The delivery model of management consulting is changing: clients now expect firms to advise on and co-execute solutions, not only design them.
For about three years, researchers of the management consulting industry have been noticing a change in the expectations that buyers of this type of professional service have of their providers, whether global firms or regional, local or niche-specialized companies. Let me put this change in context.
The way these professional services were delivered did not vary much from their beginnings at the end of the 19th century and throughout the 20th century. It was based on the logic of buying the time of very intelligent professionals to investigate and design the solution to a wide range of problems and challenges that affect organizations.
Specialties and experience may vary widely, but the general logic of the process has been information gathering, diagnosis of the problem, design of the solution and its plan, supervision of the implementation and project closure.
The role of the business consultant during the implementation phase has almost always been on the periphery of execution: sometimes as project manager or director, also in “quality assurance” tasks (that is, periodic control visits to the implementation to review progress and give feedback to management) and, very often, the consultant’s involvement ends with the document that provides the recommendations and the plan to implement them.
For more than 100 years the delivery model of this industry has changed little: the role of the management consultant has been to analyze from a distance, understand, interpret, design and give advice on how to address business issues.
Industry researchers, such as Fiona Czerniawska of Source Global Research, have been warning for several years about an important change in the expectations of the large buyers of management consulting who shape the industry.
According to Ms. Czerniawska, the market is splitting into two segments: high-value strategy consulting, for very complex situations where the client has no idea how to approach an issue, and lower-value consulting, which helps the client gain traction on topics the client understands, even if only conceptually, but where it needs the help, knowledge and guidance of a third party to carry its initiative forward successfully.
The argument of Ms. Czerniawska and other researchers is that the two types of consulting are different in the eyes of the client, so a firm positioned in the client’s mind in one of these roles is not considered suitable to provide the other. Pricing expectations are also different: clients are much more tolerant of high hourly rates for consulting perceived as “highly complex strategy”. Transformation and operations consulting is perceived as lower-priced than its strategy counterpart.
Large global firms are making a significant effort to keep their “universal branding” and position themselves as complex-strategy firms (with high hourly rates) that are also equipped to do operations and transformation.
This positioning strategy is NOT working: the latest surveys by Source Global indicate that buyers do not see the large traditional firms as the best option for operational execution and transformation.
This trend represents an interesting opportunity for regional and specialized firms that can position themselves as having the combination of advisory and execution services that move their clients forward with their initiatives.
We have said in other articles that the future of transformation and digitization lies in practical execution capability and, in real terms, pure knowledge of “what to do”, without the execution capability to put it into practice, is little more than an academic exercise of limited use to business clients.
In our opinion, this trend has been reinforced by an increasingly fluid labor market, where digitization makes it possible to collaborate remotely and on demand in many fields, and where market uncertainty and variability make the “variable, on-demand support” model attractive.
The new management consulting, for providers in the region, must combine management advice with the real capability to implement and even operate processes, including the capability to execute in specific technologies (analytics, robotics, artificial intelligence, as well as some key support functions for the primary value chain of the business).
The management consulting industry is changing, and it offers interesting opportunities for smaller, more flexible firms that can quickly take advantage of the changes in client expectations and perceptions.
From our archive. Originally published in Spanish in Nearshore Americas on 6 February 2018; translated into English. Read the original (in Spanish).