In this article, we look at the future of consulting. Its latest developments, approaches and broadly, what the future holds for strategy consulting.
Before the last ten years, consulting firms had worked in the same way for a long time. They recruited talented generalists who worked on all kinds of strategy and operations projects.
Recently, this model has changed in a big way. Consultants are beginning to specialise earlier in their careers. In addition, consultants are being recruited specifically for their industry expertise. Top firms are pinching great employees from retailers, manufacturers and many more to be experts in that field. Above all, consulting firms have added digital and analytics services to their value proposition.
The obvious reason for this is that in today’s world, all companies require a digital platform. Any business changes that a consultancy suggests will demand integration into a firm’s electronic systems.
As a result, consultancies are increasingly developing digital teams. Either that, or their generalists are being encouraged to develop the required digital skills. These bolt-on digital groups help with the transformation process, allowing consultancies to affect “end-to-end” change.
For the consultancies, this typically means a longer project. Although the digital implementation phase is less lucrative than the initial strategy phase, it goes on longer. Typically, it will twice as much time. This creates more revenue and helps to nurture the consultancy’s relationship with the client.
In addition to these software oriented groups, consultancies are building analytics teams. This allows them to analyse data beyond the numbers on Excel. It enables them to compute algorithms and scrape data in order to truly understand an industry or firm.
McKinsey for example has purchased a range of firms including the hugely successful QuantumBlack. In contrast, BCG has organically developed its own BCG Gamma and BCG Omnia, which deal primarily with data and software. Increasingly, a BCG project team will include a couple of generalists, plus some computer scientists. Consultancies would say that this makes them more agile. It gives them the ability to adapt, generate rapid responses to new problems and lead change. Beyond these two, the pattern has been to encourage engineering and computer science majors to focus on this side of things after a few years as a generalist.
Consultancies have previously tried a similar but different side-strategy to modernise. Certain firms believed that with their industry expertise, they could spin out highly effective entrepreneurial groups. Although this worked in the case of Bain Capital Credit, it has more often failed.
That is because there is a contradiction between a company owning a firm, while giving advice to another firm in that same industry. BCG are trying a similar project at the moment, called BCG Digital Ventures, which is a corporate investment and startup incubation firm. We shall see whether it escapes this age-old problem!
Finally, consultants are becoming less and less general. Where consultants used to work for 4-5 years before really specialising, this will now happen after 2 years.
The first effect of this is that there is more movement between firms. As firms develop requirements for specialists in growth sectors in consulting like supply chain, marketing, technology, etc, they need to recruit specialists. It is much easier to just hire someone who has worked on multiple projects in the industry, than to give them specific training.
Moreover, this means that you don’t need to start off as an analyst or take an MBA to become a consultant! With increased specialisation, consulting firms have placed a higher emphasis on hiring from established companies. For example, after two years in marketing at Marks and Spencer’s, someone might leave to become a retail consulting associate at MBB!