How Hangar 75 Unlocks Value with Outcome-Based Commercial Models
In today’s competitive business landscape, corporations are demanding more from their strategic partnerships, particularly when it comes to measurable results. Traditional consulting models—whether time-based or fixed fee—often fail to provide true accountability and alignment with the business’s long-term goals. Hangar 75’s outcome-based commercial model changes this dynamic by tying compensation directly to verifiable outcomes, ensuring both parties benefit when success is achieved.
What Is Hangar 75’s Outcome-Based Approach?
At Hangar 75, our focus isn’t on time spent or deliverables produced; we focus on results that matter. Our outcome-based commercial model ties our compensation to measurable business outcomes defined by our clients. Instead of operating on a fixed-fee basis, our compensation is directly tied to achieving pre-defined metrics, such as increased customer acquisition, revenue growth, or societal impact.
Each engagement is customized, taking into account the strategic objectives of the client. This approach allows us to align our success with theirs, driving real business value while ensuring we remain fully invested in achieving the best possible outcomes.
Benefits of Our Outcome-Based Model
For Clients:
• Reduced Risk: Payment is contingent on success, reducing financial exposure.
• Aligned Incentives: Our goals are tied directly to the client’s core business objectives.
• Clear ROI: Each dollar invested is tied to measurable, verifiable outcomes.
• Increased Accountability: We are incentivized to innovate and deliver results, which drives superior performance.
For Hangar 75:
• Reward for Impact: Our compensation is directly linked to the value we create, allowing us to focus on delivering high-impact solutions.
• Deeper Partnerships: We move beyond transactional relationships and build long-term strategic partnerships.
• Competitive Advantage: Our outcome-based model differentiates us from traditional consultancies that operate on fixed-fee engagements.
Overcoming the Challenges of Outcome-Based Engagements
While the benefits of outcome-based models are clear, they also present challenges. Here’s how Hangar 75 addresses them:
1. Defining Measurable Outcomes
Agreeing on clear, quantifiable metrics of success can be complex, especially in multi-dimensional projects. At Hangar 75, we invest significant time upfront working closely with clients to define measurable outcomes. For example, in a theoretical healthcare engagement, outcomes might be defined as both an increase in patient satisfaction scores and a reduction in operational costs through the implementation of digital health tools.
2. Attribution of Results
Isolating the impact of our work from other factors influencing performance can be a challenge. To address this, we utilize robust data analytics to track performance metrics. Imagine a scenario in which an automotive firm runs a well-being initiative tied to employee safety and customer satisfaction. By carefully measuring safety incidents and customer feedback pre- and post-initiative, we can attribute the results directly to our efforts, providing clear evidence of our impact.
3. Time Horizons
Outcome-based models often involve long-term strategic initiatives, which can create financial uncertainty for consultants. To overcome this, we design hybrid models that combine outcome-based incentives with fixed fees or interim milestones. For instance, a client working on an R&D innovation project might structure payments based on early-stage breakthroughs and the eventual commercialization of new products, allowing us to deliver continuous value while working towards long-term success.
4. Risk Appetite
Not all organizations are comfortable with the risks associated with outcome-based engagements. To mitigate these concerns, we often propose a blended model. For example, a consumer goods company looking to launch a new product line could opt for a model where a portion of our fees is fixed, with the remainder tied to specific sales performance metrics. This structure reduces the financial uncertainty for both parties while ensuring a strong focus on results.
5. Cultural Alignment
A successful outcome-based engagement requires strong cultural alignment between the consultant and client. At Hangar 75, we place significant emphasis on transparency and communication, fostering a collaborative environment. Consider a scenario where a multinational technology company engages us to help with a global expansion strategy. By establishing a joint steering committee, we ensure continuous alignment between both teams, addressing issues proactively and ensuring that we remain focused on shared success.
Practical Examples of Outcome-Based Models in Action
While specific client engagements are often confidential, we can explore how these principles could apply in various industries:
Healthcare Sector: Imagine a healthcare provider aiming to improve patient outcomes while reducing costs. In this scenario, Hangar 75 could structure the engagement around metrics like reduced hospital readmissions or improved patient satisfaction scores. Our compensation might be directly linked to achieving a specified percentage improvement in these areas, ensuring our efforts align with both financial and societal goals.
Automotive Industry: An automotive manufacturer looking to drive innovation might run a global challenge to source new ideas. Hangar 75’s role could be to facilitate the challenge and incubate the top ideas. Here, success metrics could include the number of commercially viable ideas generated and incubated, with our compensation tied to the subsequent market performance of those innovations.
Consumer Goods: A global consumer goods company might engage Hangar 75 to help launch a new sustainability-driven product. The success metrics in this case could be tied to both sales performance and reductions in the company’s carbon footprint. Our outcome-based model would align our fees with the dual outcomes of increased revenue and measurable environmental impact.
The Future of Outcome-Based Engagements
As businesses increasingly seek more accountability and measurable ROI from their consulting engagements, outcome-based models are poised to become more prevalent. We believe that a range of hybrid models will emerge, offering flexibility and customization to suit different client needs and risk appetites. Hangar 75 is well-positioned to lead this charge, with our ability to deliver both commercial and societal outcomes.
We see outcome-based engagements as more than just a pricing model; they represent a deeper commitment to driving real impact for our clients. By aligning our incentives with the client’s long-term success, we create partnerships built on trust, transparency, and tangible results.
For further information on Hangar 75:
Media: media@hangar75.com
Capital + Impact: capital@hangar75.com
Ventures: ventures@hangar75.com
General: hello@hangar75.com