In this article, we go through four trends of strategy consultancy we’ve observed over the last few years:
The ever-changing requirements of clients
Consultants are being hired more within the company
The rise of big “one-stop-shop players”
The growth of small, flexible consultancy boutiques.
Then, we examine the immediate responses from the strategy companies as well as our predictions of what is likely to be needed for the industry to be able to avoid The Levitt’s “Marketing myopia”. The strategy firms have definitely begun to evolve, but in an the ever-changing world of digital they must look at delivery strategies that go that go beyond throwing intelligent people and their experience in the industry at the issue. To achieve this, they have to be fully embracing the latest technology.
Then, we examine the immediate responses from the strategy companies and also what we believe is going to be needed for the industry to be able to avoid the Levitt’s “Marketing myopia”. The strategy firms have definitely begun to change, but in an the ever-changing world of digital they have to look at delivery strategies that go that go beyond throwing intelligent people and their industry knowledge at the issue. In order to do this, they need to be fully embracing the advancements in technology.
“MARKETING MYOPIA”
The beginning of the consultancy “mini-MBA” we were taught about myopia in marketing the term invented by Theodore Levitt. It describes the dangers of marketing only in the context of selling a particular product instead of in terms of meeting the requirements of the customer.
At an era in its growth any industry could be classified as a growth industry because of the perceived quality of its product. However, case after instance, companies have been sucked into the shadow of poor management. The most often emphasized aspect is selling rather than marketing. This is a mistake since selling is focused on the requirements for the vendor, whereas marketing focuses on the needs that the purchaser.
As I go through this article this moment, I cannot think of it as an opportunity to be heard by strategy consulting companies. They have helped their clients overcome their marketing blindness for a long time There are some clear indications that the initial “disruption” that we’ve witnessed in the field of consulting has been beginning.
THE CHANGING CLIENT REQUIRES
As the global online transactions continue to increase and expand, the requirements of a large portion of customers have changed.
First of all, the ubiquity of data has altered the customers’ requirements. Before, consultants for strategy could bring information from a market to a customer. An insightful analysis of this could assist in identifying trends and factors that could trigger future changes. The data available is not just accessible and accessible, but also much more internal records, which can be even more relevant.
In addition, businesses have developed more internal capabilities and tools. They are getting more efficient in utilizing their data. They are building products around data instead of being able to see what data is released when they sell their productsor services. This makes it easier for companies to adapt and improve. Tech companies that are growing rapidly are constantly developing strategies, across all levels of business, as a result of improved knowledge and data.
The third reason is that companies that have a significant presence on the internet are faced with different challenges than traditional industries. The new worlds of UX and product management as well as Big Data are suddenly of crucial importance.
In addition, due to the ever-present risk of recession and the low levels of growth in GDP, customers are more strained financially than ever before. In the past the prospect of a 10x ROI was enough to justify the huge upfront fees. But, as the constraints increase customers are beginning to search for more flexible solutions that are available at a lower cost.
Increased HIRING OF CONSULTANTS IN-HOUSE
The past has seen a steady flow consultants to”strategy teams” of corporations “strategy” team of corporations. Actually, many students choose to consult with consultants in order to “open doors” to industry. Typically, consultants take their first steps into a position of strategic importance, before moving to a commercial position once they have a thorough understanding of the business and have built the required stakeholder network.
But, what’s beginning to change is that consultants are now being recruited into non-strategic positions. Because the capabilities of consultants (analytics and insight; communications to top-level stakeholders) are becoming more essential in all areas of business, they are employed in commercial and operational roles right out of consulting. As consulting is becoming more functionally specialized (i.e. supply chain consultants, technology strategy experts) there are more obvious points of entry.
It’s a self-fulfilling prophecy that as more consultants join involved in the teams, they tend for “what they are familiar with” (i.e. that is, greater number of consultants). With the increase in numbers it is not just that there is an eroding “need” for consultants from outside but there is also greater competition for the talent.
The growth of large one-stop-shops ADVOCATE
The biggest growth of strategy companies over the last couple of years have been in the Big 4. By acquiring companies and the hiring of senior partners, they have formed teams for strategy made up of former employees of well-known brands of strategy (i.e. recruiting from McKinsey, BCG, Bain and the Oliver Wyman, LEK; acquisitions of Booz and Company (PWC) and Monitor (Deloitte)).
The Big Four are able to offer a unique distinction: their powerful strategic minds are supported by the size. In terms of functional aspects they can be a one-stop-shop to use them as an expert advisor in accounting and tax, legal operational and consulting. The scale is advertised as not just providing an enhanced, integrated, end-to-end solution, but also bringing huge savings in costs.
On the other hand the size of their business allows them to be more flexible. They are able to offer smaller projects and more flexible models , as capacity is more easily controlled.
The tinier, more flexible BOUTIQUES and FREELANCERS
Another exciting trend is the rising number of freelancers as well as small, two-to-three-person boutiques. It’s a popular career option, which offers greater flexibility and freedom. On one hand you will find boutiques, which employ entire teams and position themselves as direct rivals to strategies firms. Less well-known are more modest boutiques, freelancers and the like.
There is increasing people interested in either an individual resource for junior managers (stand-alone with good stakeholder management abilities) or in putting two teams of a smaller size (manager as well as 2 analysts) to carry out strategic projects. While the costs of these projects may seem very different from an traditional strategic consulting venture, their setup and implementation may not be that much different. Although it is unlikely that these smaller firms or freelancers will be able to tackle the heart of work that strategy consultants do (i.e. crucial Board decisions) The peripheral work that has gradually been accumulating over time is at risk from the more flexible, cost-effective method.
How are STRATEGY FIRMS ADOPTING
There are some interesting responses to the recent changes in the marketplace. We are not only seeing the introduction of new business models that are innovative however, consultants are also looking into different ways to gain access to a bigger and better-equipped workforce.
The latest business models for innovation were clearly explained within the HBR article “Consulting at the edge of disruption” in October of 2013. The trend has been resonating, with new implementations, operations and analytics, as well as benchmarking “arms” for the top strategies firms. Most of them operate under the name strategy (i.e., McKinsey Solutions; McKinsey Implementation), but there are also a few subsidiary companies (i.e., Finalta is an affiliate of McKinsey that focuses to benchmarking FS). They are likely to continue to grow, and I can be a significant element of the disruptions we’ll observe.
In the last few months, an fascinating trend has been observed. Consultancies are beginning to respond to the need of more flexible and flexible model for delivery. The “manager + 2” model appropriate for certain situations. Clients require more long-term engagements usually for less intensive durations. When the work is more functional as well, it becomes deeply entangled to the company. This means that things will be moving more slowly. The delivery process is no longer viewed as an opportunity to buy into the excess and it’s about delivering changes to these areas of operation, which is always taking longer to fully integrate.
We’ve seen two interesting trends within consultancies that are looking to provide greater flexibility:
Flexible employment. The best strategy companies are searching for new ways to attract the best talent. We’ve had many fascinating discussions about how consulting can be made more flexible. This is in order to prevent the loss of top talent due to the way of life. If the three-day work week or the 7 months on 5 months off models are more popular and will be fascinating to observe.
Freelancer pools. We’ve seen strategy companies plan to launch “surge capacities”. We’re currently working with seven strategy firms to assist them in helping create “freelance pool”. These are pools made up of strategy consulting alumni who have become freelancers. This lets these firms improve their utilization however, it also allows them to offer more flexible methods of service delivery to clients (i.e. longer-term, less contact). This was traditionally difficult to deliver without the size that is the Big 4.
The CUSP OF DISRUPTION: What is the future for Strategic Consulting Services?
Consultancies have grown rapidly over the last two decades. In the process, the proportion of work that is considered classic strategy has steadily decreased and now is around 20 percent, down from 60-70 percent a few years ago, as per Tom Rodenhauser, the managing director of advisory services at Kennedy Consulting Research & Advisory (Consulting on the Cusp of Disruption HBR). If consultants in strategy are to remain at their current size they must be innovative to maintain this non “classic-strategy” fringe.
Consulting has been at the edge of change for the past two years. Although there are clear developments in the works, we believe this is only the beginning. We expect to see a further shrinking of the middle by more specialized firmsas well as the continuing consolidation of larger companies. We are also anticipating freelancers to grow and to increasingly take the tasks that are more peripheral to the larger consulting firms.
For us, the biggest change that must be made is greater flexibility in the delivery. The needs of clients have changed. Although steps are being taken to expand beyond traditional consulting groups but there is need to be more ingenuity. Consulting has to shift away from the role of smart people to solve problems , and adopt greater technology and the capability to offer products for their clients that help them solve their issues.
Strategy consulting firms can maintain their position in the “periphery” (non-classic work on strategy) They have grown in the last few decades through the provision of “products” which serve their clients in the long run. Strategies can be provided in the form of smaller projects that focus on solving difficult problems. Due to the rapid growth of innovation and the many startups that are within the industry anticipate certain acquisitions in not too distant time. Consultants will be able to see the latest innovations not just as high-margin delivery systems, but as essential to continue to offer their top-of-the-line guidance.
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