Consulting, disrupted.

Over 5 years ago in a landmark paper*, management consulting was called out as an industry that was ripe for disruption. It’s a $250b dollar industry that’s growing 7 to 8% per year and is open to and actively being disrupted. Traditional approaches of consulting don’t fully work, and the consulting model is flawed:

*Consulting on the Cusp of Disruption, HBR 2013

• Traditional “fixed cost pyramid” based on billable hours
• High margin and infrastructure operating costs
• Knowledge commoditisation and democratisation
• Critical skills in the few, not the many
• Value driven by information asymmetry
• Frustrations of clients with incumbents

Disruption has been coming from Technology & Innovation, People & Delivery models and contractual arrangements. Traditionally Consulting is an industry that’s been based around pyramids of people solving client problems, leveraging analytical and strategic frameworks. Disruption is coming from platform and asset-based approaches and rapid, iterative and creative innovation often characteristic of start-ups. Whilst traditional players have established or acquired Digital Labs and new Venture models to foster new innovation, it’s still early, often not as sophisticated as client’s own innovation and is a bolt on to the main offering rather than being integrated into the core business.

People disruption is happening from bringing diverse and specialist skill sets together e.g. data scientists, designers, behavioural scientists and integrating freelance specialists to form consulting teams, often delivering virtually. There has been a high growth of expert networks to solve client’s specific problems. Delivery is increasingly moving from static strategy-based PowerPoint to deliverables that integrate and implement business objectives, storytelling, user experiences, data, design, and technology. Contractually the consulting model is moving from time and materials contracts to increasingly risk and reward sharing, pay on performance, licences and retainers.

Defining and implementing the optimum user experience a client has through the consulting engagement is not often considered by traditional players. Newer incumbents have built in incremental value opportunities, build up to a big reveal and built storytelling and narrative into engagements, lending from creative and design agencies to power the experience.

If we think about future buyers of consulting services, the way consulting is bought and sold is likely to need to continue to evolve. We know next generations buy services in very different ways. They prefer and trust:

• Content from peers over content from companies
• Education over advertising
• Online interactions over in-person conversations

Finally, if we think about strategic buyers of consulting companies, research by Equitec perhaps unsurprisingly calls out AI, Robotics and Analytics as skills that are both in demand and growing for buyers acquiring consulting firms.

Consulting firms are proving that they are relevant in this new world, but it’s a big turn to make when the whole model is established around a traditional model and you wouldn’t ideally start from here when building a consultancy business today. Indeed, new incumbents have implemented new models from the offset, typically disrupting on one element of the model.

In establishing a consulting business for the future it’s likely the following principles would be adopted:

• Organize for learning, innovation and customer impact by:
• Employing a small team of leaders at the core, like the largest accommodation provider owns no real estate (Airbnb), the world’s largest media owner creates no content (Facebook) and world’s largest taxi company owns no vehicles (Uber), consulting companies would own no or few people
• Leaders creating followers to grow in impact, influence and authority
• An empowered agile network model would underpin this core team co-ordinated through culture, information systems and talent mobility to enhance the responsiveness and allowing teams to form and disband quickly
• Projects being staffed with experts from very different disciplines rather than business generalists and experts connected through a common platform. Experts would be innovators, disrupters, experts and entrepreneurs
• Behaviours being as important as technical skills in selecting the right mix of people to solve a client problem
• Underpinning the platform a community model with points of view, tools and frameworks, experts and publishers
• Sector and geography would not be organising principles, characteristic of traditional firms with large people practices. A platform would help organize experts globally
• Concepts would be designed, tested, evolved and socialised allowing them to move rapidly from whiteboards to going live in the market e.g. rapid prototyping, agile testing, digital co-creation, hackathons
• Service offerings would be specialist, underpinned by digital tools and technologies
• Propriety methodologies and software would enhance scalability and support future revenue
• Rigour would be put into change management making change a science as well as an art
• The model would achieve and prove better value for money
• It wouldn’t be branded consultancy or advisory, it would rather describe the impact and outcome for the client rather than the process which will need to go deeper than advising and consulting

Today demand for traditional models still exists, big logo brand names still carry prestige and represent reduced risk in client’s minds and although these models are likely to contract over time consulting has perhaps not been disrupted at the pace expected.

As further alternatives emerge, including the ability to access and leverage agile teams, representing better value for money, organizations who want to achieve in a new way may choose agility and innovation over legacy.

Karen Thomas-Bland