Industry Expertise: You Know it When You See It

However, like the customers who don’t take these advertisements into consideration, having seen it in so many other windows, buyers may glaze over a claim of industry expertise without deeper examination. It’s  a claim that loses its meaning. Varying terminology adds to the noise from “industry knowledge” to “industry expertise”, the latter of which is a stronger phrase. “Industry experts” is even stronger and suggests that a firm actually has the people who can deliver, and not just generalized industry familiarity from past engagements. A sign that advertises the best cup of coffee maybe missing some fine print, like it was the best cup 20 years ago. The point is, smart consumers break down terminologies to distinguish one product from another and uncovering meaning in the “expertise” language being used can help set expectations and separate the wheat from the chaff.

What is heard from providers today is that they are organized, or actively organizing, around industry-lead or industry-focused solutions. But among all of the firms doing just that, how is it possible for consulting buyers to make smart decisions? What are organizations looking for and why are so many firms raising the point about having industry, or sector expertise? This approach is a recent development and firms are reacting to market demands with vigor. We know that in today’s consulting market, more than ever, this level of expertise is important to buyers and can appeal to them significantly as a driver in the decision to hire one firm over another.

Over the past few years, talent models at firms have been shifting away from the practice of filling the ranks with fresh MBA’s and CPA’s and instead look to supplement with the more experienced worker precisely in reaction to the need for more industry-led solutions. This can be seen in financial consulting engagements for example, where industry insiders such as engineers, data specialists, and business line managers provide important, competitive insights into engagements involving contracts, supply chains, due diligence, expert witness testimony, investigations, etc. Former regulators who have experience covering a particular industry are highly prized. The competition for talent is stiff everywhere including among the big industry players themselves. This makes the targeted industry investments expensive, leaving all but the deepest pocketed consulting firms sidelined aside from the selection of the few experts in well-chosen industries where smaller, niche firms choose to compete. Those who are spending on expertise, in turn, cover a wide number of industries since the competitive environment requires it.

The challenge for consulting firms is to distinguish themselves, let alone keep up, in the commoditized “expertise” space. This isn’t any easier to do than becoming “one more louder” in any other crowded market. So many firms are trying to be the amplifier that goes up to eleven, to reference the movie “This is Spinal Tap”, while building solid brand identities and reputations through industry relationships. Leading a service offering with industry or sector expertise is a fundamentally difficult proposition, difficult to message, and a challenge to demonstrate. It’s ripe for argument among firms of who’s the best, yet still a necessary part of the package. Clients aren’t considering firms without industry expertise given all of the challenges they face today, so firms respond with ever deepening, expensive industry-focused solutions that have opaque returns and are tough to differentiate competitively.

 

Gabe Walle is an Analyst, Financial Consulting Research with ALM Intelligence.

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