By Tony Tiernan
In tough economic times, many consulting firms revert to two tactics that appear essential, but actually dig them deeper in the hole both during and after the downturn. The first is selling work at which they cannot be truly great, and the second is pursuing clients that do not share their values.
Both tactics can help fill the short-term revenue void, but the consequences can be severe: unhappy clients who will not come back; a damaged reputation in the marketplace; and disaffected staff who will leave at the first opportunity. All of these chickens will come home to roost when the upturn comes, as it will.
The pressures to make these compromises are certainly understandable. But they can irreparably damage a consulting firm's core value-creating identity—the often unwritten principles about what the firm does (the business problems it chooses to own and solve) and the way it operates (the meaning and purpose that drives its business—the difference it is trying to make in the world—and the values that shape its relationships with clients and staff).
A consulting firm that does the hard work of discovering and articulating its identity can use it as a tool to shape the firm's three core business processes: developing clients; developing people; and developing ideas. The result is an organization that is "all of a piece"—inherently differentiated and coherent while retaining the flexibility that professionals value. That is the foundation for a powerful professional services brand.
A strong identity, clearly articulated and shared, is a consulting firm's guiding compass and its true source of differentiation. While competitors can copy a consulting firm's concepts and marketing messages with relative ease, the way its consultants do their work and interact with clients cannot be copied.
In the 1990s, I worked for a consulting firm (CSC Index) that lost its identity after setting the world on fire with the blockbuster consulting service of that decade: business reengineering. While there were numerous reasons for the firm's rapid descent and failure (after a breathtaking climb from $40 million to $250 million in revenue in less than 10 years), identity was at the heart of Index's calamitous fall. The firm took its eyes off of solving issues at the lucrative intersection of operational change and information technology, and lost sight of some of the core values that made it unique.
Conversely, I know of a large consulting firm that soared after revisiting, articulating and broadening its identity. Today that consulting firm is one of the largest and most successful in the world. Downturns are times when struggling consultancies need to revisit and renew their identities.This article
explains more deeply what it is about, how to determine when it's necessary, and how to do it.
Why Consulting Firms Need Clear Identities
Consulting firms, possibly more than any other type of business, really need the consistency and direction provided by a clear identity. There are at least four good reasons.
The first is precisely because their services are intangible, hard to explain, and easy to expand and change. Without a clear, shared sense of the real meaning and purpose that underpins the business, the problems that it solves, and the value that it creates, a consulting firm can so easily morph into whatever the client—any client—wants it to be at any given time, or whatever each new senior
hire thinks it should be. That's a recipe for immediate dilution, eventual mediocrity and ultimate disaster.
Staff retention is the second reason why consulting firms need the compass of a clear, value-creating identity. A consulting firm's assets are its people, and these assets appreciate significantly with seasoning—i.e., their expertise builds over time. A clear, shared sense of the purpose and meaning (therefore value) in the organization helps bind your best people to the firm, and helps elevate morale and motivation during tough times.
The third reason is differentiation. The sheer proliferation of
consulting firms, and the relative ease with which concepts and
marketing messages can be copied by a competitor, mean that the stated differences between firms are often onion-skin thin. Add to that the fact that a consulting firm's "brand" is conveyed in large part via its people, and you have a uniquely difficult industry in which to create meaningful differentiation or build a brand. A
clear, strong value-creating identity is the foundation for a strong organizational brand.
The fourth reason is that a well-understood identity enables a consulting firm to harness the emotional value that its clients get through their relationship with the firm. This is an important,
but often neglected, differentiator for consultants.
