... where visionaries, game changers, and challengers discuss business models
I think there are som great opportunities for small and medium sized consultancies to disrupt the big players. Actually, it seems to be happening already!?!
Why, because they far too often deliver more than the customer needs (or sometimes not at all). To make things worse, they charge too much.
A thing I know bothers many clients is the consultancy business model; A partner or senior consultant engages with them. The client accepts the proposal, but then it's the "back office" consultancy mostly made up of grunt (even straight out of school) consultants working day and night, who solves the case.
Furthermore, most of these consultancies never walk their talk - implementing their own recommendations that, by the way, in many cases are short term focused.
An interesting issue consultancies sometimes struggle with, is finding enough work. Some consultancies, including the one I work for, only hire employees on a project basis to keep the costs down. Problem is, everybody has to pay their bills, so they have to have other work on the side, which makes them inflexible.
A guess large clients still use large classic consultancies partly because of their brand value. The momemtum McKinsey adds to a management decission is still significant.
This answers my earlier question. I recently read a book called "Closework: A Story That Will Change the Way You Think About Your Life, Work, and Future" by Adam Lury and Simon Gibson (Apr 1, 2005) - it reminded me that as consultants we have a duty to really get to know the organisation that we are working with and hopefully adding value. I see the Business Model Canvas as a tool that helps in this understanding of business when utilised to its full potential - but - it is hard to get the top end of town Consulting firm to take notice of the tool.
This is my struggle as I am one. I do see the BMC as a great tool that can change the consulting game and interact with our clients (no matter what the size) in such a dynamic and different way.
I would be keen to be involved in the conversation.
Yes!, very interested.
I've been engaged on several workshops on the subject. Way beyond the proposed example at the BMG book, several consulting firms, associations and startups and struggling to define and find a new (&better) consulting business models.
There are quite a lot of reasons or detected needs.
- Client perception of value of the Consultancy, in general.
- Alternative forms of knowledge management/acquisition and resource allocation.
- Alternative means of engagement.
On top of this brief list, the influence-credibility map has changed dramatically due to recent failures and the 2.0 disruption. Most large consulting firms have started a "transparency" and "we know more than anyone" battle, requiring a complete reassessment of the relational, governance and delivery model.
More than happy to participate!
Just a twitted activity about CapGemini on the same subject.
Real strategy or just PR? Capgemini Consulting Gets ready for 'a New Kind of Consulting' http://t.co/GRR2Q1p
via @eacorg #yam
This is a really interesting article, and it underscores exactly my experience. And, yes, I'm talking about real strategy, not just P.R.
Quoting the article: "If consultants are to cure the growing malaise in their relationships with their clients, then they will have to offer "a new kind of consulting," according to Cros -- one that focuses less on productivity improvements and cost cutting and more on innovation, understanding customers, and risk management."
It is exactly this kind of innovation, understanding customers and risk management that the design/branding process can uncover.
And not only can they uncover the opportunity, the same processes -which demand openness, transparency and collaboration - can be used to help teams learn how to build bridges between the silos that have traditionally limited synergy and productivity.
Related thought: the new social environment is revolutionizing both communications (again, internal and external) AND the ways we do business.
I suggest that these "2.0" processes (and permissions) can both revolutionize the strategic consulting firm's product (service mix) but also the firm's form and structure itself.
What is the FORM of tomorrow's consulting firm? I suspect that it is not a deep bench of tenured partners reporting to the same offices. I'm guessing that it is a flexible, responsive structure that provides a true win-win for client and consultant alike... one that provides both better results and lower cost to the client, and a means for the consultant to attract and serve clients with their own unique talents.
IMO this is the opportunity we have for reinventing the business model itself - both product and form.
Very interesting thread. Glad that this conversation attracted such interest.
The strategy consulting model is definitely ready for reinvention. I personally am particularly keen on migrating from the strategic advisor that I am now to a more specific, value-adding role in business model disruption / radical innovation. See great potential in this area
Another epicenter might reside in the revenue stream realm, transitioning from the traditional project-based fee to a more creative combination (success fee, equity participation in a new venture, etc)
Anyway, would all of you like to take up the challenge and "write the chapter" for the BMG book on strategy consulting, using the BM canvas? If so, please let me know so we can have a webex to work on it.
Like the others who have contributed to this discussion, I find it very interesting and meet the same 'consultancy' challenges operating with small to mid cap technology businesses.
My clients go 'glassy eyed' if I lead with strategic consulting as they expect short term and visible business performance improvement, even if it is reasonably obvious that the problems stem from 'tired' business models.
Only after demonstrating that I can help them achieve tangible performance improvement in profit, revenue, people development, market expansion etc. will they then entertain the idea that we need to re-visit their business models.
This is always on a baseline project fee combined with a high proportion of 'success fee'
I would be delighted to help in creating a chapter on strategy consulting using the BMG canvas.
Even consulting firms that are way down "the food chain" from the behemoths like McKinsey and CapGemini are facing challenges these days when it comes to client willingness to pay for consulting engagements (unless they're disguised by tactical or operationally oriented projects).
I've heard from several firms that used to thrive on 6-figure engagements that Global 2000 clients want to pay dramatically less for similar results: $30K/gig rather than $250K... One issue that colleagues point to is the increasingly likelihood that budgets for consulting services have been dispersed: lots of little pieces across a highly decentralized organization. This makes it much harder for the consulting firm to sell big-ticket item engagements... Said otherwise, if you need a centralized buying decision, your sales cycle will be much longer.
Here in Seattle clients are much more interested in buying the services of contractors (meaning implementation) rather than consultants. We're seeing procurement functions try to pigeonhole consultants as a fungible commodity, and therefore subject to tremendous pricing pressures.
Here's an interesting blog post from Forrester on the need for a "revolution in management consulting." http://blogs.forrester.com/daniel_krauss/10-11-16-the_path_to_revol...
And the Harvard Business Review on "the State of Strategy Consulting," http://blogs.hbr.org/cs/2011/03/the_state_of_strategy_consulti.html
It's crystal clear to me that this business model needs transformation — or we need to move into different professions.
Christine, thanks for your very thoughtful post and the accompanying blogs. I too am witnessing a major shift across the whole value chain from value perception (willingness to commit money and resources) to intensified internal competition.
Where do you see the "epicenters" of this badly needed business model innovation?
Well, the answer may depend on where the consulting firm chooses to focus... In my world, I'd say the epi-center is some combination of "offer-driven" and "customer-driven." We're being forced to respond, like it or not, due to a shift in buying power. Our traditional clients have less power as economic buyers, given the centralization of control in the hands of the procurement people and the squeeze to reduce the number of "authorized vendors."
When I started my consulting firm 15 years ago, most of my gigs were with brand-name Fortune 200 firms. These days, they're too much trouble: they pay too slowly, demand too much in the way of contractual hurdles. Their people are so oppressed... It's downright unattractive. Especially for someone like me, who spent her formative years at Apple...
Mine is more of a boutique firm, so I've found myself gravitating more toward mid-market clients where those buyer-side pressures are less fierce. Focusing on mid-market clients is about the only way to have a direct relationship with the client, unless your firm has a lot of clout in its own right. Or privileged status.
In Seattle if you want to serve Microsoft, for example, you live or die based on your status as "an authorized vendor." (I hate the word vendor.) So if you want to work with Microsoft clients, you end up changing your channel model, going indirect -- and having the economic relationship managed by another firm. Which means you have to give up a lot of margin, for the so-called benefits those firms offer.
I'm using Microsoft as an example of the changes I've seen in how the leading West Coast tech companies are buying services from consultants. The increased power by the procurement folks, who know how to buy on price but not necessarily discern differences in competence, has forced the shift to aggregations of consultants (or contractors) working through what we refer to here as "body shops."
So in my case, facing a value proposition that no longer resonates as well as it used to, I'm exploring "offer-driven changes," as well as flirting with a different channel model.
Does that answer your question? Never having worked for a large management consulting firm, I don't feel qualified to respond on their behalf...