It is very interesting to observe what is currently happening in and around the Iranian market, now that the JCOPA has been implemented. Over the past months we have attended many Iran related events in Germany, as well as in Iran. In the following I would like to state my observations in regards to the consulting landscape in particular – to follow are my personal opinions, please feel free to comment.
A quick snapshot of the pre-sanction relief era of consulting in Iran (findings from a thorough industry scan that ILIA Corporation conducted in 2013):
Management consulting at the macro management level and in private sector activities has existed for a long time in Iran, but management consultancy in its current form has only been started a few decades ago.
The industry has experienced various phases of development which have shaped it under direct impact of environmental changes. The presence of different combinations of governmental organizations, private companies and individuals that provide management consulting services to various industries and sectors intensified competition in this industry. During the past years the industry suffered severely and international businesses were not a target, as very little business was taking place.
Due to several internal and environmental factors this industry is undergoing austere times in Iran. Among internal challenges are the lack of specialized industry focused expertise among consultants, promoting tools and techniques instead of understanding real problems of companies, and low level of compliance with internally recognized management consultancy qualifications. Economic depression, widespread economic sanctions and stringency of production are among the negative influential factors.
As a result of interactions between key stakeholders of this industry, management consultancy in Iran can be expected to be more regulated, to be asked for higher professional requirements and to receive higher legal support.
After JCOPA implementation consulting firm’s / business enablers are growing like mushrooms from the forest floor, especially catering towards international business
It seems now that many domestic and international companies are seeing an opportunity in the market again, an equal amount of consultants has popped up. Anyone who speaks Farsi and / or has been to the country seems to have become an Iran expert overnight. Many websites were launched one day after the deal was signed in Vienna last year July to cater towards the gold rush frenzy that has broken out.
I think that as always the people who keep a cool head in such a situation will be the long-term winners – how to separate the weed from the chaff:
Belief me when I say that no genuine consultant will work for free, i.e. purely based on a success fee. Why?
- The asset a consultant sells is time (spent to create value) – already the understanding of the client’s situation takes time and the achievement of goals assumes perfect understanding of the individual client’s situation
- The experience a professional consultant has accumulated is way too valuable for giving it away for free and it is that knowledge base that they charge for (if they have one)
- A professional consulting firm will have fixed costs and overheads to take care of (top talent has a certain price in any market)
Will people offer you to work for free until success is achieved? Absolutely!
But be careful, this means at the same time that this person has probably offered the same free services to a lot of other people, which means that there will be no focused and allocated time to your specific case, which minimizes the chance for success of your project, whilst at the same time spreading the potential for a successful deal for the consultant.
Also, often what you might perceive a s a success is short of many integral steps along the way to your goal. If you do not have someone on the ground who understand your goals, and who knows how to achieve them under local market conditions, you almost certainly will lose out on many opportunities.
Other problems that will cost you time to build the relationship and a business case (and ultimately money) include miscommunication, ambiguity, mismanagement, unprofessional behavior, etc.
Our advice is to take time to find the right partner and to keep a cool head. Here a checklist to determine a genuine consultant:
- Does the consultant take the time to understand your concrete business endeavor?
- Will you receive a written proposal that clearly outlines the steps required to achieve the desired outcome?
- Are there professional references, and not just a nice collection of logos?
- How well do they know the market?
- Are they present in both markets?
- Do you feel comfortable with the person? Does the person take the time to understand your situation?
- Do they also tell you about the challenges, or just the good bits?
- Can they proof market / area specific expertise?
- How long have they been in the market for? And when was the last time they visited Iran before 2014?
The key lies in listening to your gut feeling, and to look out for professional behavior (no matter where in the world, the principal that professional people will deliver a good job applies) – too often have I seen that for example very conservative Germans become unnecessarily flexible in markets far away from home, not thinking at all anymore.
Why you might need a consultant, and for what?
We see a difference in companies with a strategic approach, and the ones that want to go for the quick buck (the latter will definitely not succeed in Iran, clocks run differently in this country). We enjoy working together with companies that strive for long-term, sustainable business, and only mutually beneficial partnerships will be encouraged by key stakeholders in Iran.
If you want to go into a market that has been a black box to the outside world for a decade you will benefit greatly from a partner that speaks your language, who understand the local business landscape and all stakeholders involved in the market.
You would also not climb Mount Everest without a guide, right?
Same logic applies for an emerging market with all is paradoxes such as Iran. A good guide knows the terrain, equips you with the right tools, prevents you from falling, understand the underlying conditions, and warns you about detrimental pitfalls.
How many people are there really who understand the Iranian market as-is, and are not just starting now to understand it from both sides? Not many! The Iranian market has been a black box for most over the past decades, and it will remain a market full of paradoxes and a multitude of stakeholders that need to be managed smartly.
There are three types of consultants in and around Iran:
- Type 1: They are somehow associated to the market but have not been there for the past decade and thus cannot really claim to understand local business structures and behavior
- Type 2: They have been in the market for the past decade but do not have ties to the outside and cannot really claim to understand international business and customs
- Type 3: They have been in the market for the past decade and have up kept ties with the outside, both from a business and cultural aspect
No need to mention that Type 3 is very rare and if you come across one at least have a chat with them – the value proposition they carry is substantial.
- Take the time to find the right partner
- Choose professional people, as they will enhance your chance of success
- If you want to go into a market that has been a black box to the outside world for a decade you will benefit greatly from a partner that speaks your language, who understand the local business landscape and all stakeholders involved in the market
- You want the people that go the extra mile, and they need to be motivated
- Cheap is not necessarily good – you pay more in the long run and you lose time. So many so-called experts are hunting around, but most of them do either not know the market, or they do not understand the western perspective
- Quality costs money – you would also not expect a Mercedes for the price of a Toyota. Difference is that you can see the physical product, but at the end you can also not look into the motor
- Also see it from the perspective what you save when you hire a consultant: time, travel, worries, etc. Judge the costs by the value that can potentially be created, and not just the absolute costs
- The value added of a consultant lies in asking you and showing you critical questions, and to solve problems – not in telling you exactly what you want to hear
- The challenge with any external entity is the trust building phase – chicken or the egg
How does ILIA Corporation ensure quality?
- Cultural aspect in our company – we have it deeply embedded in our culture that we are not satisfied with just doing a good job
- The talent we have within our team
- The depths we go for in order to ensure reliability of our advice
- Critically ask at every stage
- Always think from the perspective of the client
- Use project management tools that ensure that the project objectives are being pursued at every stage
- We have accumulated a large knowledge base of the Iranian market through actual operational work throughout the past eight years – at the same time we do understand how foreign clients think, which is a rare combination
- We tell our clients honestly if we are capable to fulfill their task, and in case we are not we can refer them to someone who can. In order to ensure a high quality, we cannot be experts at everything
Written by ILIA Corporation Managing and Founding Partner Marlon D. Jünemann
ILIA Corporation is one the most known consulting management firms in Iran.