Disruption in Consulting – Adjusting to the New Normal

StelliumBlogDisruption in Consulting – Adjusting to the New Normal



Disruption in Consulting – Adjusting to the New Normal

Management Consulting as an industry traces back its roots to the late 19th century when professionals with knowledge of specialized areas like Finance and Engineering offered advisory services to businesses. The first evolution in the industry (Consulting 2.0) happened post the Great Depression when small groups of professional consultants got together to form bigger outfits having multifarious expertise and a greater brand equity. The McKinsey’s and ADL’s of the world were thus born. The second wave of change arrived in the 1960s with the globalization of the industry. Consulting 3.0 was all about movement of the industry from the USA to Europe and Japan. 1990s brought in rapid onset of Information Technology which metamorphized consulting once again, Consulting 4.0 was, in a sense, a paradigm shift. Skill took over knowledge as the stock in trade for the industry and evolution became a continuous rather than a discrete process.

Over the last few years the consulting industry seems to be headed for another paradigm shift. To understand this transformation, it is important to understand and classify the value proposition –

1. Procedural – Repetitive deployment of known solutions
2. Experiential – Synthesis and amalgamation of experienced problem solving to provide new solutions
3. Knowledge based – Problem solving using Imagination and Innovation based on superior knowledge

As with most other facets of enterprise, the Covid-19 Pandemic is changing the face of consulting by precipitating and accelerating evolution. Budgetary constraints, limits on travel and social interaction and evolution of technology is today interacting to produce a situation where existing business models are being rendered irrelevant and a ‘New Normal’ is being defined. This is what we call Consulting 5.0. It might just be the case that consulting would end up being the next photography equipment or entertainment industry where change was so rapid that most incumbent market leaders fell by the wayside. This disruption is likely to be precipitated by two factors

1. Precedence of knowledge over skill – Consultants are increasingly being looked upon as either providing thought leadership or performing routine tasks. This is essentially favouring knowledge over skills. While the knowledge workers are getting greater respect and greater share of the wallet, the skill workers are being consigned as replaceable and being substituted by internal resources, retrained and upskilled to perform tasks hitherto being outsourced to these skill workers.

Even when clients do decide to employ third party consultants, it is unlikely that they would pay the substantially high ‘per hour’ rates which has been a standard feature of the industry.

Procedural and to a very great extent Experiential consulting work is caught in this downward spiral. We see an increasing number of clients requesting for resources on a ‘Time & Material Basis’ or in a ‘Devops Model’ in place of running implementation or support assignments. This is a clever way of combining skill acquisition by their resources with delivery of defined business objectives.

2. Evolution of digital delivery mechanism – Even as the panic caused by the Covid-19 pandemic recedes, clients see greater value in digital delivery of solutions. The advantage of avoiding expensive travel is only one part of the story, value is also being perceived in greater participation in deliberations across the client organization and better documentation being offered by technology like digital white-boarding and video conferencing.

As pointed out earlier it is activities lower in the value chain which are more amenable to digital delivery. Knowledge based consulting is being affected to a lower extent by this metamorphosis.

“It is not the strongest of the species, nor the most intelligent that survives. It is the one that is most adaptable to change…..” Charles Darwin had said. This is true in the context of Consulting 5.0 as well. Consulting firms which adapt to the changing realities of the industry will be the ones thriving in the foreseeable future.

The most likely to succeed are the firms with the most thorough understanding of their offerings. This understanding along with an ability to translate their offerings in the digital context will spell success. To exemplify – conducting requirement gathering sessions digitally rather than through personal meetings. This would call for an understanding of all aspects intricately and the ability to conduct the right conversations with the right participations without the luxury of a repeat the discussion at will. Another example could be the ability to conduct a complex strategy solution with an executive management team using digitization rather than in the old fashioned conference room workshop. Having a comprehensive understanding of the issues, pre-empting the discussion and channelizing in the right direction are more important than ever before.

Also important for success here would be the ability to use cutting edge digitization to achieve the objectives on hand. Use of video conferencing and other collaboration tools might offer limited value, it would need an innovative core methodology, use of Artificial Intelligence, Digital Automation, No-code Software, On-cloud (subscription based) Solutions etc. customized to solve real problems at the clients business are but some examples of the innovation required to succeed.

Prasoon Singh – Head, Supply Chain Consulting

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