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20/01/2016 Back

Consulting 4.0: The «secret» market leaders

Does the consulting industry face drastic change? Not long ago opinions were built on sheer guesswork or more or less robust predictions.

The consulting market and its players (the consulting firms) had to adapt to the (economic and technological) change. Today’s consulting landscape (speaking of Consulting 4.0) is quite different compared to not long ago. A lot of the educated guesses and forecasts have been confirmed and have become manifest in concrete changes of the service portfolio of consulting firms.

In search of growth and innovative consulting services

The consulting market is growing on a lower level, the market exhibits lower consulting volumes, which leads to higher competition, and the demand for consulting services is adapting to changing economic conditions. No surprise that consulting firms are looking for new growth opportunities. In order to expand service portfolios and skills consulting firms often rely on acquisitions of firms or build alliances. Large management consulting firms enter the territory of the marketing, public relations and advertising agencies: Deloitte Digital became the 2nd largest U.S digital agency, Accenture and Adobe is expanding its global alliance to create and deliver digital marketing solutions, Roland Berger established a new executive communications & corporate affairs business line. Driven by new technologies, traditional management consulting firms launch new products and collaborative services: BCG/ xChange, Mercer/ Workday, Cap Gemini/ Salesforce. As a result of the rapidly changing business environment, established companies are finding themselves left behind as smart competitors use newly available technologies to disrupt markets. For example, the ‘hackathon’ is a recently in vogue innovation technique that provides large corporations with a means of developing radical new ways of creating valuable propositions for customers in a short timeframe (McKinsey: Demystifying the agile innovation hackathon).


New «one-stop-shops» based on flexible delivery models

When BCG plans to send its consultants as temporary staff into the organizations of their clients, dubbed client secondment, this is not only a new model or way to develop its consultants (Spiegel Online). When consulting firms like McKinsey, BCG and Co. unbundle their offerings and not only deploy smart strategy consultants anymore but also trainers, “implementers”, IT developers, data scientists, “entrepreneurs”, business and venture partners, this marks business model innovations that could reshape the way the global consulting firms engage with clients. This also applies to smaller boutique consultants which extend their roles and approaches how they interact with their clients (interim management, co-entrepreneur, analysts, etc.) and differentiate their offerings by combining the “what” (competencies) and the “how” (roles).


From pyramid to diamond

To most essential way consulting firms can add value to clients (now and even more in the future) is through specialization and seasoned expertise (study: Consulting Market Trends 2014, Cardea/ consultingsearcher). Therefore, besides skimming the best from elite universities and MBA programs (junior consultants), the recruitment of seasoned functional or industry experts gains importance. Experienced professional hires already count for 20% to 30% of all new hires at McKinsey. This recruitment practice follows the strategy to foster growth in new client areas and to provide to clients not only deep analytical skills but also creative problem solving and implementation capacities. “Partner led consulting pyramids”, which have been fundamental to big consultancy consulting firm’s growth and profitability, are coming under strain and are unlikely to continue in a way we recognize today. Experienced professionals and seasoned consultants play an increasingly important role on client engagements. but staffing client engagement teams with more senior consultants force large consulting firms to shift their operating models and their organizational set-up which are similar to those of the boutique consulting firms: From “partner-led consulting pyramids to diamonds” by dramatically downsizing the number of associates on the lower end of the pyramid. This downsizing has created the new consulting firm operating model of the 21st century, one based on flexibility and new staffing strategies, and has changed the shape of the graphical representation from a pyramid to a diamond.