The disruptive future of consulting - dynamic, digital, data driven

I’ve been reflecting on the future of the consulting industry after reading The Innovator’s Dilemma by Clayton Christensen and the disruptive impact of emerging technologies. As a thought experiment, consider the following:

Imagine a future where customers request consulting engagements on a platform that matches the right partners to them.

Once matched, the consulting firm’s electronic personal assistant evaluates the likely win rate and moves the opportunity to proposal response. It gathers relevant case studies and reference material, sources the appropriate talent from a dynamic talent pool, prices the engagement risk and marks up draft contract terms for review.

When scope is confirmed and the firm engaged, robo-advisers complete the primary research, crowdsource feedback from specialists in the field, extract insights from relevant data sets, and present a report to the engagement manager for review.

If this was available now, would you use it? Would you trust it? What would you pay for it and how would firms differentiate?

First things first. Before we explore this scenario, let’s consider why companies engage consultants and what value they provide.

Organisations engage consultants from professional service firms to:

• Help solve complex problems — on strategy, operations, technology
• Provide a fresh perspective — external, impartial insight and advice
• Bring specialist expertise not currently available in-house
• Improve business processes by identifying efficiency gains
• Drive business change — often through technology transformation
• Mitigate risk through research, governance and applying best practice
• Provide resource supplementation — the extra capability to help flex.

Let’s assume that these needs remain constant — even if the nature of the problems consultants solve change over time. Where are professional services firms at on the journey to this future scenario?

Sustaining versus disruptive technologies in consulting

Christensen differentiates between sustaining (incremental) technology versus disruptivetechnology. Disruptive technology often has worse performance initially but offers a value proposition that some, usually new, customers value which is cheaper, simpler and more convenient.

Sustaining technologies currently used by professional services firms include incremental improvements to systems for managing sales, customers, resources, knowledge, finance, delivery, risk and so on. You can get a good sense of where consulting firms are focusing their investments in these areas from the Technology Services Industry Association (TSIA) Technology Services Heatmap.

The bulk of investment is on increasing adoption of more mature, proven technologies and whilst many are experimenting with more disruptive approaches, they are not yet mainstream. Why not?

Why investing in truly disruptive technology is hard in good times

Over time sustaining technologies improve efficiency but, as Christensen points out, as a firm matures this capability can become a disability to disruptive change. It creates corporate inertia when trying to pivot to face emerging disruption and anchors the resources, processes, and culture into certain modes of operation.

This makes disruptive customer markets financially unattractive to pursue and difficult to support. Further, these sustaining technology improvements do not provide enough competitive differentiation, no “blue ocean” free of competition.

Noticing disruption can be deceptive in industries as leading companies are often still growing and achieving substantial profits. That is, until disruptive technology catches up, by which time competitive advantage is lost…

Looking at the Australian consulting market this certainly appears the case, as Consultancy.com.au highlights that consulting firms are booming currently. Big professional services firms may be at risk of becoming a victim of their own success.

What will disrupt the consulting industry in the years ahead

Where then are disruptive technology changes likely to come from? It’s all too easy to call out the latest over-hyped technology as “disruptive”. In reality, most are sustaining technologies around which established firms will stand up a new market-facing offering, hire some talent and ignite the sales engine.

As Christensen points out — disruption is often difficult to analyse — if it is predictable and incremental, it is more likely to be a sustaining technology.

His 2013 article in HBR, Consulting on the Cusp of Disruption, highlighted that firms are responding in a variety of ways in anticipation of these changes. These range from the Big Four getting bigger and acquiring capability through M&A to become diversified full-service firms, modularisation of work, and the rise of data and asset-driven consultative models.

A number of these changes have already come to fruition, and some are well underway. What about the next wave of change? Where are those weak outlier signals that are likely to turn the industry on its head?

Looking to the future — emerging disruption

In 2019, we can see change leading us to the Fourth Industrial Revolution outlined by Professor Klaus Schwabin. This maps out global transformation in innovation, fusing technologies, disruption to business and jobs, agile technology, security, and ethics which are all blending into a wave of change that will impact consulting.

My hypothesis is that the combination of emerging dynamic, digital and data-driven change will form the basis for disruption within the consulting industry and is likely to come from non-traditional providers.

As a tried and true consulting formula, let’s look at the people, process and technology dimensions of our future scenario and how they might apply.

People

The need for specialist expertise to help solve complex problems is not likely to go away. However, the way that talent is sourced, teams are composed, and creative insights are generated will. Already we see the gig economy and flexible workforce disruption emerging through Upwork, Fiverr, Cloudpeeps and Guru.

They are new, cheaper, simpler, smaller and more convenient to use. The trust in these is insufficient yet to use for whole-scale digital transformation change driven by consultancies.

Where the next evolution of this could come from is a platform like LinkedIn ProFinder, Expert360 or Seek connecting and combining this talent and creating a market for companies to request a team rather than individuals.

This, coupled with improvements in the way that an emerging platform enables thought leaders to generate insights — through more effective crowd-sourcing and collaboration, could be truly disruptive. This dynamic facilitated network of freelance consultants on a trusted platform with brand recognition might just be good enough over time to topple the traditional consulting model.

Process

As mentioned earlier, as big firms drive greater automation into their processes to drive efficiency can be a disadvantage when trying to be nimble. New approaches leveraging agile, lean and design thinking are already well progressed throughout organisations to offset this process rigor mortise.

Christensen’s 2013 article also referred to modularisation of processes to allow the ability to customise the approach to the needs of the customer.

Consider how disruptive it could be to transparently expose all functions and services usually preserved within a professional services firm, enabling customers to self-serve and construct their own consulting engagements. A proxy for this is the way AWS or Azure allows users to set up, configure and spin up cloud environments based on a list of services.

Think of the implications of a customer being able to order from a list of digital services to: complete a competitive market scan, request key industry insights, rapidly create a minimum viable product website to test their idea, analyse the data, run three more iterations, request an architecture design for the scale up, and then pick a build and support price, along with a marketing campaign or change management program that they could integrate into their business.

How ready are big firms to unlock and expose their offerings in bite-sized chunks, automated and connected in a way that leverages people and technology in a rapidly reconfigurable way? There’s an interesting article that explores the implications of training your people to think in code.

Visualise a consulting firm as code — with a continuous integration / continuous delivery pipeline, and API’s to connect key micro-services (be they freelancers or intelligent agents) to deliver rapid outcomes to customers. A digital, customer-led, self-service engagement would certainly create a disruptive shift.

Technology

Underpinning these futuristic scenarios are digital technologies that rely on data sets, machine learning, flexible workflows, natural language processing, and the emergence of more mature intelligent agents such as personal assistants and robo-advisers.

In this future, being data-driven is essential. The bot is your friend and co-pilot, helping you with analytics and orchestration, tighter design and prototyping cycles and even contributing to creative processes.

Two exciting examples that are possible precursors to this kind of disruption.

1. The first — where Garry Kasparov, former world chess champion, outlines in Deep Thinking the combination of AI complemented with a team can outperform a pure AI or an expert. Consider a scenario where a consulting robo-adviser can source, sort and extract key insights to share with new consultants to harness better customer results. This co-pilot could prove invaluable to a consultant, and if released in the B2C market, could potentially completely disrupt traditional consulting. Individuals or groups could use this cheaper alternative as a sort of DIY for consulting in lieu of more traditional professional services firms.
2. The second — technology enabled creativity. When we consider that AI is now starting to enter into domains which we never anticipated, such as art and music, as highlighted by this ABC article on artificial intelligence and creativity. There may well be opportunities for emerging technology to disrupt creative consulting domains: from brainstorming and idea generation, design, risk analysis, and scenario planning. Read more on this from MIT Sloan which explores unleashing creativity with digital technology.

Consulting firms should continue to scan the market for truly unique enabling technologies that could replace or complement core intellectual and creative functions.

The future of consulting — platform, product, and profession

So where will this disruptive future of consulting take us? Certainly, the current trajectory suggests that it will be dynamic, digital and data-driven.

More than that, as these disruptive forces consolidate in more profound ways, we may well see consulting become a combination of platform, product and profession.

What are the implications for consultants, the customers, and organisations they serve?

• Continue to monitor, trial and experiment with platforms that offer dynamic resourcing opportunities. Look to engage early if one looks positioned to become a breakout performer so that you are first to market.
• Consider how to digitally productise, modularise, expose and enable your capabilities to customers to self-serve what your firm has to offer. This will help overcome internal inertia and increase agility.
• Ensure that you are data-driven and be on the lookout for effective intelligent agent “co-pilots” for advantage. They are your mental exoskeletons that will help with your consulting heavy lifting.

What do you think the disruptive future of consulting might look like? How are you preparing for change and what experiments are you running to explore how emerging technologies might be used? I’d love to hear from you!

Arrange a Conversation