EXPLORING THE FUTURE OF MANAGEMENT CONSULTING

In the summer 2017, my colleague Jac van Beek penned an article about the past and future of consulting. He saw the increasing expectations of clients pushing management consulting in new directions. And he concluded with what I think is a great insight: “What has not changed, though, is the need for enterprise-wide perspectives, flexibility, and the capacity for rapid delivery in addressing the possibilities inherent in a disruptive, dynamic landscape.”

Consulting has grown into a vast industry, measuring over $250 billion with an average annual growth of 4.1% globally. Looking at management consulting as an industry of its own after excluding financial and IT consulting, it still leaves us with an annual turnover total of $130 billion.

These statistics show that many companies are using management consulting services. But despite the industry’s evident growth, we still need to consider its future. This is because even the management consulting industry, which in many ways revolves around change, is itself vulnerable to disruption. So, the question is: What will be the future of management consulting as an industry?

The Value Proposition of Management Consulting
The value proposition of management consulting services is simple: helping organizations do better work by improving the effectiveness of their internal processes. Everyone is pursuing added value and clients of management consultants are no different. Once we provide them with that value, they can carry on and offer it to their clients and customers after they’ve become more effective in their work. It puts great responsibility on the shoulders of management consultants, as we need to work at a fundamental level with organizational systems that drive its performance overall.

The challenge of management consulting is that if poorly done, the company could be damaged or destroyed. As consultants, we have the duty to our clients to provide them only with the very best services.

As Consultancy.uk reports based on the data from Gartner there are some interesting insights we can glean from global statistics of management consulting. The top 10 management consulting firms in the world provide 56% of management consulting services, but top 200 firms take approximately 80% of services offered globally. Smaller and mid-sized consulting firms, on the other hand, make up about 20% of the services.

And yet, based on research conducted in Austria (UBIT Austria / Gallup Consulting Survey 2012), a very mature consulting market, 78% of 800 firms surveyed indicated that they had no need for consulting services. Only 5% identified a medium or a high need. There is huge room for higher levels of service delivery in an already large industry.

With the size of the market and its potential in mind there is no question consulting firms have a tremendous opportunity when it comes to providing services. How this work is distributed across consulting firms may also be changing for a number of reasons.

The Dichotomy of Traditional Consulting
The long-established dichotomy of consulting services appears to be breaking down. On the one side, high-level strategic advisory services provide support to a company that helps them position themselves in the market. These services are thought of as elite and typically command high fees. On the other side, firms place large teams of consultants to implement well-defined processes. This end of the dichotomy is becoming a commodity and compete on price.

Studies of clients of management consulting services show that this model leads to four main areas of client dissatisfaction:

• They feel that consultants do not deliver sustainable results often enough;

• They think that consultants lack knowledge relevant to the industry they’re operating in;

• They don’t feel like they’re getting the value of the work done by consultants;

• They don’t feel like they’re getting the right tools and understanding of the methodology they needed to use after the consultants leave.

The current dichotomy of traditional consulting does not address these gaps and issues that the clients face. Neither trains the clients directly, nor do they not leave clients with an understanding of the methodology they need to use after the consultancy is concluded. 

Partnerships as the Future of Consulting
The answer to these concerns is forming a better partnership between a consulting firm and the organization it serves. The new model should include not only helping them, but training them so that they have, in-house, a methodology they can leverage.

Rather than the consultant coming into an organization to solve a specific problem, the client takes the lead. With in-house expertise they identify the problem but realize they do not have the means to solve it. They seek out and find the external consulting resources that have that expertise - and the approaches and methods to solve the problem. Exactly how the partnership works depends on the situation of the client, the expertise of the consultant, and the nature of the problem.

Typically, an internal-external team is formed where expertise from the client organization can be combined with the expertise and methods of the external consultant. The organizational change is implemented in a planned and coordinated way. As part of the implementation, the methods and expertise are transferred to the internal team, so that the change can be sustained.

In addition to the partnership between the consultant and the client, this opens the door to partnerships of consultants, who can collaborate to put together projects and specialized expertise to respond to client needs. It enables consultants to come into organizations to develop and deliver precisely the services that the clients require, contributing to stronger organizations and a stronger and brighter future for the industry.