External consultant: somebody who is employed externally to the client (either by a consulting firm or some other agency) whose expertise is offered on a temporary basis, generally for a charge. The other firms in the Large Four divested their consulting solutions pretty much a decade ago, soon after the introduction of Sarbanes-Oxley legislation and other U.S. reforms, but are now catching up and beginning to stake a claim in the greater-margin management consulting business. Like most other skilled solutions, consulting is very opaque compared with manufacturing-based companies.
And the marketing intelligence corporation Motista employs predictive models and software to deliver insights into customer emotion and motivation at a compact fraction of the value of a best consulting firm. In Might 2013 we held a roundtable at HBS on the disruption of the professional solutions to encourage greater dialogue and debate on this subject. As access to expertise is democratized, opacity fades and customers no longer have to spend the costs of huge consulting firms. In industries where opacity is high, we’ve observed, new competitors ordinarily enter the industry by emulating incumbents’ business models rather than disrupting them.
Although these upstarts are as however nowhere near the size and influence of significant-name consultancies like McKinsey, Bain, and Boston Consulting Group (BCG), the incumbents are showing vulnerability. These firms assemble leaner project teams of freelance consultants (mainly midlevel and senior alumni of top rated consultancies) for clients at a tiny fraction of the price of standard competitors.
In our investigation and teaching at Harvard Business School, we emphasize the significance of searching at the globe through the lens of theory—that is, of understanding the forces that bring about change and the circumstances in which these forces are operative: what causes what to come about, when and why. They are typically hired to bring price and high-quality benefits to corporations by working creatively with law firms.
Now incumbent firms are seeing their competitive position eroded by technology, alternative staffing models, and other forces. By adding increasingly granular data, such as leverage and profits per companion, the Am Law rankings shone a light on the previously secretive operations of white-shoe firms. Frequently these jobs ought to be repeated on a regular basis to be helpful, and quite a few of them deal with massive quantities of data.
M&A activity, as hard as that may well be, will increase as some firms make a decision that they never have the resources or stamina to make necessary changes, and other individuals realize the need to obtain fill-in capability. Early indicators of this pattern in the consulting market involve increasingly sophisticated competitors with nontraditional business models that are gaining acceptance.