Nov 3, 2005 | Richard Bird | 2 Comments

Pink Paisley, Conflict Of Interest, And Time

We are sometimes contacted by potential clients with this first question, “Have you worked with, or are you currently working with, any clients in our product category?” This question is posed not because the prospect wishes to seek experience, but because they prefer - or mandate as policy - not to be working with a consultant who has or is working with a potential competitor.

This is an unfortunate thing in our business. In any engagement, we invest a great deal of time studying specific product categories to develop understanding and discoveries that would potentially benefit anyone in the category without regard to specifics of any specific project initiative. (See our Patterns reports for an example.)

Yet, competing companies will choose not to take advantage of the experience we have already gained and, instead, choose - and prefer - to recreate the learning process with an uninformed resource solely to avoid the potential for conflict of interest.

Meanwhile we are paid once for the prior effort only to find ourselves restrained by both the original client and potential future clients without any remuneration in exchange for the restriction.

In a survey sponsored by the APDF this question was posed: “Is it a conflict of interest to simultaneously work with two clients if their products are in the same industry but a different category? (for example, trucks for Ford and cars for GM). My answer to this question was as follows:

Certainly, I feel the potential for conflict exists. This is particularly true when competing clients share intellectual capital with a common outsider. There’s no avoiding it. For example, we may know that GM will be touting pink paisley automobiles in 2005 - a significant and revolutionary thought. Meanwhile, Ford has asked that we explore new colors for 2005. Might we irresistibly be compelled to explore “plaids”? let’s say, rather than solids? We may not explicitly communicate or expose our GM knowledge, but it certainly can influence thinking that otherwise would not be pondered.

An honest relationship is always the best. Provide ALL information you are legally allowed to provide regarding current client relationships that your prospect may consider at-risk. Past conflicts can actually be an advantage in consideration of the similar industry experience. If you avoid communicating potential conflicts of interest, then your relationship and firm are unnecessarily at risk.

Each client organization’s view is unique, as well as each client representative’s view. We have relationships where competing clients feel it’s an advantage that we have broader knowledge (business consulting and financial services clients). We also have prospects who won’t even speak to us unless we eliminate potential conflicts (consumer product clients).

The “conflict of interest”? refusal happens more often than we would like. It is troublesome particularly when an active client forbids one to work with a competing company - effectively making hard-earned, specific knowledge worthless and restricting the growth of our firm in return for a vaguely-defined and fragile relationship.

A real dilemma. Even we see both sides of the coin. Is there a middle ground? What do you think?

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The image above? My prized 1968 Pink Paisley Telecaster Bass. Mint condition with tags. Oh yeah.

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