Peak-Performance Consulting: Who Hires Business Coaches and Why?

Who would have thought that coaching, of all careers, would have become a billion dollar business each year in the United States alone? Most of us think of coaching in terms of athletic performance or sports teams, of course. However, that’s not the type of coaching we’re talking about in this context. This multi-billion dollar global industry focuses on helping people deliver peak performance—not on courts or ball fields—but at work and, by extension, in life as well.

But potential clients need to know some useful facts before they select a business coach. The International Coach Federation (ICF) is the coaching profession’s largest association; in 2016, a PricewaterhouseCoopers report estimated about 53,300 ICF members in 70 countries. ICF defines coaching as “partnering with clients in a thought-provoking and creative process that inspires them to maximize their personal and professional potential.”

A smaller group comprising universities that train coaches that calls itself the Graduate School Alliance for Education in Coaching (GSAE) offers a slightly different definition. That’s because this group—consisting of colleges like Columbia University, the University of Pennsylvania, and Northwestern University—emphasizes leadership development within organizations and teams. GSAE defines coaching as:

A development process that builds a leader’s capabilities to achieve professional and organizational goals. The focus is on leaders who are in a position to make a significant contribution to the mission and purpose of their organization.

As we’ll see below, because of its emphasis on the selection and achievement of objectives, business coaching embodies a distinct personal service that differs from other professions. Indeed, coaching differs significantly from related fields like management consulting, corporate training and development, mentoring, or psychotherapy.

How Did Business and Peak-Performance Coaching Develop?

Business coaching first developed in the United States because of the efforts of entrepreneur, CEO coach and peak-performance expert Tony Robbins, who single-handedly invented the peak-performance coaching industry. Although many recall Robbins as a late-night TV infomercial pitchman throughout the 1990s, or today know him from world tours that sell out sports arenas, few understand that Robbins actually invented the coaching industry decades earlier.

Robbins originally conceived of coaching as a more effective, faster, and less costly alternative to psychotherapy for people who needed focused support achieving goal-directed outcomes. While collaborating with Dr. John Grinder, the co-developer of neurolinguistic programming (NLP), Robbins’s first commercial assignment involved coaching precision sharpshooters for the U.S. Department of Defense at a secret underground base near Washington, D.C.

Soon after, his work coaching physicians and executives for medical practice management firms led to advances that delivered better patient care at lower costs. Robbins then set up an organization to train thousands of business coaches in his most effective techniques—a company which went public and continues operating today.

Furthermore, Robbins has accomplished a stronger track record as an authority on CEO coaching during the past two decades than many realize, especially because of his work coaching other successful entrepreneurs.

As this Fortune Magazine cover story explains, Robbins and his teachings were instrumental in the founding of Salesforce by entrepreneur Marc Benioff in 1999. Today, Salesforce ranks as the sixth-largest software company in the world, reporting $8.39 billion in revenue in 2017 and an August 2018 market capitalization of $113.14 billion. Robbins is also the chairman of a holding company comprised of 40 privately-held businesses. Furthermore, Worth Magazine ranked Robbins at #25 on their 2017 list of the 100 most powerful men and women in global finance; a 2003 study published by the Harvard Business Review Press ranked Robbins at #46 on their list of the top 200 business gurus; and Money Magazine reported his net worth at about half-a-billion dollars in late 2015.

Who Hires Business Coaches—and Why?

Ever since personal computers and the internet ignited solo businesses in the 1990s, entrepreneurs—and especially SOHO (small office/home office) entrepreneurs who work alone—have frequently hired business coaches. These clients lack the readily available collaboration opportunities many within large organizations depend upon to motivate themselves and function effectively.

One such Boston “solopreneur,” Noel Theodosiou, tripled her business during the 30 months since she had started working with a leadership coach. During a recent meeting, her coach prodded her to tackle a looming project. Theodosiou told American Public Media’s Marketplace broadcast that coaches can stop clients from bogging themselves down with negative thoughts, or spending excessive time on particular tasks: “I would attribute a lot of my success to the way coaching has changed my perspective, and made some things easier and made me prioritize my emotional energy and my time.”

Like Theodosiou, clients typically hire business coaches to accomplish a broad variety of objectives. Traditionally, they’ve hired coaches to help them start a business, improve their sales or marketing capabilities, or build organizational, interpersonal, and networking skills.

However, it’s not only entrepreneurs who hire business coaches. Companies who want to keep their best employees happy and productive now routinely sponsor coaches to work with executives. And especially these days—living in a digital world—all these clients increasingly seek coaching to enhance their expertise with technology and virtual communications.

This last objective—developing technology skills—is becoming increasingly common, and one with which I’ve had a tremendous amount of personal experience. Some years ago, the credit card provider Visa USA hired me to work at their headquarters in Foster City, California to train a senior marketing vice president to use Apple’s Macintosh computers. This executive managed co-branding initiatives affecting thousands of Visa’s largest blue-chip enterprise customers across the United States. But at the time, he had no idea how to create a spreadsheet, connect to the Internet, or buy computers and software for a new home office at his mansion in Blackhawk, an upper-class gated enclave 50 minutes east of San Francisco.

For this vice president, one-on-one coaching was about much more than developing tech skills. It was more about helping him enhance his competitiveness while Visa was grooming him for a top management role. And like so many business coaching engagements, coaching for him didn’t serve merely to develop technical competence, but to enhance personal qualities like his confidence and self-reliance.

Not long afterward, one of the earliest “fintech” (financial technology) startups in Silicon Valley hired him away from Visa to take the company public. That opportunity—and the windfall fortune this executive received following the startup’s initial public offering—had only emerged as a direct result of our coaching relationship.

How Value from Coaching Triggered the Industry’s Tremendous Growth

The money spent on our coaching relationship was insignificant compared to the value that both Visa and this vice president received. This value is one of the reasons why the coaching industry has exploded into such a big business.

Coaching is the second fastest-growing industry in the world, according to John LaRosa, an industry analyst who has followed the coaching industry for more than two decades. He estimates that the market value for coaching in the United States amounted to just over $1 billion in 2016, a 41 percent jump from 2011. LaRosa expects the market will reach $1.34 billion by 2022, based on a 6.7 percent compounded annual growth rate.

The Other Side of the Coaching Industry

However, despite this rapid growth, coaching isn’t regulated. Startup costs are practically nonexistent in this industry and no barriers to entry exist in this market. Like public accountants or psychotherapists, are business coaches required to back up their titles with university degrees or licenses? Not at all. Literally anyone can claim they’re a coach, hang out their shingle (or these days, their LinkedIn profile), and establish their practice.

And although no educational requirements exist, plenty of dubious credentialing organizations charge premium prices to bestow a coaching “certification.” More than 500 entities certify coaches worldwide, observes LaRosa. Moreover, NBC News correspondent Nicole Spector points out that from many of these entities, coaches can “earn some kind of certificate in just a couple of days.”

The effects of this situation have contributed to the paramount challenge facing this industry: large numbers of incompetent, poorly trained or unscrupulous coaches. The exploding market draws “many would-be coaches, who want to leverage their life and work experience for pay,” says La Rosa.

His observation about monetizing life experience is significant. Most coaches happen to be over age 50—with about two-fifths between ages 46 to 55. And in virtually no other occupation can one seek to profit handsomely from experience without the foundation that academic standards afford most professionals.

Does Hiring a Business Coach Make Sense?

Coaching may be approaching a crossroads. The torrent of new coaches appears to be saturating the market in the United States. Meanwhile, analysts and commentators are calling for higher standards and greater accountability throughout the industry.

The current trends certainly suggest that potential clients need to exercise conscientiousness and care in selecting coaches. But do those trends mean BSchools readers shouldn’t seek coaching to help with their business challenges?

Not at all! On the contrary, the right coach at the right time can help a client realize professional and personal accomplishments well beyond what the team ever could have anticipated before the start of their coaching relationship.