Consulting’s fundamental business model has not changed in additional than 100 years: Quite clever outsiders go into organizations for a finite period of time and advise solutions for the most tough difficulties confronting their clientele. Their reaction is understandable, since two factors—opacity and agility—have lengthy produced consulting immune to disruption. But as disrupters march upmarket, armed with leaner business models and new technology, the variety of issues requiring strategic solutions ought to shrink. Consulting firms that hope to incubate a technology-assisted model will want to revisit the lessons Christensen laid out in The Innovator’s Option.
And the prime consulting (or law) firms have human capital as their key assets they aren’t hamstrung by substantial resource allocation choices, giving them outstanding flexibility. Hence the initially firms to offer interdependent options to troubles arising at these intersections stand to achieve the lion’s share of the value. This is so due to the fact in consulting, as in every other business, the unlocked entryway is in the basement of the established firms. No matter if they will try to create a disruptive business model or just copy the incumbents’ business model remains to be seen.
This strategy is most pertinent for consulting jobs that have been routinized—that is, the course of action for uncovering a remedy is effectively-identified and the scope of the solution is fairly well defined. Scores of commence-ups and some incumbents are also exploring the possibility of applying predictive technology and large data analytics to provide worth far more quickly than any standard consulting group ever could. LeClairRyan coordinates this discovery work with the greater-worth solutions of lead counsel, who focus on the much less routine aspects of litigation. Management consulting’s fundamental business model has not changed in more than 100 years.
The most prestigious firms have evolved into solution shops” whose suggestions are developed in the black box of the group area. Kennedy Analysis estimates that turnover at all levels in prestigious consulting firms averages 18% to 20% a year. Comparable huge data firms are expanding explosively, fueled by private equity and venture capital eager to jump into the high-demand, higher-margin market place for such productized professional services.
The initially significant blow to law’s opacity came about 25 years ago, when Ben Heineman, fresh from serving as a basic companion of Sidley & Austin, responded to Jack Welch’s contact to come to General Electric and primarily invent the modern day corporate law function, considerably lowering corporations’ reliance on law firms. The agility of major consulting firms—their practiced ability to move smoothly from significant idea to massive idea—allows them to respond flexibly to threats of disruption. We have the capacity to accompany clients from the definition of the method to the implementation of the resolution.
But a counterforce to modularity is building a lot of ill-defined interdependencies amongst the specialist services. The amount of human intervention and customization varies, but in general it is significantly less than what the conventional consulting model requires, meaning reduce expenditures spread out more than a longer period of time (usually by means of a subscription or license-based charge).