Do we really need consultants?
Does the world really need consultants?
If you’re a consultant, your answer is probably “yes”. You’d probably also agree if you’re a retailer of high end Tumi luggage, if you sell funky colourful dress socks, or work at a frequent flyer program. But for a large part of the rest of the population, the answer is slowly but surely starting to land on a firm “maybe”.
Over the last decade, we’ve seen a massive transformation in the consulting industry. Gone are the days when the MBB’s had a stranglehold on every government and corporate tender in town - nowadays we’re likely to see creative agencies pitching for consulting work, big four consultants launching agency offerings, companies building in-house teams and freelancers and independents gobbling up all of the work in between.
So in this article I’m going to answer the question: Do we really need consultants? Or would the world be better off without them?
Love me tender: The problem with consulting
Full disclosure - I’m an ex-big four consultant, and I also built out Meta’s partnerships org that works with consulting firms. On top of that, I spent my early career building a consulting team within an award winning digital agency. I’ve seen how it works from many sides of the fence, which has given me a pretty unique viewpoint on how the sausage is made.
So I was intrigued when I read an article in the Sydney Morning Herald entitled Love me tender: Why the government can’t leave the ‘big four’. The author makes a strong case for why the requirements for government tenders unfairly advantage the big four consulting firms to win, and that this is actually not in the best interests of the client when smaller firms are much more specialised, nimble and economical.
In particular, the recent PwC scandal in Australia has highlighted the precarious nature of this arrangement - in a nutshell, a team at PwC were caught red handed advising the tax office on how to maximise their tax collections from foreign tech companies like Google, while they were secretly feeding details of the new measures to those very same tech companies. Not exactly the highest standard of ethics, and it’s landed the firm in some very hot water that they may not bounce back from.
All the corporate governance policies and CEO apologies in the world can’t undo the wrongdoing. And it illustrates one of the biggest problems with the consulting industry: when the entire advisory market is limited to just a handful of large firms, does it still serve the greater good as it once did? Or is it a system that now only serves the consulting firms themselves?
The million dollar Powerpoint deck
The question of the value of consultants came to a head for me recently when advising a client. Their team had been charged with leading a major transformation initiative across the organisation, and they had spent close to 3 months planning the project out in great detail. When it finally came to securing budget approvals, there was pushback from global leadership saying that they needed to engage an external consulting firm to run the project.
Obviously my client was irritated by this. Not only did it mean going back and throwing out a lot of the planning work they’d worked so hard on, but they strongly felt that the work would be better done in-house. The transformation program involved a lot of intrinsic knowledge of internal processes and systems, so getting an external team of consultants up to speed would mean additional time and cost. After going back and forth a few times, things finally blew up when my client asserted that they didn’t want to pay a million dollars for yet another powerpoint deck.
My advice was not to treat this as a black and white decision; it felt like there was the possibility of a good middle ground here with a cross-functional team. The plan was to bring in specialists from the consulting firm to do what they do best, and then use the internal teams to navigate the things they are best placed to deal with. In the end that’s the model they ended up going with and the co-resourced team gelled in no time, coming together as a more productive unit than either party could have managed alone.
So you’re probably wondering - what were the bits that the consultants were best placed to do in this case?
What do clients really buy from consultants anyway?
Through this process, I stumbled across an old presentation that I’d given at Meta a few years back. At the time, the business was looking to upskill their media sales teams to act as trusted advisors to their clients to help deal with the more complex conversations that were bubbling. So I ended up working with the L&D team to run an internal training course called “Think Like a Consultant”.
One of the key sections of that presentation had been a breakdown of five of the most common scenarios when client organisations need to hire consultants in order to get the job done:
Framework and Playbook: when clients want a team of consultants who have done the same project 5 times before and have a formula to make it easy
Deliver the bad news: when clients need to cut costs or make layoffs, it’s often the external consultants who are behind the process
Business model: when clients are looking to launch a bold new play and need help to figure out how and where it will make money
Body shopping: when clients know exactly what they want and just need skilled people to come in as a temporary workforce to fill their resource gaps
Rubber stamp: when the client needs the seal of approval of a reputable external party in order to sell their proposed investment to the board
In the case of my client, the value that the consulting firm delivered was actually more than they’d expected - they thought they were just signing up for a “Rubber Stamp” to keep the leadership team happy, but they actually ended up getting a lot more out of the engagement than they expected.
Does a one-stop shop make sense anymore?
So is the moral of the story that the world really does need consultants? After all, it worked out for my client. But this scenario doesn’t take into account the massive changes that have been sweeping through the professional services industry over the last decade.
With the explosion of digital, agile ways of working, the rise of startups and the gig economy, all of a sudden throwing a bunch of MBAs at every problem didn’t work. Suddenly the world needed service designers, UX architects, and software engineers. The consulting firms responded with an explosion of new offerings: Accenture Song, Deloitte Digital, BCG X, McKinsey Leap. All of them promised to “imagine, deliver and run the future”. Forget the good old days of the million dollar Powerpoint deck - now consultants were expected to actually build things.
Of course, those clients who still value that rubber stamp of a top-tier consulting brand have continued working with these large firms for now, albeit with the recently acquired new teams in jeans and sneakers. But we’ve also seen a spate of more adventurous corporates exploring different models. Freelancing sites like Upwork and Outsized give more sophisticated clients access to individuals with deep specialist skills, in an arrangement that’s much more flexible and cost effective.
More recently, we’ve seen offerings that make this concept more accessible to even the most risk averse traditional organisations. Studiospace is an on-demand platform launched by a group of ex-Deloitte partners offering access to over 250 of the world’s specialist agencies, with the platform itself offering a layer of governance that makes it easy for the client to manage a variety of vendors under a single contract. This level of access to specialist skills was something that just wasn’t possible until now.
Studiospace is an on-demand platform that allows client organisations to access the specialist skills they need from a panel of independent agencies, providing a layer of governance under a single contract. These types of new platforms are challenging the traditional consulting firm model.
So will the traditional consulting firms be able to keep up with these rapidly evolving new models? At least for now, they are trying and seem to be doing a decent job. But the truth is, these large scale industry changes tend to be generational - they happen very gradually and slowly, until a new generation of C-suite takes the reins and suddenly everything seems to change overnight. This is the challenge for the consultants, and only time will tell if they will manage to reinvent themselves fast enough to stay in the game.
What do you think - do consulting firms still have a valid role to play in the corporate world? I’d love to hear any other insights or stories you have to share, especially all you consultants out there. Also if you have a question you’d like answered by an innovation coach, leave it in the comments below.
