Glossary
What does 'skin in the game' mean in consulting?
Skin in the game in consulting means the advisor carries part of the risk of the outcome, not just the fee. Instead of being paid the same whether the advice works or fails, the advisor ties their compensation to results, through a guarantee, a refund, or fees linked to what actually moves.
Classic consulting has a misaligned incentive: the consultant is paid for the recommendation, not the result. If the advice does not work, the consultant still keeps the fee, and often sells the next engagement to fix the last one. Skin in the game removes that gap by putting the advisor's own money or reputation on the line for whether the work actually delivers.
In practice it looks like a money-back guarantee on a diagnosis, fees that are credited against a build, or compensation partly tied to the outcome. The point is not the mechanism, it is the alignment: the advisor only wins when the client wins.
Skin in the game only works when the advisor can also execute. An advisor who guarantees an outcome they cannot build is bluffing. That is why it tends to come from operators, who have lived the consequences of being wrong, rather than from pure advisory firms.
Frequently asked
- What does skin in the game mean for a consultant?
- It means the consultant shares the risk of the outcome, through a guarantee, refund, or outcome-linked fee, instead of being paid the same whether the advice works or not.
- Why does skin in the game matter when choosing an advisor?
- It aligns incentives. An advisor with skin in the game only profits when the work actually delivers, so the advice is filtered for what works, not for what extends the engagement.
- Can any consultant offer skin in the game?
- Only credibly if they can also execute. Guaranteeing an outcome you cannot build is a bluff, which is why skin in the game usually comes from operators rather than pure advisors.