INTRODUCTION SECTION, CONSULTING MAGAZINE, November 1st, 2016, Page 8.
BY NATHAN SIMON AND MICHAEL TAYLOR
In the age of digital and the empowered consumer, even traditionally staid B2B service sectors are speaking the language of customer experience. Companies are grappling with how to respond to changing customer expectations, new competitors with different business models, and new technologies that afford opportunities to re-envision the customer experience. An oft-cited example is healthcare, where organizations are adapting to a fee-for-value model in which providers are compensated based on the ultimate health outcomes delivered to patients rather than the number of diagnostic tests or procedures performed. While straightforward in principle, the implications touch nearly every aspect of organizations’ business models.
Management consultants, among the most vociferous promoters to their clients of the importance of customer experience, are ironically holding tightest to their traditional service model, which elevates consulting to an art form. But disruption is coming, bringing more science into the consulting process and shifting away from the prevailing overdependence by firms and their clients on the “A-Team,” that group of highly experienced consultants who can bring to bear deep insights and the judgment to be able to deliver the best product every time. These changes portend significant implications across the consulting business model.
The change imperative issues from a confluence of developments in the external environment, both challenges and opportunities, that are laying bare the limitations of a traditional consulting model designed to maximize the in-project adaptability of seasoned consultants rather than an organization’s versatility to respond to changing conditions at scale. At the heart of the challenge are the traditional model’s human-centric process control and related lack of scalability, which together constrain consultants’ ability to systematically capture and control for the complexity of the factors that determine outcomes and thus can yield biased recommendations and incomplete execution.
Some consultants are trying to respond to this challenge through measures such as adding new labor resources, developing tools and offshoring to improve the scale and scope of activities, piloting, and launching new products and services such as managed services or as-a-service platforms. But, while useful, these are incremental changes aimed at doing what consultants have always done, only faster, better, or cheaper. They either double-down on the adaptability of the craft paradigm or trade it off for greater reproducibility or calibration to real-world experience.
A revolution in consulting productivity depends, in contrast, on operating in an entirely different way that can yield both greater reproducibility and calibration. The opportunity is to adopt technology-enabled process control to transform the consulting service delivery model from a craft to a test-and-learn one that designs in responsiveness to the sources of divergence between intended and realized client outcomes rather than consigning that activity to a separate implementation process. Making this transformation happen will hinge on the application of a lot more science: both to manage the group agency challenges that can disrupt coordinated action and understand the complex causal relationships that determine outcomes. It also depends on client side changes in terms of how clients engage with consultants, interact externally and internally within their organizations, and what they value in those engagements.
The consulting process is a collaborative information management activity. How it generates and processes information is the most significant contributor to consulting product quality and client outcomes. As consultants frequently counsel their clients: rather than a constraint on their creativity, good process improves the consistency, accuracy, completeness, and efficiency of human-centric activities. It ultimately enables a more predictable and effective application of an individual’s wisdom and skills. Just as occurred with manufacturing during the industrial revolution, moreover, isolating and liberating the consulting process from the specifics of the consulting product is the crucial step to enabling ongoing process improvement and consulting labor specialization that can together yield a quality and productivity revolution in management consulting.
That said, the master craftsmen who continue to comprise the bulk of consulting firms’ leadership might reject a more process-centric consulting model that appears to diminish the creativity and good judgment that have been the bedrock of the traditional consulting model and the industry’s most storied brands. Such reticence is, however, misplaced. Management consulting will not become the automotive industry, with robotic factories assembling client plans and recommendations. This is not about replacing consultants with consulting process and technology. But a well-designed service backed by effective process technology can remove much of the mundane work consultants do and enable them to deliver more consistent and better outcomes.
At the same time, well-conceived process improvements can help consultants foster a more participative, informed process that brings greater wisdom to the table without leaders losing control of the decision-making.
Early signals from those bringing the talents of their consultants to bear in redesigned, technology-enabled consulting processes are positive for client and consultant alike. Traditional consulting firms will increasingly face a reckoning. As clients become more educated and experience the value of firms using consulting process automation and technology they will create a “pull” as they shift their buying criteria towards consulting process capabilities that deliver outcomes, while small and mid-size consulting firms that avail themselves of this new source of competitive differentiation will furnish the “push.”
A consulting process technology platform, while necessary for management consultants to advance their consulting process and enhance their differentiation and scalability, is, however, only part of the solution to providing clients with better outcomes. Consultants ultimately need to change the mindsets and behaviors that animate their services. For that, they also need to revisit who they hire, how they train, and against which metrics they evaluate performance and organize their incentive programs. They need to shift, for example, from judging performance by rate and utilization to metrics related to client outcomes. Inasmuch as process technology changes the time and cost-to-serve, it also portends changes in how and how much consultants are compensated for their services, potentially making first-rate consulting accessible to underserved small and mid-sized clients.
The next few years will be an exciting time in management consulting as market forces drive transformation and management consulting moves from a 50-year old people-based s-curve to one driven by people, process, and technology.
Nathan Simon is Director, Lead for Strategy & Operations Consulting Research where he is the lead analyst for ALM Intelligence’s strategy and operations management consulting service lines. Download the full white paper on which this article is based that Simon coauthored with Michael Taylor, co-founder and managing principal of SchellingPoint, using the link above.