Disruption comes to consulting

Wednesday, August 26, 2015

You say you got a real solution
Well, you know
We’d all love to see the plan
— “Revolution” by The Beatles

Worldwide economic, technology, and social change is transforming consulting — an industry that has prospered by teaching others how to manage that change. The old guard is now under attack from a contemporary set of innovative firms with new business models, technology, and democratization of talent services.

Old school consulting is being disrupted for a few reasons:

  1. The old school consulting business model is inefficient
    Old school consulting has a business model based on billing for endless hours of junior consultant time within a seemingly endless array of process steps. This model is optimized when employees are fully utilized — in fact the incentives are to outdo each other with tales of a high number of billed hours. Old school consulting methods aim to have many bodies, billing as many hours as possible to a client.
  2. Old school service delivery plans do not fit the needs of current business
    Based on specialties of expertise, old school consulting uses teams of consultants to create solutions from a “black box” of knowledge, then offer advice, telling the client what they should do. In fact, consultancies are seeing steady erosion in their traditional bread and butter strategy practice, now about 20%, down from 60%-70% about 30 years ago. Simply giving advice is no longer satisfactory. Clients want and need an agile response, direct access, and collaboration with experts.
  3. Clients are asking for more — and new methods
    Clients are smarter about using consultants; the ranks of former alumni/Big Three consultants now number over 50,000. In fact, many former consultants are now working inside corporations and know the tricks of the trade and can perform much of the old guard’s work on their own. They are now seeking engagements that are solution-based with value-added results.

The Disruptors: several new consulting models and services include:

New school business model
The new wave of disruptive consultancies is delivering solutions with value-added results. Some are providing access to software platforms, data analytics, or even products that are carefully scoped and defined. Others have consultancies bringing down base fees to reduce the risk to their clients and having an achievement fee for successfully delivering the desired results.

New school delivery model
Some new and agile consultancies have adopted a model offering clients access to an extensive network of senior, experienced consultants that can be tapped to staff projects. Some clients no longer hire a team of consultants, but rather pay fees for access to the network and the new consultancy structures a team of experts to deliver value. There are signs that consulting customers want to pay for clear outputs and deliverables, access to top talent, and information.

Business Design Thinking approach
Clients now seek more creativity and holistic thinking from consultants. The rise of design thinking in business has been evident. With the complexity of products, services, and processes companies now face, businesses need problem-solving methods that provide holistic solutions. This means focusing on customer or user experiences and needs, designing models to gain insights and applying prototyping to explore solutions.

Consulting must now be far more solution-focused; applying an integrated approach and providing value-added results that are measured by, at minimum, an improvement in the client’s bottom line and ideally delivering triple-bottom-line value.

Originally published at compass52.com on August 26, 2015.

Parker Lee

Parker Lee is the managing partner of Territory, a design consultancy, who has developed and led teams in transformation, design thinking, and business development for decades. Co-author of The Art of Opportunity, he has created and facilitated dozens of design and visual thinking engagements.

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