In my experience working as product development consultant, I’ve learned a few things that I wish every client knew. Misunderstanding of the relationship between the client and the consultants was a common issue. Ideally it is similar to a marriage, which requires trust and communication. The better each side understands the other, the more likely the relationship will be blissful.
Selecting a firm to partner with takes a lot of effort that doesn’t seem to be moving you towards a product you can sell. Because of this, once you’ve decided to work with a firm it’s tempting to commit to the whole project with them, but that would be like getting married on your first date.
A better approach is to give the firm a problem to solve and see what it’s like to work with them. If that goes well, give them a few more problems to solve. Ideally these are challenges that reduce your risk and make it easier to raise money to continue the program. If they’ve earned your trust by communicating well, solving problems, and being enjoyable to work with, then it’s time to commit to the relationship more fully.
If your consultants understand your deepest fear and your highest hopes, they are more likely to create a plan that assuages your fears and achieves your hopes. One way to do this is to separate your needs from your wants. It’s fine to ask for the moon, but if all you need is low-earth orbit, make that clear. This will allow your consultants to understand whether to suggest a high-risk high-reward path, or a lower risk path that fulfills your needs, but not your wants.
The deep communication must be two-way. The consultants need to share their plans, updates, and concerns. When there’s bad news, they have an obligation to share it quickly and you have an obligation to listen and focus on solutions, not recriminations. If you make sharing bad news unpleasant, then they’re going to delay sharing it in the hope that they can fix the problem and never have to let you know. That’s not how a healthy relationship works and it usually negatively impacts the project.
Assign problems to solve, not tasks to complete
This is the most important lesson, one too many clients don’t understand. By assigning problems to solve, your consultants can flexibly and efficiently follow the path that the facts lay out for them. There are ways to mitigate the risks of your consultants running up the bill, such as time limiting an effort (e.g. “work on this problem for up to 20 hours”) and sharing frequent status reports.
I recently met with a consulting firm and I was surprised by their choice of technology, since there was a cheaper technology that would have resulted in a better output than they achieved. When I asked why they choose that path, their response was that the client had required them to use the latest, coolest, buzziest, technology, even though it was poorly suited to the problem at hand. The client had hired a team of experts, and then not taken full advantage of their expertise and the result was mediocre and overpriced product.
The client reaps the reward and therefore must accept the risks
When you’re developing a product, especially a hardware product, there are lots of risks and challenges. Development rarely follows a straight line without backtracking and deviations. There will be ideas that just don’t work out and others are harder than expected. Since you get the upside if your product is successful, you have to accept the risk.
A fixed-bid relationship, where the consultants commit to certain deliverables for a given price, is reasonable if there’s a clear path to success with only moderate risks. Even then, the consultants will pad the proposal so they can make a profit if things go wrong. You should only consider a fixed-bid approach where there are clearly defined deliverables. Many a relationship has soured because the client and consultant didn’t agree whether the deliverables met the requirements.
If your project is high risk or without a clear path to success, then you should expect a time and materials (T&M) relationship: the consulting company would be foolish to sign up for fixed-bid. Your consultants should provide an estimate to complete the project with clearly laid out assumptions. As the project moves forward and assumptions are tested, the estimate should be regularly updated. If the estimate increases, the reasons should be clear.
A happy marriage
If things go well, in nine months (or however long it takes) you might have a brand new, bouncing, baby product. You will also have a relationship that could lead to more products and mutual profit. Just like all relationships, this one will require an investment in time and energy, but should be worth it.