Consulting

The consulting industry is about to see a major disruption

One of the oldest sectors in the professional services industry, management consultants sometimes don’t follow the standard professional services mandate of “eat your own dog food,” a phrase meant to imply that one should follow one’s own advice. Much of management consulting is built around encouraging clients to be willing to accept and embrace change – but consultants have themselves operated the same way for the past hundred years.

The current model is often, unlike the practices they encourage clients to embrace, slow to adapt, and at times inefficient. That’s not to say consulting firms don’t deliver valuable services – they do. But they could do it better. Larger consulting firms keep chugging along mainly based on their reputation and prestige, with steep retainers and long-term engagements, and a product that sometimes delivers measurable results and increases in cash and Ebitda, but at other times are hard to quantify.

What is driving the disruption in consulting?

There are two limitations to the current consulting model: It does not tend to help smaller businesses which may not be able to afford a multi-million dollar six-month contract, and it does not tend to help businesses with more modest requirements, which simply want an on-demand subject matter expert to give occasional advice and counsel as needed. There are often cases where a six-month contract with a dozen on-site consultants is overkill, and the client has a single need that can be answered in six minutes instead.

The standard consulting playbook is based on that of the largest consulting organizations with thousands of consultants, who may put together a team of dozens of analysts to solve a problem over a period of several months. There are of course, plenty of situations in which this model works well. Some problems do require that level of expertise and dedication. But the limitation of the consulting industry is in seeing this model as the standard.

When a newly minted MBA is hired on as an associate at McKinsey & Company, they don’t expect to be solving problems for a local company with ten employees and a few million in annual revenue. They expect to be solving problems for the Fortune 100 with lots of cash to spend. What those new MBAs recognize today is that the bigger opportunity in consulting, which is now enabled through online platforms, real-time search and global connectivity, may well be in becoming part of an on-demand platform serving a much broader audience.

The disruption is coming

Disruption is finally coming to an industry which has historically been the loudest voice proclaiming the benefit of disruption. The problem is that there is only room for so many McKinsey’s, Bain’s and Deloitte’s, and in fact the vast majority of consulting organizations are much smaller, many taking the form of sole proprietorships or LLCs with only a few staff.

The disruption today is in three areas: smaller consultancies are beginning to take on a much larger role and are becoming more visible; smaller organizations are more eager to take advantage of consulting expertise, thereby opening up a new marketplace for services; and innovations in connectivity and search are allowing it to happen.

“We need a new consulting model,” said Ash Sobhe, co-founder of ThinkPeeps, a new kind of search engine that locates and connects consultancies and other subject matter experts with the companies that need them, over live videoconferencing and often in real-time. “In today’s information age, intelligence is what drives success, and that holds true for businesses of any size – not just the traditional Fortune 500 consulting client.”

“We are in an age where smaller and smaller companies have routinely been taking advantage of systems that were traditionally only available to the largest of corporations with the deepest of pockets. Services which only a decade ago required a multi-million dollar custom software installation are now available on a software-as-a-service basis for a few hundred dollars a month. Data analytics, also once considered a useful but very expensive tool for the biggest companies, is routinely used by small businesses and even solo entrepreneurs.”

“Global connectivity, end-to-end supply chains spanning the globe, and the ability of small businesses to compete on a more level playing field with larger competitors are all routine, and now, platform-businesses are allowing these smaller companies to gain access to the same level of high-end expertise that not that long ago were limited to only major players.”

The new consulting model in action

Today smaller businesses – often businesses with just a handful of staff and possibly no physical office at all – have a global reach. Global platforms allow a small company to easily cultivate partnerships with other companies, suppliers, and professionals in India, China, and throughout Europe, and the growth of e-commerce allows smaller retailers to have a much bigger target market that extends far beyond their home region.

Those smaller businesses today will have access to the same level of highly experienced consultants as do their largest competitors. Similarly, smaller consultant shops are able to extend their reach and offer services much more easily than ever before.

“Small businesses, and even larger ones, wanting to connect with a subject matter expert can do so by conducting a search to find the most appropriate consultant,” said Sobhe. “The big advantage comes in recognizing that the small business can do so on an on-demand basis so they do not need to engage in a long-term contract. Rather than a months-long engagement, a small business may only need an expert for an hour or two.”

“Consultants, taking advantage of the same platform to offer their high-value services on a per-minute or per-hour basis, are becoming the new face of the gig economy,” concluded Sobhe.