By Dr. Georg Tacke
Recently, critics have taken to several papers to proclaim that consulting's growth phase is over; others still have voiced the opinion that the entire industry lacks a strategy. Criticisms launched at consulting as a whole are highly exaggerated and entirely without merit.
Today, nearly every company, industry, and nation faces a period of insecurity. In such times, trustworthy professional advice is more important than ever. Without external expert advice, many companies will hinder their own success.
How should consultants adapt to best advise their clients in these uncertain times? What changes are unnecessary? Here are five considerations to keep in mind:
1. Size alone doesn't create customer value. Sure, a consulting firm needs to have a minimum size. It should operate in key markets and be strong enough to invest in knowledge innovation. But at the end of the day, a client doesn't care whether the consultancy has a few hundred more (or less) on staff. Sheer size alone offers no advantages to the client. Almost no economies of scale exist in the consulting industry. It should give you pause, then, that major consultancies have recently attempted to merge. It certainly won't offer their clients any perceptible benefits.
2. Use all available resources. The value and strengths of an external consultancy come from its ability to see the "big picture" across industry and other boundaries or constraints. Let's look at the automotive industry. As manufacturers move into mobility services, electric cars, etc., they need someone with many years of experience in the automotive sector itself. More importantly, they need someone who offers seasoned experts in new business and revenue models; someone who can master the transition from product to service business and market real innovations. Needless to say, this client requirement has a direct impact on a consultancy's organization and management. It's counter-productive to organize a consulting business along rigid industry lines. Instead, consultants should ensure that their clients have access to a full network of cross-industry expertise.
3. Clients want quick and measurable success. Real customer value lies in pushing your strategy and achieving measurable results as soon as possible. Making this happen requires increased involvement in implementing recommendations to ensure or influence the speed of their success. Greater involvement in implementation will also affect the team composition and staffing needs of consulting firms. After all, implementation and strategy development require different types of consultants. Your client's increased insistence on quick and measurable success will also revamp the structure of your consulting projects. Projects are not about completing tasks in a set order. Today's consultants must offer clients quick gains in addition to strategy development. This is how larger programs will finance themselves.
4. Take the right approach to globalization. The strength of a consultancy lies in its ability to offer clients a close-knit network that goes beyond regions and industries—precisely what the client is lacking. Effective globalization is crucial in delivering the best possible service. Smooth, cross-border cooperation is a must, particularly in international projects where the client expects support to come from a single source. Coordination problems due to internal invoicing or tangled lines of responsibility among consultants are unacceptable. It's equally unacceptable for a consultancy to pitch a project backed by several international offices, only to staff it primarily with consultants from the home country.
5. Cross-selling is highly overrated. It's no secret that major auditing firms have big plans to penetrate the consulting industry. Motivated by consulting's higher margins and the cross-selling potential of auditing projects, these firms are quick to promote their capabilities. However, the cross-selling potential for auditing firms is greatly overrated. In my experience (and as evidenced by countless takeovers), clients don't care who checks the books when they choose a consultancy. And it's rare that the promised cross-selling experience is ever exploited to its full potential. Specialized consultancies needn't fear auditing firms' attempts to elbow their way into the consulting market. Instead, they should hold their ground and remain focused on their clients' needs.
Dr. Georg Tacke is CEO of Simon-Kucher & Partners. Simon-Kucher & Partners is a global consulting firm with 500 professionals in 23 offices worldwide (US offices in Boston, Miami, New York, and San Francisco) focusing on Smart Profit GrowthSM. Founded in 1985, the company has 25 years of experience providing strategy and marketing consulting, and is regarded as the world's leading pricing advisor.
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