BUSINESS CONSULTING

Although it was way back in 1995 that Boston Consulting Group consultant Clayton Christensen coined the term “disruptive innovation”, it is only in the last few years that the business consulting industry has started to experience the true meaning of the term.  

Much of the upheaval owes its rise to the arrival of new (and more efficient) technologies whose adoption has allowed startups to compete with established players in history. That has left business consulting firms – which were bringing in record profits a few years ago –facing the aftershocks of technology-driven disruption. 

Following are five reasons why the business consulting industry is about to be disrupted:

1: Labor-intensive operations

Whether your consulting firm provides its clients with business investment opportunities in Africa or it opens the doors of power corridors for its patrons, it can ill-afford to shift its reliance away from humans and put it on the shoulders of computers. 

From researching your target market to analyzing how it works – and from giving recommendations to your clients on the best way forward for them to managing their businesses, it is humans and not computers who still perform all the key tasks in the business consulting industry.

2: Billable time-based model

Visit any business consulting firm with an open mind, and you’d see that in any given day, there would be multiple, lengthy, and overstaffed engagements which serve no purpose on face value. Yet, since the industry operates on a billable-time model, it encourages such operations to maximize revenue. 

However, with the advent of technology, clients are aware that they don’t have to pay by the hour for, say, a working lunch with their consultant. That realization might lead the tech-savvy clients to move away from established players and towards the newbie firms which operate on a value-based model. 

3: Democratization of intellectual capital

In the good old days of the business consulting industry, the tools, templates and models used by one firm were guarded like a hidden-treasure. Business firms did that in the hope that without the information which those troves had in them, their competitors just couldn’t compete. 

However, with the advent of Google, everything that is of value is now only a few clicks away from a tech-savvy person. This democratization of intellectual capital has taken away the monopoly of knowledge which big business firms enjoyed in the years gone by. 

4: Increasing pace of technological change

With technological changes taking place at a breathtaking speed, the recommendations of a consultant are out-of-date the moment they arrive on the desk of their client. That’s because these recommendations are based on external factors which no single human being can control.

As a result, when these factors change and new trends emerge, the same recommendation which might have looked bulletproof a few days ago could become full of holes in a week’s time. And with business consulting firms being slow to adapt, there isn’t much they can do to stay relevant. 

5: Decrease in value of a consultant’s work

Provided the client and consultant are both on the same page, a consultant performs four functions for the client. Go through them, and you’d realize that all four of them have seen their value decreasing over the years.

  • Information: The data that affects the client’s interests.
  • Expertise: The consultant’s perspective on a problem.
  • Insight: Application of expertise to come up with a solution to the problem.
  • Execution: The roadmap using which the client can implement the changes recommended.

While information about anything and everything is more available than ever, expertise has been disaggregated. Likewise, insight has been commoditized and execution has been outsourced to freelancers who could do the same job but on less money. And amid all this, it is the interests of the clients that remain ignored.

Conclusion

Despite suffering from these inherent flaws, the $250 billion global business consulting industry continues to boom. However, ask any business person who is aware of the concept of “tyranny of success” – which means that the means which led to today’s success will contribute to tomorrow’s failure – it is high time for the business consulting firms to recognize their limitations.