Management Consulting is Dead…Long Live Management Consulting

Times are tough in the guru business.  Management consultancies are facing falling revenues, fading differentiation and more challenging service delivery.  True, the advice business is cyclical and we are witnessing the worst downturn since The Great Depression. However, though reliable data is difficult to source, anecdotal evidence suggests that the market is losing confidence in the traditional management consultancy model, and for good reason. 

Management consulting is now a mature industry.  Given a plethora of suppliers with ‘me-too’ offerings, Clients are demanding more value at lower cost.  Furthermore, companies want a clearer view of what consultants do and how their recommendations link to value and action. Finally, Clients continue to have nagging concerns that many consulting firms are much more motivated to sell services than to act in the Client’s best interest.  Many factors are driving the change in Client needs, including:

The “product” is maturing – The days of Clients blindly following the latest management fads are long gone.  Management consulting has entered the stage in the life cycle when it’s no longer a hot item that everyone wants to buy at historically inflated prices. 

Consulting inputs are plentiful – Consultancies are facing competitive blowback from laid off consultants who now compete with their former employers for business at a fraction of the fee.  As well, thanks to the Internet and globalization, Clients have access to a greater wealth of information about their customers, competitors etc. than what was available even 10 years ago.  

Clients are getting wiser – Savvy Clients are increasingly bidding out projects and demanding knowledge transfer to ensure they maximize value.  Many firms now realize they don’t need large consulting teams to get results quickly.  Often 1-2 consultants, supported by internal resources, is more than sufficient to address most business problems.  Finally, Clients are demanding actionable recommendations that are grounded in the reality of the organization and available capital & resources.

Clients are in-sourcing – Many Fortune 500 Clients, tired of expensive fees, have created internal consulting groups to deal with major strategic issues, change management initiatives etc. In many cases, the companies hire talent directly from the consultancies, who bring with them the same models, skill sets, and processes that were prevalent at their prior firms.

In many consultancies, service and operating models are being recalibrated to address Client demands.  For example, Quanta Consulting Inc. is enhancing value, accountability and transparency in a number of impactful ways, including:

  1. Assisting with project implementation – Clients are very concerned about consultants leaving them with projects the organization can’t integrate or assimilate. Helping the Client with implementation increases the consultant’s accountability, improves their understanding of key business issues and enables strategic or tactical course correction if required.
  2. Delivering projects through Clients not beside them – Leveraging and leading Client teams on project delivery (as opposed to bringing in a squad of external consultants) helps reduces consulting fees, promotes knowledge transfer and minimizes consultant-employee friction.
  3. Move to a stakeholder-based service model – Many consultancies focus and organize around delivering projects not cultivating relationships.  We see projects as part of a longer term “stakeholder” relationship, similar to an ‘Agency of Record” model.  With this type of relationship, the consultant becomes a trusted and embedded “coach,” supporting and counseling the organization on a regular basis, often at no charge.

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