Updated: Aug 9
by Andrew Lenti
What losing a big-ticket client taught me about entrepreneurship and the mixed messages of corporate innovation
SPOILER ALERT: If you are sitting on the fence wondering if you should go into virtual freelance consulting or launch an entrepreneurial venture targeting corporate clients through your network, you may find this article disheartening.
"It is not the strongest or the most intelligent who will survive but those who can best manage change." - Charles Darwin
In 2022 our team made the pivotal decision to double-down on our online software-as-a-service offering by making our operational excellence business management platform completely out-of-the-box, acquirable online and conveniently available to the little guy (aka small & mid-size companies). Prior to this decision, our ideal client avatar consisted of enterprise relationships with a significant portion of our offering dedicated to consulting and relationship management.
Our decision to fully automate our onboarding, training, billing, and client service support model was driven by our recognition, or better stated revelation that investing in client relationships based on placing trust in human beings, especially those who are ‘paid extra’ for their corporate loyalty can often lead to great disappointments and impedes our objectives to stay lean and agile in our innovative efforts.
Before labelling me a cynic, take note that I don’t believe I am alone when stating that counting on the word of people in business, especially those working in the field of innovation in a corporate setting is a very risky bet. It is not that people intentionally lie but that most corporations still have great difficulty in providing a framework that fosters transparency and trust among staff to reduce organisational complexities while allowing senior management to execute on strategy.
The crude reality is that to stay agile, businesses need to be able to change gears quickly and what may be formalised in an agreement today, may disappear tomorrow when management decides that they made a mistake.
As an external consultant looking to bring high virtual value, you must be aware that the bigger your client is, the greater the chances that you will go up against latency resulting from the mixed messages and lack of decisiveness in your client’s execution which is often followed by the proverbial ‘lip service’ as you are waiting for clarifications. Such difficulties may occasionally push decision makers into uncomfortable corners forcing someone high up in the food chain whom you probably don't know to rain on your parade by making big changes.
You, the external service provider with little visibility into the dynamics of the situation may be caught in the crossfire and as we have learnt over the years, the chances that your client will be completely transparent with you during the confusion are quite minimal even though the direct and indirect costs you may incur can be quite dear.
"The most successful businessmen foresee the unforeseeable." – Confucius
For no performance-related reason whatsoever you may get pushed aside without warning, you may get 'demoted' from what your original agreed responsibilities were or worst of all and most commonly, you may get put in a never-ending holding pattern of delays chasing phantom decision makers for a signature for your contract renewal and the critical answers you require for planning next steps. All of this while listening to the excuses (aka ‘lip service’) of your client’s corporate soldiers (aka 'Yes Men') explaining to you why things aren't going as they were originally agreed.
When you find yourself in this situation, it is important to remind yourself that there is a good chance it is not your fault and even more importantly, there is little you can do about it.
It is here where thick skin, patience and good judgement as to when to fold a losing hand are crucial skills for the entrepreneur. You must recognise that it is not only your time your client is wasting but also that of your team who are going to become increasingly demoralised the longer things play out.
As an external service provider, when you see a good relationship go cold, it can often be because the company has changed gears and your sponsor has now changed roles or has changed mindset due to excessive internal complexities and lack of internal focus on strategic goals. In this case, your client to protect itself may prefer to ignore your inquiries, “kick the can forward”, and state in an unformal, ambiguous manner that your project is no longer a good fit for the company instead of finding the courage to apologise and tell you the truth that their company is bad at staying focused on their commitments, has changed their strategy and ultimately wasted your time.
It can be difficult to accept that the time and effort you spend trying to decipher your client’s mixed messages, keeping the relationship positive and staying in contact engaging in unpaid interactions may be undervalued, or even disregarded altogether.
As an external consultant working virtually, it is important to be prepared for the potential risk of losing time in corporate BS. Working at a distance can also make relationships colder and more difficult to control, especially when your client has a ‘flavour-of-the-month’ management style and is in constant 'firefighting' mode.
It is also important to remember that most of the time when the decision makers get together to take action, you will not be in the room making you an easy target for the cost cuts to come. Knowing that your contract can be terminated in a complete virtual setting and that the exit interview will be outsourced to a mid-level manager who is not in tune to the details of your relationship with their senior team is an easy out for high-level executives who prefer to avoid conflict.
"The business world is a jungle, and if you want to succeed, you have to be willing to fight for your survival." - Richard Branson
In 2022, we lost a big European client who was in the second year of a five-year contract with us. Up until the relationship deteriorated in the last 3 months, our project and team received great praise from their management team including their COO, our 15 primary software users located in multiple areas of operations, and the Big 4 external consultant responsible for product training and project administration.
In the last Steering Committee meeting update before things went downhill, the external consultant reported to the C-Suite our product launch as a "great success". Furthermore, having worked closely with us throughout the year, he assisted in drafting a joint case study with our team for the purpose of bringing it back to his Big 4 headquarters to be used as promotional material to attract new projects with clients and prospects. In short, our project was consistently coloured as GREEN (“on track”) in each Steering Committee meeting, and there was no sign of turmoil or dissidence in the air.
Despite the overly successful results delivered in the first year and the positive feedback, doubts arose in early-2022 when we noticed a press release in a notable financial publication announcing that our client made a large deal with a big and well-known Nasdaq-traded software firm operating in the process management space in the financial services sector.
This was bad news all-around for us as our platform was already being used to support their process orchestration program.
Our client did not tell us about this and probably hoped we had missed the news. We stayed quiet for some time and later noted that if we had not proactively raised the point with our client several months later that we knew of the event, our client most likely never would have told us about the enourmous project they were launching in parallel to ours which was already in the second year.
It was shortly after the signing of this deal that one of the company directors who up until that moment hadn’t clocked more than 8 total hours with our team since the start of the project began asking us to draft a new contract offer for an additional piece of work. The requirements went well above and beyond the initial contract that we had originally put in place in 2021.
We were delighted to be considered for such a request and were eager to take on the responsibility but of course were perplexed as to exactly what was behind the widening of the project scope considering that our client had just made an enourmous deal with a multinational competitor offering a similar product and support services.
"When you find yourself in this situation, it is important to remind yourself that there is a good chance it is not your fault and even more importantly, there is little you can do about it."
"Bureaucracy is the enemy of progress." - Bill Gates
As we entered the new contractual phase, we immediately noticed a very negative tone from the director making the request as he coldly rejected each of our attempts to enhance our current contract in place to accommodate the new set of feature requirements.
We were mysteriously asked to split the contract into two separate expiry date-connected contracts but were not informed as to why this was necessary nor what price amounts and product specifications were expected in each.
In short, with each drafted offer we sent, it was rejected usually stating that we were overpricing the work quotes and that the deliverables did not match their expectations. With each attempt we were also accused of ‘overcomplicating’ the situation.
Making the situation even worse, the director then engaged the lead project manager and the external consultant to become the middle men in the contract negotiation exercise. Up until that moment both were our key advocates with whom we had an overly positive relationship and were more than satisfied with the results we brought their team to date. In doing so, this action single-handily accelerated the deterioration of our relationship with all those involved in the project implementation as it allowed the director to put distance between himself and the time-consuming administrative exercise while crippling the momentum of the delivery of the project which up until that moment was bearing fruits and on schedule.
As one would imagine, the positive vibes and synergistic team building benefits we had accrued over the course of the past two years quickly became overshadowed by what was becoming a full-on contractual dispute over a contract that our team had never even asked for.
To put things into perspective of the absurdity of the situation and the exhaustive, energy-draining situation our small team was subject to, the client continued to ask us for price quotes on a long list of development deliverables that would have taken at least 9-18 months to complete but rejected each offer without giving clarity as to why.
With each quote we sent, our offer was rejected often stating that our estimated quote was overpriced by as little as $1,000 and that we had to re-do the offering.
The situation was made impossible for our team to conclude as the scope of work requested changed in each e-mail exchange so that our offering could never be aligned with the new requirements in the client request.
This went on for the entire summer of 2022 demoralising our Administration office, our two consultants that were being paid an hourly rate to support the relationship as well as the three salaried product developers who were already working full-time on the robust list of features agreed in our 2021 contract.
Despite the great and frequent praise received by the users together with their COO on the ease-of-use of our product and its utility over the course of the first year, things were taking a turn for the worse.
"Cowardice in leadership breeds cowardice in the ranks." - Al Swearengen
As the managing director effectively engineered a situation that continued to collect strikes against us with each exchange of communication, he stayed distant by keeping himself unavailable for phone and webinar calls always leaving his team to scrutinize our proposals and relay his message back to us.
Our once positive relationship with the implementation project manager also went sour in the end as our contractual negotiations became more contentious. After building a solid problem-solving weekly relationship and hitting many challenging project milestones together as a team, he became distant and the tone shifted in his e-mails which became little more than parroting his boss’s objections.
In my last discussion with their COO, we agreed to close our open contract for which we agreed that they pay the majority of the four years which were left on their contract.
In my closing statement, I emphasized the significant amount of time and resources that were wasted due to the Managing Director's mixed messages, lack of transparency, and poor leadership judgement in handling the situation and the example he set for his team.
In retrospect, if the client had been transparent with us earlier on as to their true intentions of terminating our contract instead of engineering such an unfortunate and complex situation, our Board of Directors would have been more accommodating to making the exit plan more effective and less costly.
“In business, the rear-view mirror is always clearer than the windshield." - Warren Buffett
Looking back at our recent challenges, we can see that it provided a valuable lesson in navigating the complexities of corporate bureaucracy and the importance of strong leadership in driving innovation.
Situations similar to the one previously described waste company time, resources and employee morale regardless of company size.
Reflecting on the lessons we learnt from the ‘lip service’ we received while standing on the shoulders of ‘Yes Men’ following corporate orders gives visibility into the challenges that corporate buraucracy mixed with poor leadership can pose on the innovation life cycle and the entrepreneurs who are active in supporting it.
It also highlights that there are still major bottlenecks in the start-up ecosystem and one-sided risk when big companies interact with start-ups aiming to enhance their innovation program by leveraging the start-up’s rich portfolio of R&D-based know-how.
Immediately after closing the dispute, our Board of Directors took the decision to make online sales aimed at small and mid-size companies our number one priority.
Using that milestone as a trampoline we then launched with success a series of initiatives including:
•Building an automated online subscription model offering our software affordably to
single users with a 14-day free trial
•Outsourcing invoicing & tax remittance processing to a well reputable global merchant
of record servicing 40+ global currencies
•Offering a freemium-for-life software package to pre-qualified, small & mid-size
•Building and launching an online training portal enhanced with consulting tool kits, job
aids and videos that not only explain how to use our software but the logic behind it
•Enhancing corporate policies and procedures to be more transparent with roles,
responsibilities and expectations when onboarding enterprise clients
•Enhancing our client discovery questionnaire to give better visibility into ‘red flag’
enterprise client prospects before they become clients
Aspiring entrepreneurs will need to evaluate if taking the leap into business ownership is worth the risk knowing that there are few governing bodies that effectively protect small businesses from the time-consuming and sometimes unethical business practices carried out in larger corporations who are cost savings-focused and often don’t have a clear vision into their strategic initiatives.
While we experienced some setbacks in losing a portion of our client portfolio, we also have gained valuable experience and perspective that will help us to better serve our clients moving forward and remain committed to delivering value to our market and fostering a positive and productive work environment for our team in the future years.
Andrew Lenti has been working with multinational organisations in business transformation initiatives since 1999. In this time he has been based in six different European countries as well as two years of client service operational experience in the United States. Andrew is one of the co-founders of TOPP Tactical Intelligence Ltd, a European operational excellence software provider and one of the original architects of PRESTO Digital Enterprise, the all-in-one continuous improvement business management system
currently being used on 3 continents by large and small organisations as a tool in performance governance for quality assurance and operational restructuring.