Is It Time to Disrupt the Consulting Industry?

Hopefully this serves those who like to read, and those of you who like a mix of reading and listening

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In 2013, ten years ago, McKinsey & Co. issued a report called “Disrupting the Consulting Industry.” It said, and I quote…

“Tomorrow's consulting industry will need to look and feel very different from the one we know today. For firms to thrive, they will need to find new ways to differentiate themselves from their competitors, to become more nimble and collaborative, and to enhance the value they deliver to clients while reducing their costs.”

Were they onto something?

The late Harvard Business School professor, Clay Christensen, known for his theory of disruptive innovation said, and I quote…

“Smart companies fail because they do everything right. They cater to high-profit-margin customers and ignore the low end of the market, where disruptive innovations emerge from.”

Tony Ulwick, the inventor of Outcome-Driven Innovation wrote in a case study, and I quote…

“The lead users had become an integral part of the company’s innovation and development practices. What a mistake! Through the application of Jobs-to-be-Done Theory and the Outcome-Driven Innovation Process, the company learned that its lead users did not at all represent the rest of the user population.”

While McKinsey detected a disturbance in the force, I’m not sure they had yet determined exactly how this would play out.

Those of you who are in the management consulting world have probably faced downward pressure on your prices. This often comes from procurement departments who essentially view you as contractors, and not consultants. And unless your sponsor is going-to-bat for you because of a unique perceived value, you’re forced to invest - which means you’re differentiating on price. Those pretty PowerPoint decks just aren’t getting the job done anymore, are they?

The market’s telling you something when they force you to discount your fees.

They either don’t perceive the same level of value that you think your offering. Or, they don’t perceive any differentiation between you and your competitors. Those are facts, and this has been going on for quite some time now. Otherwise, McKinsey wouldn’t have felt compelled to write about it 10 years ago.

The problem we collectively face is that as consultants, we’re not addressing the real problem. And as a result, we’re missing a vast and untapped opportunity in the market.

But “Wait!” you say. “There are only so many Fortune 500 companies we can sell to!”

This is the problem that both Clay and Tony were addressing. The true underlying market is “Companies seeking answers to key strategic questions.”

So how can we differentiate ourselves by delivering more value at lower costs? And can we do it faster as well?

I would propose that “Firm 2.0” reconfigure itself from the highly leveraged resource model it has today, that relies on top-performing individuals into one that leverages its intellectual property more effectively. This could result in a growth engine that looks very different from traditional consulting.

Companies have a job to get done. They need answers to the questions that will direct them to the actions they can take to compete more effectively. It doesn’t matter how big, or how small the company is. It doesn’t matter what stage of development it’s in. They are all seeking these answers.

It’s clear to me that in order to deliver this outcome, the solution has to get the job done very differently. To get costs down, it needs fewer features. To get to the answers more quickly, it needs to be systemized and automated where possible.

But how do we get there?

1. We need to view the market through a new lens to find growth through innovative digital solutions that confuse our traditional competitors and adjacent industries

2. We need to embrace emerging capabilities (such as artificial intelligence and machine learning) and organize them in new ways to deliver differentiated value faster, with less complexity, and in a more cost-effective way

3. We need to utilize these new capabilities to disrupt the consulting industry from below; accessing a new kind of client, and making our current consulting clients even more successful

Expensive, long-lasting projects are what we want, not what our customers want. And certainly not what the lower end of the true market wants.

We need to stop selling methodologies, and start leveraging those methodologies to sell answers

We need to add value, not cost.

Firm 2.0 must become the Uber of the consulting world

Uber initially solved a big problem for consumers. They didn’t always want to take a taxi but suddenly needed one when the weather turned sour. They addressed sudden surges in demand

Firm 2.0 can solve the problem for companies that don’t traditionally purchase strategy consulting but are under pressure to survive. This will expose and address an underlying surge in demand

In case you were wondering, everything I have just shared with you is based on Jobs-to-be-Done Theory, and one of the methodologies that you might leverage is Outcome-Driven Innovation, or a variation on it.

When you focus on the real problem, you begin to understand that growth, in any industry, comes from expanding your thinking beyond the current solution-space and understanding that a large portion of the market is cobbling together solutions that can be frustrating.

Consulting is a solution: an expensive, time-consuming, invasive solution. And as Edwards Deming said…

“A bad system will beat a good person every time”

Can you think of a way to solve this innovator’s dilemma?

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Some additional reading:

Killing Strategy: The Disruption Of Management Consulting

Consulting on the Cusp of Disruption

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You can reach me at mike@pjtbd.com