215 - The 3-Step Framework Consultants Use to Fix Million-Dollar Problems with Maurizio Cuna

0:00The Silicon Valley philosophy, move fast, break things, maybe doesn't apply that well. Doesn't work so well, though. Did like our consultants just naturally try to bill people for more and more money? You've heard that before, right? I'm not like the first person to say that to you. Of course. I had one client after we presented the outcome. He said, OK, so what you're telling me is that the outcome of this consulting engagement is another consulting engagement. The reality is you can't expect that I come in in three months, I fix all your problems. so I can fix certain problems for you. We want to enable you to eventually run these on your own.

0:34Like, I don't want to be stuck with you forever. I think the times of, let's wait, nine months or 12 months or a year and a half to see results are gone.

0:46My guest today has the best name in the world. Hopefully I can say it correctly. He is Maurizio Kuna. That do good? Perfect. Yes. Perfect. I'm super excited to talk to you today because you have 20 plus years worth of consulting experience. You've consulted for some of the largest companies in the world that have trillions of dollars in assets under management. You've lived on multiple different continents, Australia, Asia, Europe. You speak multiple different languages. You have a newsletter that's read in 120 different countries. You've written books. You've led multimillion dollar programs.

1:19And I feel like many entrepreneurs, myself included, we're just kind of figuring it out. we're trying to think through, how do I solve this problem today? Your experience is literally, as a consultant, you were paid to come in and fix problems. Like your job is fixing problems. So I'm excited to learn from you today. And hopefully the audience also learns from you today. How does a consultant approach problem solving? And how can I take some of these skills and apply them into my life and into my business? So I'm stoked for that. I hope everybody else is stoked as well. And Maurizio, where are you in the world right now?

1:53Thank you, Nick. Thanks for the introduction. And I'm in Australia. So I'm in Sydney. I live in Sydney. Originally, I'm from Italy. So tell me, as a consultant, this is one of the things I've been really fascinated by is I've kind of created my own workflows of like, okay, identify a problem. And how do I identify the problem? I gather information and then I start kind of putting the information into different buckets and I make decisions, blah, blah, blah. But I've never been trained in it. I didn't work for a consulting firm. Can you help me understand, like, what does a consultant do? What are the steps and process that they go through to not only identify the problem, but also like the root cause and what some solutions might be?

2:33What does that typically look like? What a consultant do is a very, very tough question. And I'm still unable to answer properly this question after 20 years. But what we can probably discuss today is how we can apply some of the frameworks that we normally use with our clients from an entrepreneur perspective, from a small business owner. And this conversation I have also with some of my friends that have small businesses, and they ask the same questions as you asked. How do I solve the right problem? By the way, in my experience working with large enterprises, this is a common issue. I think even clients that work in large enterprises, sometimes it's not easy for them to identify the right problem to solve.

3:22So they think they have a problem, but most likely what they're going to give you is a symptom, right? They're not going to give you the disease. They're going to give you the symptom. And so part of the job for us is normally at the start of an engagement is to understand what the actual problem that we need to solve here is. and we got a bunch of framework for that. So the first one that comes to mind is, for example, the problem tree, right? So if you go to a client or if you go to a business owner and an entrepreneur and they tell you revenue is going down, which is pretty much a common issue, right?

4:01I would say. Not good. Not good, not good. So you might think that this is the actual problem that we need to fix. But then what you need to do is to go through the problem three, what we call it. So you need to identify the major branches of this problem. So why revenue is declining? Is it because you're selling less? So it's a volume problem? Is it because you maybe are discounting too much? So it's a pricing issue? Maybe it's the product, right? Maybe the customer is moving and is buying cheaper items. So is it volume, price, product? If you picture these three getting developed into branches, then you pick the first branch, for example, the volume branch, and then you split it further down.

4:52So why volume is going down? Is it because of traffic? Is it because of conversion? Is it because, let's say, your traditional repeat customers are buying less from you? and then again you pick the first branch and you go down. Do you just ask why over and over and over until you get to kind of a root cause? Correct so by the time you get let's say to the third layer in this problem tree you have a sort of a vague idea right of all the possible root causes. There is a framework called the five whys to identify the root cause. So you start asking the question why five times until you are fairly comfortable and confident that you hit the right problem.

5:41Let's say you have a gym. You probably don't own a gym yet. I don't. You will one day. Thank you. Yet. Yes. So let's say you own a gym and you need to solve for leads. You need more leads. You need more people to get to know about your gym, to eventually subscribe to your gym. So we go through the process that we just described. So we map out the tree. And then you get to understand that maybe you already have a lot of walk-ins into your gym, but nobody's signing up. So you ask, why? Why? What's happening? And then you identify that maybe the sales tour into your gym is a bit not very good. It's a bit awkward.

6:26So then you ask, okay, the sales tour is awkward. Why? And then you realize maybe my personal trainers are not very warm, right? To people coming into my gym. Okay. And then you go down to the next level. Why? Why are my personal trainers not warm? And then you realize I haven't told them what to do. There is no onboarding process, right? For them. And then again, you go down this route five times. and what you land, what you end up with, is probably a very different perception of the problem from the one that you started with. So video's cool, but I have what scientists call a face for radio.

7:07And so what's even cooler is long-form audio via my podcast and my newsletter, nickonomicspod.com. Go there for free, subscribe to my newsletter. It's one email per week, super tactical. And then go to my audio podcast. I do three to five episodes a week, depending on how curious I am. And it's stuff like this. It's all free. No sleazy sales pitches. Nickonomicspod.com. So it's not a marketing issue, for example, in this case, but it's more an experience and training issue because you haven't given the ammunition to your guys. Can I try and rephrase it to you and you tell me if I'm understanding it right?

7:40Sure. Okay. Have you ever heard the Backstreet Boys song, by the way? Tell me why. I'm a big fan of the Backstreet Boys. I was about 13 or 14 years old. Yes. Yes. Tell me why. Okay. So let's use the gym example. Right. You have low sales and you start digging into it. You said something in the beginning that I think is really important. You said to identify the right problem, because there can be multiple problems that you identify, but which one is the right problem? And sticking with the gym analogy, you have low sales and you might look at the first thing and say, wow, we're only converting 30 % of our customers.

8:18We should be converting 50. And that could be a problem. You're like, okay, that is an issue. But then you go to the why. You're like, okay, well, why are we so low in our volume? Okay, well, actually, we're only getting 10 walk-ins a day. We should be getting 30 walk-ins a day. Oh, wow. Okay, so we also have a lead issue. And why? Why do we have a lead issue? And then all of a sudden, you drill into it and it's like, oh, our messaging sucks. We don't have a good brand. we don't have anything specific that we're marketing where people are attracted to us. So that makes it difficult to get people in the door.

8:52And it makes it difficult for our team to close them once they get in the door to help them understand this is exactly what you're getting out of this gym. So if you fix the branding and the marketing, sort of, you know, what are the programs that we offer? How are we going to help you achieve your goals, et cetera? You're going to not only solve the leads, but you're also going to solve the conversion problem. But if you would just stopped at the conversion the first step that's not the right problem the right problem was to go all the way back to like messaging or branding positioning etc am i understanding it right did i yes articulate it okay yes so first of all you have a great voice so you could have been the sixth backstreet boy so thank you that's that's very good yes you explained it and summarized well.

9:36And you actually, maybe without realizing, you also identified an adjacent challenge, right, for the consultants. Because you said maybe it could be a lead issue. It could be also a conversion issue and sort of an experience. So you already identified multiple problems. When you do this exercise, the reality is that you come up with different causes. And sometimes, unless you have really a ton of data and a ton of information and access to all the departments of the business, you sort of don't know which problem is really the most important. When you do this exercise and you come up with maybe a list of 10 things that could cause the issue, then what do you do?

10:24You can't fix everything, right? At the same time. So you sort of need to come up with prioritization framework with the model that you can use to prioritize these problems in a way that help you. So you know what to tackle first. Do you have to invent that? Like, do I have to create that myself or are there things out there I can kind of steal? There are many. There are many ways that you can do this and probably some of them would be specific to the industry and the problem. but one that I can give you right now is frequency, severity, and willingness to pay. So what do I mean by that? So frequency.

11:04How often does this problem hit the client? So how often do you see this problem happening? When you say the client, are you talking as a consultant, oh, the business is the client? Or are you talking about for your business? I'm talking about my client, right? I'm talking about my client, which is the business, right? In your case, it would be the entrepreneur, right? How often does this guy see this problem happening in his business? I'm simplifying. then severity would be how bad when this problem happens how bad does it hit so we need to understand that not all problems have the same impact obviously so we need to frame it that way and then we have the willingness to pay so this is again very common also with large enterprises there are many problems that we can fix and not all problems as expensive or as cheap to fix And so what is the nice to have and what is the must have?

12:08Which means what problem do I actually absolutely need to have a functioning business? And what problem is that I can just sort of wait or solve with a workaround or maybe solve a bit later? Is that a subjective process or like how do I decide what is and isn't vital? Normally what we do, we have like a questionnaire or we have a scoring mechanism. that we use for a certain industry and that we use as a benchmark across different clients. So we try to make it as quantitative as possible, because otherwise there is a lot of discretion. But then also, I think when the experience and the expertise of the consultant comes to base, I've seen this before.

12:53After you do this job for 20 years, there is a lot of pattern matching happening. You already see, okay, this problem is another one of those. that problem is one of these other categories. So you already have in your arsenal, you have a set of tools and almost like a field, right? For how you should approach at least a problem because problems are always different, but the approach could be similar. Let me ask you this. I've gone through the process many times and there's always a balance of trying to create an exhaustive list of all of the issues and scoring them and a great framework and then speed and urgency.

13:37It's like, my business is failing. I need to fix something. How do you balance that as an entrepreneur? I mean, and you've come into these exceptionally large organizations that are very, very complex. Do you have a process that you go through that balances the speed with you know making sure you capture everything yes i think again i'm glad we're having this conversation because i'm noticing a lot of parallels with enterprises client as well same story in the enterprise i think the the times of let's wait nine months or 12 months or a year and a half to see results are gone clients even now even in large enterprise they want to see results fairly quickly.

14:20So yes, we can wait for months and months and months to go through this exercise. We can solve this problem, this challenge in a couple of ways. One, we can sort of predetermine, we can time box the exercise. We can say we're going to run this exercise for certain number of weeks, let's say four weeks or eight weeks. And we are going to prioritize and uncover the most important problems, put it in a matrix or using the quantitative or qualitative framework and identify the issues, the big rocks, right? And so you time box it. The other way is also to inject into this discovery phase, inject some showcases.

15:11And so work on sort of a rapid prototyping rapid proof of concept mechanism that you have so that you probably look at a portion of the business and then you identify two, three problems you want to fix. You do a proof of concept, you show the results and from there you get a feel from the client if we are taking the right direction. Otherwise, we continue with the other portion of the business. You could use also this approach. It's really depending on what the client wants to get out of your engagement, what they expect to see, how much money they want to spend, how much time they want to spend.

15:48So as a professional problem solver, which one of these problems would you rather have? Would you rather be in an organization that moves too quickly or that takes an exhaustive analytical approach to articulating all of the problems? Right. So in my experience, I have worked a lot with banks all over the world. But in general, I should say that financial services are very risk averse and probably rightly so, because you don't want. Yeah, you're managing people's money. You don't. Right. Correct. I mean, you know, the Silicon Valley philosophy, move fast, break things, maybe doesn't apply that well.

16:28Doesn't work so well, though. Yeah, exactly. Doesn't work so well. However, even within this industry, I have worked for banks that were much quicker at making decisions and moving and for banks instead that were probably were a bit slower. And where I enjoy the most is obviously where there is more action. I mean, as a consultant, you want to be in the action. So you want to make a hypothesis, which is, of course, backed by data, backed by experience, and you don't want to completely go blind into moving. So you want to make a hypothesis and take a direction and start moving. I think that's where I enjoy working more in a sort of a fast-paced environment.

17:21And I think the smaller the organization is, the easier it is to go into that sort of execution mode. How do you build a good feedback loop for that? Because I think that that's important, right? Like, hey, let's go ahead and move. Let's test. Let's iterate. But if you don't have a feedback loop to say, oh, this is what we did. These are the results. Let's kind of fix it. That can be a problem. So it's like, I don't know. How do you do that? That's, for example, the showcase approach, right? that I was mentioning before. If you have a built-in mechanism to showcase to the client some of the progress that you have done in the last two, three, four weeks, then you also have a way to ingest feedback from the client and change direction.

18:07I can tell you, like 20 years ago, there used to be this big way of implementing software and implementing an integrated system called waterfall approach. We spend six months on a blueprint. Then let's do the next nine months on building. Then let's do the next three months of system test, unit test and the problem. So the program would last for two years and only at the end of it, you would see the results. And this was a commonly accepted approach. Hey, I don't know if you remember this, but when we started this podcast, we entered into a social contract. I would spend time, energy, and money producing this podcast, interviewing these individuals and giving you insights into how to build, buy, start, grow your business.

18:56And you would like, subscribe, and leave me five-star review. Now, out of that, we both get to talk to really cool people and hear really cool insights. We both get a ton of value. But I just want to help you keep your word. So would you do me a favor? Will you go leave a five-star review for me on Apple or Spotify? It would really help. and if you want even share this with a friend. And then you might have heard of Agile. Agile was originally a software development practice. So it was invented and used for software development. And then somehow, let's not go into that, somehow became also an approach for the enterprise and then people came up with this scale Agile framework and then they created like a whole industry out of it.

19:45And basically, when you hear the word agile now in an enterprise contest, this means that you want to iterate much quicker and you want to show results much earlier. So it's not unusual to have every two months or every month even at the end of each sprint, what we call it, you show the result, you do a demo and you collect feedback. You do another demo the next month and you collect feedback. So the point you were making, the feedback loop with your client is much shorter, which helps, in theory, creating better product and more aligned product with the actual requirements of the client. I have a question.

20:30This is like not off topic, but it's not what we're talking about. Oh, good. I have this idea in my mind that consultants make a ton of money. people pay them a ton of money to fix problems but then there's also this perception of the consultant didn't really help me fix the problem that i wanted them to help me fix either it was going to cost more money for them to actually implement it and then who's going to actually run it and manage it and all those things so it's kind of like this weird balance where companies know that they can't identify the problem so they got to go get a consultant and yet many companies then complain that the consultant came in they billed us for a bunch of hours and we still don't know what the right answer is is that a systemic problem within the company or did like our consultants just naturally trying to bill people for more and more money so i think obviously it's a very interesting question what you're asking am i off base have you've heard that before right i'm not like the first person to say that of course of course okay of course in fact i had one client he's a you know great friend and very loyal client over the years he has been.

21:36And one day, this was many years ago, after we presented the outcome of one of the discovery phases working with him, he basically said, okay, so what you're telling me is that the outcome of this consulting engagement is another consulting engagement.

21:59And I thought it was funny, but he hired us. also for the next consulting engagement. So obviously the reality is if you hire me for three months, there's only a certain limited things that I can uncover or do even in this time box period. And so you can't expect that I come in in three months, I fix all your problems. So I can fix certain problems for you and probably in the process of fixing some problems, I identify more. and to fix those problems that I have identified during the first engagement, of course, I need another engagement. So there is a bit of that. I think the other problem, which is, I would say, more of my clients' problem, is that sometimes they end up depending too much on their consultants, which is never, in my view, is never a good outcome.

22:54So this is something that I always tell upfront to clients, is we want to enable you to eventually run this on your own. Like I don't want to be stuck with you forever. Again, when I say client, I mean an enterprise. So I'm very happy to be working within the same enterprise for a long time, but not on the same project or within the same department. I want to move around because this gives me also more breadth, a better understanding of this client as an enterprise. So to go back to your question, some consultants probably want to extend their own services and they do everything not to be transparent with the client and try to get the next engagement.

23:43it's an interesting dynamic because if a company has a problem they reach out to a consultant it's because they either don't have the person like the the manpower necessary to solve it or they don't have the expertise necessary to solve it so just by bringing in the consultant you've already acknowledged one of those two things the consultant may come in and say here's my recommendation to fix the problem but typically the consultant is going to come in and say well in order for you to not have this problem again, you probably need to have somebody who's either an expert in this or the manpower to take care of it.

24:18So it is this kind of weird feedback loop that they get stuck in. So like that part of it, I totally understand. Yeah, but also I think we need to probably baseline some definitions because it's consulting. It's a very broad terminology, right? So there is the consultant that only focuses on strategy. So they come in, they give you a strategy. A strategy is not a plan. The strategy comes with problems, obstacles, and how you're going to fix these problems that you uncovered. But then they leave. They actually do not implement those solutions for you. Then there is another, let's call it type of consulting where we uncover the problem, but then we implement the solution for you.

25:09And that's very different. The skin in the game, let's call it that way, of the second approach is probably much higher than the first one because I uncovered the problems and now I'm going to fix the view and I'm going to be held accountable for the implementation of the solution. So when you go that path, there is a clear advantage that comes from hiring a consulting firm. Building capabilities is very time consuming for a client. So what do you do? You buy them from consulting firms. I'm kind of going through this process right now with the company that I have. And there's always a balance.

25:50Like we talked about a little bit earlier, it's like how much data is enough data. I once heard like 385 is the right number of people to have in a survey once it becomes statistically significant. but how do you architect the data collection piece? What's enough? How do you know when you finally hit that point? I think practically most of the times is a time box exercise. So, and you walk backwards from there. You say, look, I've got two months. Within the next eight weeks, I need to have an answer. And then what you do is to, even there, you prioritize the data that you're going to analyze. you cannot physically, you cannot look at all the data that you have.

26:33Otherwise you will end up into another sort of scenario, which is the analysis paralysis. You have too much data and you don't do anything with it. So you need to prioritize even there and address the big rocks, right? But what are the major issues that you have here? You time box the exercise. I think this would be the most practical thing to do. Time becomes the constraint, not this is how many people you need to speak to. Yeah, but the problem is how much time do you have? Of course, we can decide to talk to X number of people. This exercise can go on for a very long time. Can you afford spending that time in talking to all these people?

27:15Instead, probably a smarter way to do it would be let's create a list of the people that ideally I should talk to. Now let's rank these people. Who are the top X number of people that I absolutely have to speak to? Then what is the next layer? Then what is the next layer? You eventually end up that 90 % of the information that you need is within the top, I don't know, 15 people. And what you're going to get is only marginal improvement with the bottom 10. So if you have time, go with it. Here's my last question for you. What's something you think that most consultants get wrong? Consultants tend to focus disproportionately on hard skills.

28:04So they only try to, and this is a consulting firm, by the way, challenges, but they train and they learn domain skills, hard skills, pure, pure hard skills, Excel, how the industry works. They go deep into a specific domain and industry, but they neglect a lot of the soft skills. They will be very useful later on in their career. And this is, I think, it's a problem that you only realize you have when you are several years in your career because hard skills are sort of table stakes. And I think now with the introduction of AI tools everywhere in the enterprise, those sort of hard skills are becoming more and more commoditized.