All formal and informal sources I have looked at suggest we are a growing profession. We may be evolving in new ways in response to the disruption being experienced by our clients. Indeed, we may be growing precisely because there is need to make sense of the marketplace.
CMC-Canada will be announcing the results of the 2016 Industry Study at the CMC-Global Conference next month (October 19-20, 2016). Beyond the state of the industry, there is interest in its future. Consulting was holding its forte for a hundred years, but the forces of the new economy are beginning to disrupt it too. However, don’t take my word for it – here are some alternative ideas on the future of management consulting. If nothing else, it is something worth thinking about when you do your own forward planning and from where I sit – an exciting landscape of possibilities.
Today’s on-demand economy is pushing consulting to transform into new and robust ways. It won’t be long before we see new strategies and practices taking shape. For example, the pervasiveness and centrality of integration to increasingly sophisticated digital platforms are driving client demands for:
- Expectation of greater speed of delivery
- Better understanding of a client’s customers by their consultants
- Need to fit into and enhance complex global transformations, (which increases the scope, risk, politics, and impact of transformation projects and demands consultants who can deal with executives at the most senior levels of the organization)
- Greater attention to regulatory requirements (privacy constraints, different tax regimes across borders, for example)
Some very broad expectations of the future state of the profession, according to Forrester, include:
- Traditional high revenue, technical work will shrink and change
- Asset based consulting will revenue and delivery models
- Projects will be smaller (with more value), global, more virtual and will use centres
- Pure strategy projects with static deliverables will shrink rapidly
- Organizational change management will become a science, enhanced by data and software
- Contracts will shift incrementally to gain sharing, licenses and retainers.
Rather than delve into the specifics or rely on this high level prognostication (many of us are aware of the dubious history of predictions!), I will reserve judgement on this future until I see it unfold. There are a few more immediate changes that are evident. I believe we will see creative innovation in large consultancies and continue to witness the market of independent consultants flourish hand in hand with the on-demand economy. Here are some emerging models:
1. Alternative – Rise of Lower Cost Independents
As discussed in earlier posts, new fast paced businesses are highly ambitious, innovative and are early-adopters (if not creators) of technology. Their business models have just bare minimum semblance to traditional businesses. As they discover the undefined turfs of their business, they need the best expertise from across the world. Traditionally, this assembling and service delivery was addressed by established consulting firms. It appears that this is quickly changing.
The new breed of firms are generally smaller (more nimble), smart, work on limited budgets but have great ambitions. They have to get their analytics and predictions right but they have limited budgets. They need information and analytics, which is new knowledge. As it is new for all firms, why should they not look out for experienced independent consultants or smaller firms? They often choose to hire independent consultants at competitive costs, which would in any case be at a fraction of the cost that consulting firms would charge.
Disruption is driving boutique consulting firms, through models like Eden McCullum and A-Connect that deliver consulting services through new hiring models of having lean in-house staff drawing on a robust network of freelancers, and finally through online marketplaces for consultants that has democratised access to talent like Hourlynerd and Flexing It. Eden McCullum, A-Connect and 10EQS came into existence questioning the very legitimacy of consulting services being exorbitantly pricey. These companies assure top-tier quality engagements at reasonable costs, which is delivered through their leveraging of independent consultants. They also did away with the ceremonial ambiguity attached to consulting and brought in much greater transparency. Businesses are starting to embrace their idea that combined expert service, greater clarity, flexibility and affordability.
2. Alternative – Freelance Economy
Another interesting model emerging in response to budget consciousness, we are also starting to see another manifestation of affordable world-class service: Hire anyone, from anywhere through new platforms that provide access great talent. It is a democratic world out there with – HourlyNerd, MBA&Co, Flexing It and more. The buzz now is - hire anyone, from anywhere, for any number of days, for any number of projects. That’s total free economy. It might sound utopian, but that is how the world of independent and freelance work is evolving.
The freelance and independent consulting model works best for an on-demand economy. The pace of work is fast and there is great access to quality resources. Also there are more and more professionals taking up the route to independent working. Why? The opportunity of freelancing and project-based work is estimated to touch at a whopping $600 billion -$1 trillion by 2020 in the US. Professionals who would never before have planned to become consultants, have begun the move to become independent. 34% of the US workforce is freelancing and this is set to cross 50% over the next decade. The global online work industry - which is a sub-set of the freelance economy – is expected to grow to 5 billion by 2018 giving it a CAGR of over 25% (referenced in material offered by firm Flexing It).
3. Alternative – Maturing of the Industry
The industry has been maturing in recent years. In the future you will have to be very large to be able to have enough scale to maintain expertise across many domains (there are only two of these, McKinsey and BCG) or you have to be niche (and there are many players in this space, e.g. Delta Partners for Telco). One element of firms that get very little discussion is that they are all looking for the "holy grail" of repeatable processes that can be implemented at high margins (in McKinsey there is a consumer database for China that fits this, in BCG there is a Megatrends framework that also fits). I am not sure that these are real differentiators on scale and in the long term.
The second part is what does this mean for the consultants themselves. The job has already changed dramatically over the last 10 years and now the "proposal is what used to be the project" claim actually has a lot of validity. I believe that in the future you will see a push towards earlier and stronger specialization into topics and industries, you will see a far greater investment in information / experience storage and transmission. The real underlying question for individuals is, will it be a worthwhile / attractive profession for me in the future as it changes from the previous "gain a breadth of experience in a condensed period of time" proposition.
4. Alternative – Extreme Specialization
Extreme specialization. Hiring consultants who are very, very good in particular areas such as social media analysis; targeted market approaches; branding for age groups & specific product markets; attacking import/export efforts & entering overseas markets; market penetration approaches; pricing & costing; advanced manufacturing & maximum profitability; product extensions; and more.
More firms seem to be hiring “specialists”; target shooters, people with top expertise in these areas, rather than large, monolithic generalist firms who assign junior members to assignments, & who pump out generic reports with non-specific suggestions that have non-measureable objectives.
5. Alternative – Changing work structures
New career paths and motivators for individual contributors and millennials. Digital will change traditional consulting structures and career paths that are based on sales and the management of larger and larger teams. Instead of a pyramid project structure, firms are experimenting with a diamond structure, consisting of a senior leader, seasoned subject matter experts, and a small base of junior people. Other firms are looking at different ways of motivating employees — Millennials, in particular. They are experimenting with more virtual work, team-driven goals, use of design centers, and the application of social media. Many activities are now being automated (using dynamic software solutions, tools, and data-based assets in conjunction with static ones such as process and business models) or integrated (the merging of strategy and rapid delivery is affecting the skillsets being sought by recruiters and the acquisition targets of bigger strategy firms).
State of Our Union?
To summarize, there is a lot of experimentation underway in our profession – in almost all aspects of management consulting. What has not changed, it appears, is the need for enterprise wide perspectives, flexibility and the capacity for rapid delivery in addressing the possibilities inherent in our disruptive, dynamic landscape.
We have always had to change with the marketplace and the economy. I do not see anything different today.
