‘Management consultancy is broken. What comes next?’
I first dared to share this thought out loud at our launch party – I say ‘dare’ because for the last 10 years I have been proud to call myself a consultant. Challenging a discipline you are passionate about, on such a fundamental level is a hard journey to start, but once the journey begins, it presents all sorts of fantastic challenges when working to weave together new narratives.
The State of the Market
Management consulting has operated for more than 100 years in the same business model. Described in HBR by Christensen, Wang & van Bever thus:
“Management consulting’s fundamental business model has not changed in more than 100 years. It has always involved sending smart outsiders into organizations for a finite period of time and asking them to recommend solutions for the most difficult problems confronting their clients.”
They provide a solution, which is handed over in the form of a 100 page report, full of the jargon of the management consultants, for the report to languish of the bookshelves (or file store) of the CXO who commissioned it. Extracting value from these reports once the management consultants have left is nearly impossible.
Possible Future States
Slowly, we see organisations becoming more savvy when engaging with consultancies – they drive hard on the right price and right engagement model, paying only for best-of-breed expertise – whilst other services can be provided by a flexible and adaptable internal workforce. This has the added bonus of creating new capabilities inside the organisation – something we believe is the key to the future of 21st century businesses. This leads to a shift towards new expectations for management consulting. Client demands have changed, and they demand more transparency, more accountability and value-driven outputs.
The economic crisis caused by the 2008 downtown, has led to consulting companies moving fast to commoditise their offerings, but there is a serious structural gap that means both clients and consultants will suffer if traditional consulting firms move too fast away from a people-based model towards an asset-based model. To commoditise a consulting service we need three things:
- the service needs to be systematised;
- clients have to understand where the service fits into their organisations so they can ‘plug and play’; and
- there needs to be a consulting market supplying it.
The biggest barrier to commoditisation is the second item on our agenda: organisations do not sufficiently understand their own blueprints in order to effectively make use of a commoditised version of management consulting.
Management consultancies face many potential barriers to changing the ways they work – not least that clients, for all their shifts in client demands, still expect the same type of relationship. To paraphrase Albert Einstein, it is insanity to repeat the same action over and over, expecting different results. Other barriers to change will depend on the specifics of the sector they operate in, the size, the culture and the willingness of leadership to move towards and support new business models – to name a few!
In parallel, we are starting to see that traditional strategy consulting can no longer support the big incomes of yesteryear, so even the top three consulting firms (Bain, McKinseys & BCG) have to get their hands dirty implementing ideas and changing processes. This moves them towards the realms of management services and a world they are not used to playing in, and presenting new challenges.
We like the idea of the ‘evolutionary purpose’ of an organisation, as described by Laloux in Re-inventing Organisations. Postshift’s evolutionary journey pushes us forward, but also forces us to acknowledge that we have not yet come up with a complete set of answers to the question I posed at the beginning.
We spend a lot of time, reading, investigating and implementing the new management concepts that are being discussed in abundance at the moment (in fact just yesterday, Lee called us all nerds), and we know that one size does not fit all – there is not a single new model for consulting companies to adopt – and seeking the perfect structure is a fool’s errand.
Rather than operate as a traditional consultancy, leaving behind reams of theoretical guidance in reports and slide decks, our focus at Postshift is on enablement and development of internal capabilities within client organisations, and we are more interested in supporting people inside the firm with better information, inspiration, confidence, tools, models and shared practice than simply writing reports and presentations.
Ultimately, it feels like the destination is Post*Shift-as-a-service, whatever that means and however it is delivered. We have some ideas on this, and hope to share them when they are more fully formed.
For anyone who is interested, here are a few of my favourite discussion points around the future of management consulting (in addition to those embedded in this post):