David's Rules of Consulting Work...

I have been thinking about the possibility of starting my own consulting firm for a while now.  What follows are some business heuristics that I have developed based on my own experiences doing consulting work:

• The two most important initial hires in a consultancy are your accountant and your Chief Technology Officer/Head of IT.  These should be long term hires, and you must be willing to trust them with your livelihood.
• Whatever expectations and analytic standards you might set for yourself initially, over time the pressures of business will drive your expectations and standards to an equilibrium that is just a little bit ahead of those of your clients.  Therefore, take on a small number of clients that satisfy three requirements:
• Interesting/challenging but tractable problems
• High expectations for both themselves and for your work
• High analytic standards/integrity 
• Be wary of contracting for the government!  Government clients tend to be subject to political considerations.  Oftentimes these political considerations will lead them to throw analytic integrity under the bus.  If you must contract for the government, seek out those agencies/departments whose analytic integrity is closely tied to their institutional reputation (i.e., central banks, etc).  Avoid at all costs working for highly politicized agencies/departments. 
• Leverage the power of cognitive diversity!  Hire a group of cognitively diverse, smart people and then pay them enough to eliminate money as the primary motivator...
• Foster a positive business culture that encourages collaboration both within and across teams...
• Have your employees invest 20% of their time on R&D and professional development...
• Grow Slow! Fast growth is unsustainable growth...

More to follow...