Change + uncertainty = opportunity: management consulting today

Change + uncertainty = opportunity: management consulting today
Published: 
March 2013

Ask a management consultant a question and what are you likely to get? A bill. Is the management consultancy industry listening to its own (often expensive) advice and becoming agile, innovative and customer focussed in the face of uncertainty and rapid change?

Management Consulting is a bit like the world’s oldest profession.

OR DOESN’T IT NEED TO?

“Management Consulting”, says David Stewart, “is a bit like the world’s oldest profession. Delivery methods may change, but the fundamental need that is being met, remains the same. Consultants answer difficult questions for money. The difficult questions change with time and how they are answered may vary – but the economic and business model stays the same, although the market is more global.”

David Stewart has seen the industry from all angles. With his MBA still fresh, David joined a strategy consultancy to learn his trade twenty-five years ago. He was closely involved in the emergence of budget airlines in Europe and the success of EasyJet, and successfully built and sold his own boutique and market-leading aviation-focused consultancy. He now heads the airline practice in the world’s largest aviation advisory firm.

David has contributed to a reshaping of the airline industry as it has passed from being a tightly regulated model of national monopolies and moved into an era of intense complexity and competitiveness, in which survival and profitability depend on remarkable business agility, flexibility and constant innovation.

There were many lessons to be learned for other industries as they watched the airlines adapt to a mass market, consumer driven model. But are they lessons that management consultancy itself has taken on board?

After all, the forces of change are on them as intensely as they are on the rest of the business world, aren’t they?

“The days of delivering a PowerPoint presentation or a report to a client and then moving on are long gone,” says Adam Powick, Managing Partner, Deloitte Consulting. “Consulting is no longer something we do to our customers. We work with them.”

Digital disruption, modernised supply chain, revolutionised customer interaction, technological sophistication, social media, globalisation, shifting workforce demographics and the forces of change have an impact on all business activities.

But for the consulting industry they also drive demand. Certainly the outlook for 2013 is bright.

In Australia, IBISWorld estimates management consulting to be worth $8 billion a year, with an anticipated growth rate of 3.5 per cent in 2013. These numbers are dwarfed by the US, the traditional home of management consulting, where the industry is estimated to be worth US$80 billion and where 80 per cent of consulting businesses expect revenues to increase this year. More than half of those surveyed by Consulting Magazine predict double digit growth. In the UK, 49 per cent of consulting clients expect similar increases in consultancy spend this year.

Does this mean business as usual?

Adam Powick says no. “The big consultancies have adopted a multidisciplinary approach, which is a fundamental cultural shift that has meant breaking down barriers, and drawing on expertise across industries and divisions, in data, accountancy through to risk management.” It’s meant new way of thinking for traditional consultancy, and requires new kinds of governance, and new pricing models.

“It’s a complex business challenge working out how you bill for outcomes and value delivered, and a complex conversation to have with clients. The answer is to collaborate up front to work through these issues. We are looking at value-based pricing, subscription models and a raft of new ways to fairly monetise the value we create.”

John Steen, Associate Professor of Management at UQ Business School agrees “The traditional consulting model where there is an investment in building a methodology and then that is replicated and delivered by junior staff to get returns on the investment is unsustainable. The internet makes these frameworks and methodologies a commodity.”

Stewart points out the impact the emergence of information as a commodity has had on traditional consulting business models. “We used to earn money for gathering information that was hard to find,” he says, “but now much of this information is commoditised, and mostly easily accessible. Many consultancies have shifted their research centres to where labour is cheaper, and to focus the expensive consultants on higher value add.”

Victor Callan, Professor of Management at UQ Business School, also views collaboration and adding value that can be seen on the bottom line, as the core capabilities of today’s consulting models. “Clients often have a lot of the data, so what they want are consultancies that help them interpret what are the key factors or indicators from the data that they must attend to, and then to support them as they plan and make the structural and cultural changes to help the business meet those critical indicators”.

Ultimately, however, David Stewart, Adam Powick and Victor Callan see change as a business opportunity. “When the business landscape is complicated, people want help to tackle complex questions and guide them through uncertainty. The more change, the more complications, the more opportunity for consultants,” says Stewart.

The key to success in the global economy, Adam Powick believes, is to be sufficiently flexible to behave like a niche player, and sufficiently global to have access to the global resources and insights of an international knowledge base.

To Stewart, the answer is simple: “Success won’t be a function of size, or who has the clever people. The losers will be those consultancies who don’t add value to their customers, and who don’t remain customer focussed.”

How firmly entrenched the PowerPoint presentation is in the consultant’s toolbox remains to be seen.
 

TOMORROW’S MANAGEMENT CONSULTANT

Adam Powick, David Stewart and Victor Callan give their thoughts on the attributes of tomorrow’s top consultants

  • above average bright with a natural intellectual curiosity
  • self starting and prepared to run with a concept or idea
  • logical, credible, persuasive
  • customer focussed, and ready to get down into the trenches where the client’s work is done
  • willingness to challenge perceived wisdom
  • good with data
  • ability to deal with ambiguity and complexity and to make sense of the grey
  • strategic in perspective and pragmatism
  • high levels of emotional intelligence to allow sensitive implimentation of change management initiatives