Archive for the ‘Consulting’ Tag

The Coming Disruption in Professional Services

Is there a way for advisory service companies, which provide accountants, lawyers, consultants and marketing experts to other businesses, to adapt to changing demands?

Some pundits, such as the Harvard scholar Clayton Christensen, have questioned whether traditional consulting firms will get less work as more innovative business models emerge.

I think challenges bring opportunities and that firms which change with the times will remain relevant and flourish.

Like many other sectors, the advisory service industry has had its ups and downs. Its current slowdown may herald the start of a darker period thanks to three significant trends:

1. Democratization of information

Prior to the Internet, advisory service firms offered clients knowledge and insight, which they couldn’t find elsewhere. Now, a lot of information is available for free, or at low cost on the web, and that includes expertise through freelancer portals like guru.com. To find critical facts and figures on market trends, customer research, or industry costs, organizations no longer need to hire a traditional advisory firm.

2. Fewer intermediaries

It used to be that if you needed top talent to address a business issue, you paid the price and dealt with a blue chip firm or hired a leader in the field. Today, a manager has many more options, often with lower costs and faster turnarounds. The rise of the freelance and sharing economy allows companies to find talent and knowledge as needed on a global basis.

3. The rise of machine learning

Machine learning, also known as artificial intelligence, has the potential to disrupt many facets of the professional services industry. Using machines for rote and even complex tasks can reduce the need to hire firms to do mundane tasks, or for an expert’s analysis, judgment and time. For example, judges and lawyers are increasingly resolving small claims through “e-adjudication” as opposed to using the expensive and time-consuming legal system.

Power of disruption

Despite these disruptive forces, traditional firms aren’t going away any time soon: the fact that they have a wide-range of services and expertise to offer, the changing regulatory and technological environment and fickle customer needs will ensure it. However, they need to evolve if they want to stay relevant to their clients, outflank competitors and maintain juicy margins.

Terry Donnelly, chief marketing officer for Canada of New York-based MDC Partners Inc., an advertising and marketing company, agreed.

“The traditional ad agency model is dying,” Toronto-based Donnelly said. “Marketers want leading edge, unique and practical solutions that drive measurable results and provide a durable and sustaining competitive advantage. MDC Partners recognized the ‘new normal’ early on and built a unique portfolio of agencies that retains the visionary founders as partners, motivated to do great creative work, versus the staid multinational agencies that regularly lose their best people.”

Advisory service leaders who want to better assist their clients and avoid disruption might want to consider these strategies:

1. Become a virtual provider

Companies can leverage their strengths such as client relationships and a trusted brand to create their own, on-demand virtual offerings as a complement to their traditional business. This model could mean acting as an online skills, data or problem-solving hub, and delivering of the best services to suit a client’s needs.

2. Get more involved in execution

While people and expertise may be plentiful, that’s not the case for excellent execution. Advisory service firms can offer follow-through and even take on line responsibilities through a shared service model. This could go beyond being an outsourcer to actually embed adaptable and skilled individuals and tools directly into the client’s workflow process.

3. Focus on capability building, not projects

Advisory services should focus their work on addressing long-term projects and needs instead of short-term contracts that deal with a specific issue. They could help clients build strategic capabilities to ensure competitiveness. One way to do this is to train people to do the work themselves.

As an example, a lawyer would not just draw up a contract based on the client’s needs and then walk away, rather they could give the client tools to become somewhat proficient in their own right.

In addition, companies could provide regular advisory support to make sure long-term goals are met.

Mitchell Osak is managing director, strategic advisory services at Grant Thornton LLP.

Mitchell.Osak@ca.gt.com

Twitter.com/MitchellOsak

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Manager influence goes up when they are less certain

This counter-intuitive notion is the key conclusion of new research coming out of the Stanford Business School.  This research has important implications for senior managers as well as industries that sell expertise such as professional services, advertising agencies and recruiting firms.  

The researcher, Zakary Tormala, had subjects evaluate the appeal of a restaurant based on the assessment of two different reviewers.  Half the participants read the review by an expert (a professional food critic) while the other half read a review by an amateur.  Half of each group saw a review that was highly certain; the rest saw a review that was tentative.

Overall, while the confident amateur inspired subjects to give better ratings than the uncertain one, the less assured expert prompted higher ratings than the certain expert. The findings suggest people do not necessarily mistrust confident experts, but sometimes people are more persuaded by experts who are not confident.

What is behind this phenomenon?  Chock it up to a concept known as expectancy violations. People expect experts to be confident. Violations of that expectation surprises them, resulting in the individual taking greater notice and giving the opinion more credence. In the research, subjects reported being more surprised by the uncertain experts and the confident amateurs.

These findings do not suggest that CEOs should project uncertainly about their company’s prospect to become more influential. Having your audience take notice is not a substitute for ignoring a relevant message.  To be persuasive, managers must balance surprise with credibility. Being credible means a delivering message that is relevant to the core argument or issue.

Complementary research by Tormala also looked at how people view potential. Interestingly, the initial findings seem to show that people value high potential more than high achievement.  In one basketball study, people read the scouting report on a player and were asked to predict their salary level. Some subjects read the actual stats for the player’s first five years in the league while others read predictions for the first five years’ performance. The numbers were identical. On average, people gave the rookie over 20% more in salary in year six than the veteran.

These findings were similar to those found in the restaurant review study.   Proven achievement is very certain and predictable. At the same time, potential is uncertain and exciting.  The potential for multiple outcomes could lead to higher than expected results, and as a result, greater expectations for performance.

For managers and external experts, there are some key takeaways to build influence and trust:

  1. Foster a communication approach that emphasizes honesty, empathy and integrity;
  2. Adopt a more humble tone and style in place of the standard confidence-based rhetoric;
  3. Demonstrate analytical and process transparency underlying the opinion.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.