Hedging against disruption in consulting industry
Today, the 4th Industrial Revolution is upon us, disrupting almost every industry. It has challenged players in every field from music to manufacturing; and consulting providers are no exception in their need to address challenges and adapt.
From one perspective, the position of consulting as an industry has never seemed more secure, in fact consulting is more than US$200 billion profitable industry experiencing strong annual growth (between 4,61% to 18,8%) due to inter- nationalisation, highly volatile economy and growth of new segments (e.g. design thinking, digital and cyber security).
But just as their clients are always under threat from new players and technologies, consultants too are not immune to the forces of disruption. Moreover, consulting meets all the qualifications to be considered vulnerable to disruption; particularly a few major players (56,2% of market share is concentrated among top 10 players), relatively outdated business practices used since 1960s and slow technology adaption.
The question for today’s consultants is not whether there is a future for the profession, but whether they are going to be part of it. Following Exhibit 1. illustrates main forces driving disruption and challenges defining new rules of where to play and how to win in the consulting industry.
Particularly, it provokes consulting service prareoviders to rethink their unique value proposition towards a holistic, brand/differentiation-driven approach focused on outcomes that supported by tools, AI, robotics, automation, staff augmentation to underpin the advisory work. Hence, it emphasises the need for T-shaped consultants combining both deep specialist and broad generalist ability as well as shift from transactional relationships to long-term value co-creation.
Let’s have a closer look at each of these critical success factors.
1. Manage brand and reputation. Given today’s competitive landscape, a positive brand reputation is essential to improve recognition among buyers. The latest client survey from Source Global Research reveals that brand and reputation is the most important attribute to clients, followed by subject matter expertise and sector knowledge.
So how does a consultant build a positive brand reputation and ensure it is maintained?
As per Gartner brand reputation audit stands on three essential elements: differentiation (from others in the market), resonance (with buyer needs), and credibility (backed by customer reviews).
Only one in four clients can distinguish differences between competing brands. This means that unless consultants manage to set their brand reputation apart, prospective clients won’t likely remember them or may even confuse them with competitors. A huge emphasis is placed on the strategic advantage of a “brand” as a “differentiator”.
2. Bridge the critical skills gap.
“If the only tool you have is a hammer, every problem looks like a nail” Law of the Instrument. (Maslow, 1966xii )
Talent is the stock in trade of consulting, and failure to be able to meet the need of clients makes individual consultant redundant and consulting firm irrelevant.
The latest report on Consulting skills for 2030 identified cyber security (77%), AI (76%) and self-employment (75%) as top ranked drivers of change that are likely to impact on the skills that will be needed by consultants by 2030.
The steady invasion of hard analytics and technology (big data) is a certainty in consulting: strong technical competence, sector expertise enables consultants to act as capacity builders (Applebaum & Steed, 2005) assisting client to build their skills and ensure project success. However, “timeless” consulting skills such as relationship-building, problem solving and change project management (Wickham and Wilcock, 2020) will remain very important in 2030.
3. Long-term trust building. The subject of trust is prominent in the consulting literature (Maister et al 2000, Schein 2016, Fields 2017) and trust building is central to the activities of most effective consultants. Qualities such as clarity, proficiency, and consistency are at the core of trust-building.
It’s interesting to highlight that for independent consultants and small firms it's essential to build credibility around its core set of capabilities, as they don’t have the power of scale like big firms do. They also need to demonstrate experience and expertise hence the need to focus largely on case studies and industry specific marketing efforts tent to be more effective.
The power of online content engines is also very useful to the consultants as it allows them to share their thought leadership and expertise to a large targeted audience at minimal cost.
The above discussed critical factors ensure success in terms of client satisfaction, repeat business, high utilisation rates, and having a positive impact on client organisation.
1. Adroit Market Research, Global Management Consulting Services Market report, 2017. 2. Source Global Research, The GCC Consulting Market in 2022 report, May 2022. 3. Gartner, Market Share Analysis: Consulting Services, Worldwide, 2019. 4.Consulting Skills for 2030” report, Centre for Management Consulting Excellence, UK, 2018.
5. Source Global Research, Building a Trusted Brand, Emerging Trends Programme. October, 2021
6. Gartner, Brand Reputation Audit, March 2021
7. Management consultancies as brands. Journal of brand management, Vol9(6), pp 412-429, Lory M. and McCalman J., 2002
8. Peter, A.J. and Gomez, S.J (2019) Building your personal brand. IUP Journal of Soft Skills, June, Vol 13(2), pp 7-20, Ebsco
9. Consulting Skills for 2030” report, Centre for Management Consulting Excellence, UK, 2018. 10. The critical success factors in the client-consulting relationship. Appelbaum S.H., Steed A.J. Journal of Management Development, Vol. 24, No1, 2005. Emerald Group Publishing Limited. 11. Part three:Undertaking the project, Business and Management Consulting, 6th Edition, L. Wickham and J. Wilcock, pp. 151-170, Pearson, UK, 2020.
12. Process Consultation (volume 2) Lessons for Managers and Consultants, Reading, MA: Addison Wesley, Schein, E.H. (1987). 13. Reproach report “Consultant Value Add: Maximising Value from your Management Consultant”, Jim Foster, Centre for Management Consulting Excellence, January 2021.
14. Marketing consulting firms in the new decade. A Source report, sponsored by Dow Jones. 2017