As we’ve explored in previous articles, the consulting industry is undergoing major changes and disruption. Among the trends we’re seeing is experimentation with new consulting business models, inspired by the anticipated failure of traditional consulting models to keep up with client needs and demands.
According to research by Sioo, a Dutch inter-university center for agile change management and organizational processes, the traditional consulting model of relying on junior consultants, conducting lengthy research projects, and focusing on strategic advice is not a good fit for today’s client requirements. In fact, 59% of respondents in Sioo’s consulting survey agreed that their business models will have to change to remain competitive.
According to the research, todays’ consulting clients want faster results, more sophisticated solutions, and services that leverage information technology to inform and improve the entire process. These three priorities scored the highest among client trends impacting consulting businesses.
Consultants are also being asked to do far more than provide strategic advice. The majority of consultants are also involved with their clients in non-advisory roles and projects, including execution, implementation, and interim leadership.
In turn, these trends are driving significant changes in consulting business models, where consultants are focused more and more on specialized services, specific market segments, faster client impact, and collaborating with other consultancies. In fact, Sioo’s research revealed three new consulting business models that appear to be emerging as a result.
1. Collaborative Consulting
Collaborative consulting involves multiple consultancies working together to meet client needs. Often this entails a network of firms that repeatedly collaborates on projects by combining expertise, information technology, digital tools, and shared knowledge to deliver value to clients.
Different network partners may team up for specific projects, and they may enter or leave the project as needed. Ultimately, by connecting and working together, firms are able to access a broader knowledge-set, create greater flexibility to meet changing clients demands, and generate faster value and results.
Online consulting and business talent networks such as Graphite have also played a role in this emerging business model. Our network of independent consultants allows firms to extend their networking and collaboration beyond working with other consultancies. They can find and hire global experts in particular markets or subjects, enabling them to provide specialized insights and services as well as hands-on execution and leadership for their clients.
2. Continuous Consulting
Another emerging consulting business model is continuous consulting, which centers on data analytics and subscriptions. McKinsey is pioneering some of the innovation in this area, with its McKinsey Solutions service offering.
McKinsey Solutions combines the firm’s industry and functional expertise with data analytics, advanced technology and proprietary data to deliver ongoing solutions that clients can use every day. These include solutions for benchmarking, diagnostics and analytics in pricing, organizational structure, lean operations, corporate performance and much more.
The idea behind continuous consulting is to create ongoing value for clients and generate continuous income through subscription-based services and recurring revenues. By combining the firm’s expertise and strategic insights with big data, new tools, and processes, consultancies can get out of the realm of one-time income and one-off projects and into a new evergreen model that produces positive results for the firm and its clients.
3. Instant Consulting
Our final new business model is instant consulting, where it’s all about delivering value to clients from day one or in the shortest time possible. Often this involves strategic advising, execution and implementation, where consultants can jump into a project and provide insights and hands-on services without requiring extensive research in advance.
Instant consulting delivers on client needs for faster value and results and often goes hand-in-hand with specialized industry or subject matter expertise. For example, a consulting firm might have a client who needs to turn a strategic vision into an action plan and needs a resource with industry-specific experience who can develop and execute it. Or a client might be looking for an experienced financial expert who can help the company establish better accounting practices, processes and reporting.
Use cases such as these are often an excellent fit for instant consulting, where consultants can get to work almost immediately and apply their expertise, skills and experience without the usual wait for a long-term research project and subsequent recommendations.
What These New Business Models Mean for the Future of Consulting
These new business models are certainly on the rise, but they’re not yet having a major impact on the consulting industry at large. Sioo’s research found that only 24% of consultants say these new business models are affecting them strongly or very strongly, and 46% say they hardly affect them or don’t affect them at all.
However, Sioo concluded that this is mostly due to the limited impact of these business models thus far. The underlying trends driving them are a significant departure from traditional consulting models, and consultants clearly believe they will have to change the way they do business to remain competitive.
That means we will likely see a greater impact by these new models in the years ahead, or we can at least expect to see further significant changes in the industry generally. Either way, we’re already in a world where consulting business-as-usual is not what clients are seeking.
At Graphite, we’ve experienced this personally given that our business model and success have both emerged from the wider trends affecting the consulting industry. As we continue to grow and connect more independent consultants with firms and clients, we certainly don’t see those trends changing anytime soon.