Is the day of reckoning for consultancies finally here?
The future-proof consultancy works inside out, not outside in.
First published onApr 13, 2020
With a global economic downturn in full swing, leaders will be asking questions about the value they receive from their consultancies. For many, the day of reckoning might have arrived.
To understand why, start with behaviour. Big consultancy brands can provide comfort to some clients. But this comes at a steep cost. For too long, many big consultancies have been content to land and expand; to prioritise expensive diagnosis over cost-effective solutions; to charge steep hourly rates for analysis that adds little sustainable value to client organisations. In the face of a terrible economic shock, many clients will question whose side the consultancies have really been on — and how valuable that “comfort” really is.
But the problems for consultancies extend far beyond behaviour to the very heart of their value propositions. Many regard people as simply “human capital” — just another fungible asset (or liability) to be acquired and discarded at will. At one level, this is not their fault: management consultancy was forged as a profession in the 20th century, where factory-style work was the norm. Profitability was primarily a question of efficiency: people were cogs in the proverbial machine. The role of the consultancy was to identify where the production line was working sub-optimally, and fix it.
But the world is not what it was. Success is now driven by an organisation’s ability to prioritise increasing revenue over decreasing cost. Companies that succeed are adaptable and innovative — at scale. Those characteristics are human-centred. And they are particularly valuable during recessions. According to The Economist, in a recent report on the short-term future of commerce, “ingenuity, not just financial muscle, will become a source of advantage, allowing cleverer firms to operate closer to full speed.”
Traditional consultancies are simply not schooled in helping their clients be adaptable and innovative. The reason for this is simple: you cannot help other organisations to develop such characteristics when they are not part of your own DNA. For many consultancies — with their focus on finance, commercial strategy and the goal of friction-free performance — this absence is becoming all too clear. Unfortunately for them, the solution doesn’t lie in acquisitions.
A perfect storm is on its way: a reputation for bad behaviour combined with limited ability to add real value could dramatically reduce demand for traditional consultancy services. A degree of schadenfreude is understandable: consultancies are not universally popular. But this ignores the basic argument in their favour: from time to time, almost all organisations need some form of external support to spot and resolve problems.
So, how do consultancies future-proof themselves in a world that is economically challenged, and which prizes adaptability and innovation? The answer lies in a wholesale conceptual reappraisal of the organisation itself — and the role that consultancies need to play in supporting it.
From robot to organism
First, let’s consider how consultancies think.
Here’s a reassuring — if unconventional — truth: every single organisation on the planet has more than sufficient ideas, talent and energy to cope with almost anything that the world can throw at it. But the sad fact is that most organisations end up blocking their ability to harness their ideas, talent and energy rather than unleashing them at scale.
This is partly a conceptual problem. The notion of organisations as factory-style production lines — and their people as robots to be optimised — is everywhere. It is present in the language of “moving parts” and “taking things offline.” It underpins time and motion studies and their ugly relation: the timesheet. It informs the automation of HR processes and the very concept of “people analytics.” Many consultancies reinforce this concept at every turn.
To state a screamingly obvious fact, people are not robots. Treating them as such dehumanises them and undermines their willingness and ability to bring their ideas, talent and energy to work. Organisations that fail to be adaptive and innovative do not have mechanical problems — they have human ones.
It is accurate and more helpful to think of an organisation as a living organism — working to its own biorhythms, capable of self-direction, and innately adaptable. Organisms work with nature, not against it. They are as complex as they need to be to survive, and no more. And each has a unique role to play in the broader ecosystem.
For consultancies schooled in the factory model, the organisation-as-organism represents a significant conceptual shift. If organisations require their help, it is not because the production line is faulty, but because the organism needs support to flourish. The consultancy’s job is therefore not to squeeze out mechanical flaws in the pursuit of perfection. Rather, it is to help the organisation be its imperfect, brilliant, natural self. This means cultivating the internal conditions in which the organisation’s people can be their natural selves.
From outside in to inside out
Next, let’s look at how consultancies work and what they deliver.
It is understandable that leaders looking to cultivate adaptability and innovation potential will seek outside remedies for the problems they face. But externally-imposed solutions or tools are likely to work against the organisation’s true nature, rather than with it. The organisation-as-organism is simply too complex for such remedies to succeed. And too unique — by virtue of genetic make-up, nurture, and history.
This negates the one-size-fits-all approach advanced by many consultancies, who rarely see a problem that a simplistic framework or pre-programmed service offering can’t fix.
That approach needs turning on its head. A consultancy’s job is firstly to help clients understand where and how they are getting in their own way — in effect, to identify where their internal systems, structures and behaviour are unnatural. Secondly, it is to help people negotiate with each other about how they will correct this imbalance, and so liberate the ideas, talent and energy that they possess.
In delivering this support, consultancies should act with kindness, compassion and the spirit of the Hippocratic oath: first, do no harm. They should also advocate the design of solutions and tools from within, offering occasional input and guidance where needed in order to jump-start original thinking.
From maximum to minimum viable intervention
Finally, there is the question of how consultancies behave.
Nature is remarkably self-sustaining. Given space, time and — on occasion — the right kind of support, it will almost always heal itself. The same is true of organisations-as-organisms: they are more than capable of solving 99% of their problems on their own, without any external intervention.
This is not a fact that most traditional consultancies acknowledge. Instead, they prefer to act as doctors without borders (or boundaries), flying off around the world at vast cost to “diagnose” a smorgasbord of problems — in order to drive demand for solutions which inevitably take considerable time and money to implement.
To the extent that cultivating adaptability and innovation potential requires external support, it should be highly targeted. Diagnosis is valuable only to the extent that it enables quick, incisive interventions. It is better to find one thing that’s wrong and tackle it, rather than fail by trying to do everything at once. The consultancy’s job is to support this process — and keep it honest.
So, the future-proof consultancy tasks itself with minimum viable interventions, and trusts that future business will take care of itself. After all, money follows value — another fact that traditional consultancies have got upside down, and will likely come to regret.
Explore more