Going forward, traditional consulting firms will be forced to compete against business models that threaten their historical margins, streamline their processes with technology and automate many of their traditional activities.
So what will the new business model for management consulting look like when it arrives or has it arrived? You can help answer both of these questions.
Let’s start by looking at the current business model so we can look at how digitization is changing that model.
Current Management Consulting Business Model Canvas
|Peers: Management Consulting specialist by practice, by industry or by location|
Statistical & Financial Modeling
Analysis, Planning & Recommendations
Access to our people, knowledge, skills and expertise to get smart recommendations to build shareholder value.
McKinsey & Company
Bain & Company
Booz & Company
Monitor. A.T. Kearney
PWC, E&Y, KPMG,
|Production PartnersPast Clients and industry experiencesE
x-Partners & Associates
Knowledge management systems
Lots of travel
Focus on outcomes
At Client Management, Employees, Customers, Investors
Externally Business community, Media, Local and national economies
OpCosts + Tangible + Intangible Capex
Reputation and Valuation
The current business model has served both multi-national firms as well as regional and local firms well for decades. However the days of unrestrained corporate spending on big consulting contracts are long gone. Corporate clients are getting more demanding and smarter about how they access consulting services.
Some corporations have built their own internal consulting staffs. At the Walt Disney Company a consulting unit called The Disney Institute is now teaching other firms how to better engage their customers. The Ritz-Carlton Leadership Center, a unit of Ritz-Carlton Hotels is teaching client firms how to give high levels of service to picky customers. Zappo’s, the online shoe retailer, is teaching others the importance of an “engaging” culture and outstanding customer service at Zappo’s University. The list continues to grow of other high performance organizations that have staffed up with their own in-house consulting resources to both continue to improve their own organization and to share their wisdom with others. Sharing wisdom is popular, free and valuable to a brand in the 21st century.
Digitization Accelerates Transformation
The change away from the traditional management consulting model are being accelerated by technology. Digital technology has automated a lot of the research, modeling and analysis processes traditionally provided by consulting firms. This ups the bar for these firms. There is greater need for synthesis of large amounts of data. And beyond that, wisdom. This will drive changes in both organizational processes and human capital competencies.
Technology is also impacting the value proposition of traditional management consulting firms. Providing access to proprietary knowledge and expertise is not as unique as it used to be. Whether it be accessing, learning, processing, preparing and assimilating knowledge or finding local resources to aid in those tasks, companies are getting smarter at (and have a lot more options for) finding ways to gain new knowledge faster and at lower cost.
Management consulting firms will need to reinvent and reorganize their own intangible capital. They will need to develop new competencies, processes and value propositions. They’ll need to use new digital tools that may be unfamiliar to them. Ultimately, this will drive a new business model for the consulting industry.
We’ll look at that model next.