If case-based knowledge consulting emerged, throughout the 20th century, as the consulting industry's dominant norm, it has been challenged in recent years by a new model known as evidence-based consulting. Practitioners of evidence-based consulting uphold the value of case-based knowledge and apply such foundational understanding to every assignment. But unlike A.T. Kearney, McKinsey & Company, and Accenture, among others, evidence-based consultants are narrowly focused on discrete industries or issues, and bring an arsenal of proprietary data to client challenges.
Consultancies typically position themselves as thought leaders and strategists, or they may be more delivery- and implementation-driven. Still others may focus on process optimization and information technology. But the increasingly common denominator in their success — both demographically and as underscored by client satisfaction studies conducted by Kennedy Information Advisors, an applied marketing intelligence company for the management consulting industry, and by the firms themselves — is that they cover one industry, and often only a few horizontal aspects of that industry. Their advice to clients is based on a thorough understanding of the industry and refreshed through continuous market intelligence.
MasterCard Advisors, for example, focuses on the payments and credit card arena by providing insights on issues ranging from performance management and finance solutions to customer development and data warehousing. DuPont Consulting Services and Safety Products (DCS), for its part, applies its expertise on safety and risk issues — including workplace safety and operational excellence — to organizations worldwide. Shell Global Solutions provides business and operational consultancy, technical services, and research and development expertise to the petrochemical and processing industries worldwide based on the vast hands-on experience of the parent company in those fields. In one of its breakout practices, IBM Business Consulting Services helps corporate R&D departments (research and development) "unearth" new ideas and marketing potential by applying its technology and industry core competencies to the client's innovation capabilities.
As a relatively new feature on the consulting landscape, evidence-based consultants clearly are evolving — emerging as separate divisions in established multinationals, as extended service lines from companies once focused primarily on data, and as brand-new companies, built, so to speak, from scratch.
They are also, it is abundantly clear, here to stay.
Taking a Closer Look
Founded 53 years ago as an organization focused on collecting and processing pharmaceutical market intelligence, IMS Health, through its Consulting and Services Business, has lately taken center stage as a leader in this consulting category, assuming a leadership position, just behind McKinsey, within just four years' time. The consultancy grew out of a strategic corporate expansion that aimed to provide a new advisory alternative to pharmaceutical companies seeking to strengthen portfolios, maximize product launches, optimize sales force structure and deployment, mount superior marketing efforts, forge more productive alliances, and navigate the legal and regulatory environment. It also emerged from a prevailing desire to bring deep therapeutic knowledge — knowledge about oncology trends, for example, such as novel therapeutic technologies and pharmaceutical brand performance and prescribing patterns — to client challenges and questions.
IMS Health's existing global database — covering multiple therapeutic areas and geographic regions while tracking billions of transactions on over a million products — provided the key information foundation for the consultancy. A number of existing analytical tools — econometric modeling, computer simulations, forecasting, e-business solutions, benchmarking, and customized reporting — further enabled the consultancy to grow. Grounding in both the experiential and the analytical quickly established IMS's evidence-based consulting approach as a resource for projects relating to product and portfolio development, pricing and market access, promotion management, performance management, and sales and account management.
At the end of the day, IMS delivers measurable value through a combination of strengths: global information assets, advanced analytical methodologies, and a worldwide team of expert consultants focused solely on the pharma and biotech industries. Increasingly, it competes against strategic and case-based consultancies for an expanding number of global consulting projects.
DuPont Consulting Services and Safety Products (DCS) is cut from much the same mold as IMS, but with an important difference that spotlights the varying genesis of evidence-based consulting leaders. While IMS was born out of a wealth of data and advanced methodologies, DCS arose from a commitment to save lives while building sustainable corporate value. With more than 200 years of experience in serving global chemical, manufacturing, energy, transportation, and other industry verticals, DuPont understood the prevailing need for truly expert counsel on safety and operational improvement — counsel that could not be met by such vertically oriented practices as McKinsey, and Booz Allen.
It's been nearly a decade since DCS stepped into this void, and the consultancy hasn't looked back. Practicing pure evidence-based consulting, the firm deploys a small army of practitioners who have, for the most part, worked on "both sides of the fence." These practitioners have seen optimal processes play havoc with organizations' productivity and morale. They've seen suboptimal safety processes and infrastructure cost lives. They are motivated to deliver real solutions.
DCS has emerged as a thriving midsize player in the highly competitive operations management consulting marketplace. More significantly, its evidence-based approach to winning and executing assignments has enabled it to win an increasing number of "beauty contests" against old-fashioned case-based consulting competitors.
One outside adviser engaged by DCS summed up the units ethos very simply, perhaps even without meaning to, when he said: "As I walked down the beautiful marble grand staircase of the Hotel du Pont discussing strategy with DCS senior management, the firm's CFO stopped me in midstream to remind me to hold the handrail as we descended the staircase. 'Safety first,' he said." With that kind of passion and commitment merged with their evidence-based data and approach, DCS embodies the new kind of firm that will continue to challenge — and often beat — the "big boys" at their own game.
Putting Evidence-Based Consulting to Work
A prime example of where evidence-based consultants are advantaged can be found within the portfolio strategy development process so essential to the pharmaceutical industry. With an increasingly difficult business environment and continuing R&D productivity challenges, it has become ever more critical that pharmaceutical companies effectively manage their portfolio of development and marketed products so that they might meet both financial and strategic goals. If the goal of portfolio strategy is clear, achieving the desired outcome is a distinct challenge — organizationally, analytically, and strategically.
Decisions on how to optimize portfolio strategy hinge on the ability of management to make expert judgments on many relevant uncertainties: how markets will evolve, how new products might address unmet needs, what clinical data is needed to support regulatory approval and commercial success, what indications to pursue and in what sequence, and how the competitive landscape and pricing and reimbursement environment will evolve. In the absence of a crystal ball, pharmaceutical companies often turn to consulting firms to help them make informed judgments.
Such consulting firms require a vast array of capabilities and knowledge, ranging from deep scientific knowledge, to strategic perspective, to process design, facilitation, and change management. Global perspective is critical, as is a thorough understanding of the key nuances in market dynamics, pricing and reimbursement, treatment paradigms, unmet medical needs, and regulatory environments across regions and key countries. Data that can drive unique market insight, support or refute critical assumptions, and help senior management to make decisions and tradeoffs supported by objective data is also an essential enabler.
With an unmatched combination of proprietary data assets and deep industry expertise, evidence-based consultants have a clear competitive advantage in supporting portfolio strategy. They can, for example, rapidly access a tremendous depth of proprietary data, analyze it, and mine it for critical strategic and market insights — all while the traditional players are turning to others for data and, often, insight. Evidence-based consultants can also apply their wealth of industry knowledge to the challenge — their comprehensive grasp of therapeutic and disease area markets and science; their understanding of the pricing and reimbursement dynamics by therapy area and country; their unique insights into both how prescribing habits are evolving and how best to influence them, again by region and country; health economics and outcomes research; and understanding of patient behavior and response. Another advantage that the evidence-based firms often have relative to their more broad-based competitors is a lack of a learning curve due to their strong industry focus. This provides them with a speed advantage; they are simply better and more efficient at integrating complex information from multiple sources into a coherent set of insights for time-challenged senior management teams.
Finally, years of working side by side with pharmaceutical companies on a vast range of decisions also provides the evidence-based firms with deep insight into company cultures and organizational dynamics. After all, portfolio strategy is by its very nature highly cross-functional, and conflicting views and motivations are, consequently, frequent. Years of serving their clients have taught evidence-based consultants how to work effectively within their client companies' processes and cultures, designing effective and efficient processes and overcoming organizational barriers and other hurdles to drive meaningful change and measurable results. While the traditional firms are often experts in one or two of the key dimensions needed, evidence-based consultants are strongly differentiated based on the strength of capabilities in all the needed dimensions — strategic, technical, commercial, analytical, and organizational.
Operational Challenges
Of course, evidence-based consultancies are not without their challenges. For example, one must wrestle with potential conflicts arising from having an advisory company nested within a product-oriented company. Different corporate cultures, different requisite skill sets, and possibly competing missions, branding, and marketing strategies must all be sorted through, so that the amplified organization is stronger for all its new components, and not weaker, and so that customers have a clear understanding of the web of interrelated services provided. Potential compensation issues and apparent internal discrepancies must also be addressed, as, to choose one example, the vice presidents of consulting, often hired from a big consulting firm, expect pay rates often significantly higher than those of the long-standing vice presidents of the parent company (which benchmarks its compensation levels against its industry, but not with the consulting industry). Internal hierarchies within such companies must be navigated as well, as systems, technologies, and incentives must be put into place to facilitate the ready access of data to the consulting arm, but often for firewall, compliance, and/or nondisclosure reasons, not the other way around.
Finally, evidence-based consultancies can be at risk for overspecialization. Those that carve out a single industry niche will, in the end, find themselves working in a finite world. Growth, in such circumstances, is delimited, hemmed in by boundaries the consultancy will have little power to redraw.
An Evolving Landscape
Certainly, evidence-based consulting organizations still represent but a fraction of the total global consulting market that was, according to KIA, which tracks 18,000 consulting organizations worldwide, valued at $241 billion in 2005. The wave of mergers and acquisitions among consultancies — some 1,000 in total in the past five years — has done nothing to diminish this surging tide of consultancies.
As of the year 2000, the estimated number of companies leveraging the evidence-based consulting business model was no more than 200. Seven years later, that number has grown closer to 1,500 — a CAGR of 33 percent — but still leaves evidence-based consultants a minority in a consulting world dominated by thought leaders such as McKinsey & Company and operational consultants such as A.T. Kearney. Nevertheless, the CAGR of an evolving industry segment combined with individual growth rates of evidence-based consultancies — between 20 and 40 percent each year — are, by any measure, phenomenal and, at least for the next few years, expected to continue.
Surely the burgeoning consultancy market has room for numerous business models. Surely, too, alliances will begin to develop between and among existing models, yielding a fresh wave of consultancies and intriguing new business models. One might even conceive of the emergence of consulting consortia, in which industry expertise combined with networking and collaboration capabilities will both redefine and drive the market.
Ten years from now, no doubt, the consulting market will be even bigger than it is today — and in need of a new generation of thought leaders, expert doers with superior case knowledge, and a relatively new breed of evidence-based experts, combining deep industry insight with robust methodology.
Clearly there will always be room for the broad-based firm; we do not mean to suggest otherwise.
However, with clients increasingly demanding specialization and access to unique insights, unprecedented alliances and possibly even consortia will eventually emerge.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.