Oct 16, 2013

Consulting on the Cusp of Disruption

My key take away: Consulting on the Cusp of Disruption (Christensen, Wong, & Bever, 2013)

It is rare to find an article on ‘Consulting’ and that too in a widely respected magazine like Harvard Business Review. When it written by one of the living guru’s in management, Christensen; time to start taking notes

Here are my key takeaways and TO DO list based on the article.

In this article, the authors look at the consulting world from the lens of theory; especially around disruption, to see how consulting is changing and why. And their prognosis: the same forces that disrupted many businesses are starting to change the world of consulting. The author’s base this prognosis based on various leading indicators; the ever decreasing share of classic strategy work in traditional firms and the increased use of value based pricing being the top two. The authors argue that the two factors that made consulting immune to disruption – opacity and agility are quickly becoming irrelevant and hence leading to the coming disruption. Opacity refers to the client’s inability to judge the quality of a consultant’s work and agility is the ability of top consulting companies to move smoothly from one idea to another. The article then uses the example of the legal industry to support this argument.

The article goes on to recommends that traditional consulting teams significantly rethink their service models and experiment with new. The short list of changes that a consulting firm should act on include

·         The disaggregation of the ‘one stop solution shop’ into modularized services that clients can procure

·         The democratization of knowledge : the explosion of analytics and big data leading to ‘almost’ real time analysis and actionable insights

·         The growth of ‘asset based’ consulting : This is the packaging of ideas, frameworks, and analytics through a technology platform; many a time billed on a license based fee model

The article then identifies two alternate models to the traditional solution shops of consulting: Value added process business and facilitated network. The key differences between the three are summarized below

Solution Shop
Value- added process business
Facilitated network
·     Structured to diagnose and solve problems whose scope is undefined
·     Delivers value primarily through consultant’s judgment rather than through repeatable process
·     Customers pay high prices in the form of fee- for-service
· Structured to address problems of defines scope with standard processes
· Processes are usually repeatable and controllable
· Customers pay for output only
· Structured to enable the exchange of products and services
· Customers pay fees to the network, which in turn pays the service provider
( Examples provided are Open IDEO, CEB, Gerson Lehrman Group, BTG, Eden McCallum)

[Table is reproduced from the article]

The author’s list of implications to industry, as they provide the dire warning ‘Disruption is inevitable’, include

·         A consolidation will happen in the industry over time

·         It will be in the smaller clients that some of the new models will get proven

·         The traditional boundaries between professional services is blurring

·         Technology will play a key role in supporting consulting services

Interestingly the article also provides some insights into what needs to be done to make a change like this successful

·         An autonomous business unit (with all the functional skills to be successful)

·         Leaders with relevant ‘school of experience’

·         A separate resource allocation process

·         Independent sales channels

·         A new profit model

·         Unwavering commitment from the senior leadership.

Now, these are definitely elements that we need to work on. Else, as the authors point out; we may become victims of our entrenched success. The leadership team and I very interested in hearing your perspectives on the changes happening in ‘our’ world. Please look around your client environment to see how they are using consulting and advisory services. What services are being consumed by our (current) primary client; the chief information officer? What are our competitors offering that makes them more attractive to our clients. What more do we need to do internally to get ready to take advantage of the coming disruption?

Work Cited

Christensen, C. M., Wong, D., & Bever, D. v. (2013). Consulting on the Cusp of Disruption. Harvard Business Review, 2-10.