at Kenway back in April of 2014, I was asked to write my bio. When I sat down to put pen to paper, the first words that came out were:

I joined Kenway Consulting, because I wanted to better myself while also providing a benefit to my company. Too often people work somewhere with the saying, “Well, it’s a job” or “It provides a paycheck”. I’ve witnessed the company’s Guiding Principles put into practice and not just used as cliché. As I continued to see this, I knew it was the place I wanted to be – to challenge my entrepreneurial spirit and become part of something special.

When I wrote that bio, Kenway employed about 24 people. Fast forward to the present day as we head into October of 2017, and Kenway is right on the brink of hitting 50 employees! When it comes to Kenway’s “Why”, Kenway’s Guiding Principles, Kenway’s culture, you know what has changed? Absolutely nothing. If I were asked to re-write those sentences in my bio now as opposed to over 3 years ago, I wouldn’t change a thing. And that really is what Kenway is all about. We want to expand, and we want to help more and more companies, but we will not grow at the expense of our culture.

About a year after I started, Kenway devoted a good portion of a quarterly all-day company meeting where all of the employees, regardless of experience level or tenure at Kenway, collaborated to develop our vision statement, or The Kenway 20/20. The Kenway 20/20 is a narrative that speaks to where Kenway will be in the year 2020. Some of the metrics you will find in the narrative are that Kenway will have partnered with close to 40 clients, opened a satellite office and grown to 100 employees. These are goals - ambitions for which to strive. They are extremely motivating. What you will also find in this narrative is that Kenway will continue to stay true to our guiding principles, true to our “Why”, and continue to focus on the means, not the outcomes.

When Kenway was founded in 2004 with one employee, Kenway had these beliefs. When I started in April 2014 and Kenway had 24 employees, Kenway had these beliefs. Kenway, in the present day at almost 50 employees, still has these beliefs.

Kenway will continue to grow and help our clients. We will strive to hit the 100-employee mark and further our competencies. We will strive to move beyond those goals … BUT, not at the expense of our culture!

To learn more about Kenway’s culture visit our website at www.kenwayconsulting.com or contact us directly at [email protected]

The Outcome Is Not the Whole Story

I am just about to hit the six month mark in my career with Kenway Consulting. One aspect of the company that attracted me was its focus on the means rather than just the results. For ethical, philosophical, and practical reasons, I am a big believer in this approach. While it’s clear that companies, organizations, people, etc. need to have good results, I believe that how those results are achieved are more important than just the outcomes.

I had never seen an organization operate in this manner. Throughout my career, when a revenue goal was at risk at the end of a quarter or at the end of a year, the mantra became, “Do whatever it takes to make the number.” Inevitably, the sales manager dropped prices in order to entice friendly customers to agree to deals to buy and hold more product than their demand warranted. The short-term results appeared to be a success. The revenue number was met, and the sales manager and organization head collected his or her bonus, but the long-term effects were devastating. The discounted price and its razor thin margins became the standard price. The excess inventory held by the customer led to little to no sales at the start of the next period, setting up the same situation at that period’s end. Finally, the customer would eventually lower the price at which it offered the product to end consumers in order to relieve themselves of the excess inventory. This ultimately damaged the brand of the producing company. This is just one of many examples of a real-world situation where a focus strictly on the end result (meeting periodic sales goals) and ignoring how you get there (cutting prices to suboptimal levels) leads to long-term bad results (lower prices moving forward and a damaged brand reputation).

A driver of this way of thinking is how decisions are valued. A decision should not be judged by its outcome, but by the choice that was made based upon information available at the time it is made. While good decisions should lead to good outcomes and bad decisions should lead to bad outcomes, this is not always the case. The reasons for these unpredicted outcomes are:

Good Decision → Bad Outcome = Bad Luck
Bad Decision → Good Outcome = Dumb Luck

Examples of these outliers are:

One person eats well and exercises regularly, but has a heart condition. Another one has bacon at every meal, drinks too much, and smokes two packs of cigarettes a day, but lives a surprisingly disease free life into his or her nineties.
The quarterback that decides to pass to his best receiver in one-on-one coverage against a weaker opponent, but the receiver tips the ball into a defender’s hands, resulting in an interception. Another player throws into triple coverage, but his receiver make an outstanding play to score a touchdown.
A project manager commits to a well thought out, risk adjusted schedule but misses the delivery date. Another project manager promises a date with no well thought out project schedule, yet succeeds.

To put a little more rigor behind this, if you’re faced with an opportunity where the potential risk is equal to its potential reward, and your chances of success (i.e. achieving the potential reward) are 90%, you would be a fool not to pursue the opportunity. However, one out of ten times that opportunity is not going to pan out. An unreasonable response to the opportunity’s failure would be to look solely at the outcome and deem the decision a bad one.

The opposite case is true as well. If an opportunity’s potential risk is equal to its potential reward, but your chances of success are only 10%, it would be foolish to pursue this opportunity. That is because your expected value is negative, you’re expected to have a negative Return on Investment (ROI). If someone were to do this and be fortunate enough to be the one out of ten that succeeds, that success should not be celebrated as the actions of a bold risk taker or a crafty gambler. The person made a foolish decision and got lucky.

While we rarely face decisions with clearly defined probabilities as detailed above, the principle is what is important. Whether it is a manager evaluating an employee, or a person reflecting on the decisions that were made, it is important to not second guess the decision or the rationale behind it if the outcome turns out bad, provided all the prior information signaled to move forward. It is equally important to not ignore the previous warning signs when an outcome is good.

I am sure you have heard the phrase, “I’d rather be lucky than good.” This is usually said when an outcome is the result of good fortune rather than sound methodology. At Kenway Consulting, our approach in both strategic initiatives as well as client engagement is driven by planning, sound processes, and rational objective decision making rather than relying on luck. I guess you could say we would rather be good than lucky.