--Will Carling

Let me tell you how I started a successful consulting firm so that you can learn from my experience . . . and get better results than I did.

After three years at head of corporate planning and development at Heublein, I was tired of the 100 mile commute each way. Contacting my old clients, I was pleased to find that they were all interested in having me work for them at night and on the weekends.

With Heublein's permission, I started offering consulting again. Soon, I had a big enough base of business to start consulting full time, as the head of Mitchell and Company.

A month after I did that, Carol Bruckner Coles who had also been a colleague at The Boston Consulting Group, resigned from Heublein to join me. Carol did more of the missionary marketing than I did because there were more prospects near her home in Connecticut than near mine in Boston.

Early on, she realized that selling to a lot of people at one time was a better idea than selling to people one-by-one. We launched a series of free seminars in New York, and companies were soon fascinated by our ideas about how corporate performance translated into stock-price improvement, something we had done a lot of work on at Heublein.

That interest surprised us because much of our strategic work was of more economic value. This stock-price improvement practice became the backbone of our firm over time. From this enthusiasm for stock-price improvement, I learned that there was untapped potential in areas that I didn't even consider to be very important because others did.

Wanting to push the boundaries of knowledge, Mitchell and Company did pioneering research in many areas of stock-price improvement. Typically, however, we found that client interest in important new ideas and practices was tepid, at best.

Focusing on that lesson, we turned our research model around and began to only research questions that were of interest to clients. In the process we formed a learning organization for executives at major companies, Share Price Growth 100.

Over the course of a decade, we learned that every major existing approach to stock-price improvement other than the one we had been developing was fatally flawed. Why? It turned out that those who wrote the road maps for stock-price improvement hadn't bothered to do much, if any, research to test the validity of the directions.

Following Peter Drucker's advice, we began inventing lots of new measurements, employing those measurements in as many ways as we could, cross-checking our conclusions with independent sources of measurements, and adjusting our conclusions to reflect how well the past estimations had worked. One of our first new measurements was to express a company's stock price in terms of the factors that the company's shareholders paid the most attention to.

We did this by looking at statistical correlations to a company's historic stock price. Next we interviewed shareholders to find out which of those most highly correlated factors (or similar ones) the investors actually used to make buy and sell decisions.

The result was a verified multivariate correlation (an equation describing past stock prices in terms of what investors considered) that reflected those shareholder perceptions and practices. Those verified correlations, in turn, were helpful for anticipating stock-price changes through locating what had happened to companies taking new actions whose shareholders had similar perceptions and practices.

In addition, we used anonymously sponsored interviews to test market planned or potential actions to see which steps would elicit the most stock purchasing with the least selling.

We had a big surprise at first: We greatly underestimated how well our advice worked. We weren't optimistic enough!

Here's an example. One of our clients had asked us about taking a subsidiary partially public. After they succeeded with that stock offering, the parent company's stock went to almost double the level we had predicted.

From that observation, we eventually learned that the client had created a bandwagon effect that caused investors to rush forward to create stock-price growth faster than would otherwise have occurred for less well designed and communicated programs. To adjust for that bandwagon factor, we added a fourth set of measurements related to the improved ways of understanding the current and potential liquidity of the stock.

Eventually, we developed a service to facilitate creating and sustaining the bandwagon effect and incorporated that learning into our estimations. With that service, we could help companies attract investors who would raise the value of the company while avoiding those who would harm the company's stock price.

Then, the great epiphany occurred for me: With the right direction, people could greatly exceed the highest levels of historical stock-price performance that anyone had achieved. Now that was interesting to think about! Many company leaders were intrigued, too, and identifying and executing strategies to exceed historical stock-price performance became a rewarding part of our company's strategy consulting practice.

Oh, how I wish I had been a faster learner from my clients in those days. I hope you will learn from my experience.