Once upon a time…
Some years ago, I had the pleasure to speak at the same conference as Clayton Christensen in Vienna, where he was already at the point of stating clearly that the consulting industry will undergo radical change. He was right, and that change is now inevitable. At the same conference, Kotler was also speaking, and just before I went up on the stage, he asked me: “Are you Mr. Penker?” “Yes,” I said. “Are you the guy with the Wheel of Innovation?” “Yes,” I said. He asked me: “Is there any correlation between profit and innovation?” I answered, based on data we had collected over a long period of time and endless analysis, “No, Mr. Kotler.” Then, he asked, “Is there any correlation between market growth and innovation?” “Yes, Mr. Kotler…” And he agreed. The rest is history and not to be told….
Today, in my former home country, Sweden, I read an article about how large management consultancy firms are crashing the Swedish public sector with pop management consulting. And I agree! They do. All these incidents are linked in the chain that led to founding Innovation360, and, today, we are the leading global network for innovation experts, radically reforming an old industry with fast accurate digital deliveries and methods based on science, instead of consulting hat tricks and slide shows that have no real possibility of being successful.
Pop management consulting is the pop version of an inherited structural management problem.
So, in Sweden’s most respected newspaper, we could, today as mentioned, read how large global top tier management consultancy firms hire the smartest people from the best schools and then deliver things that are simplified and do not work.
But the real issue is not mere simplification (although that is sometimes the case); the real issue is far more intricate. If you are large, you need to utilize the market maximally and sell the same solution over and over again. This means that your clients will, in the best case, be as good as the competitors you sold the same solution to! In the worst case, they will be less good. The odds are not favorable if the upside is the status quo and the downside is loss. I like the up and downside to be equal, and I think anyone with any mathematical sense would agree.
The broken business model of management consultancy firms
As Soren Kaplan has pointed out in Inc., there is a lot about how management consulting works that would predispose it to being vulnerable to disruption:
1. It’s highly dependent on manual (computational) human labor—something that computers are doing more and more of.
2. It traditionally has very high margins (and doesn’t bill based on outcomes, but on time spent).
3. Its value is largely time bound, because advice often gets outdated quickly.
4. Its value is also largely driven by information asymmetry (knowing things that other consultants or companies don’t know), which is harder to maintain in the age of the Internet.
Basically, there is a scalability issue in the management consulting industry. Clients are more sophisticated and consultants are selling the same thing that they did in the past, but cheaper. All of these things are signs of disruption, because complexity is not lessening, the decisions to be made are not getting easier, the requirements for smart and well-educated people have not lessened, and the methods used are constantly becoming more and more sophisticated.
Capability is the solution
If you truly believe it is possible to compete and win in this industry, you must find your own way, because doing what everybody else is doing is generating a low margin business and that is not where you want to be. Build on your capabilities, not on old competence. Find amplifiers and blockers. What can be used more? What is hindering you? Assess, analyze, measure, and re-assess, securing success.
You are invited to the party!
In the wonderful paradigm shift we are experiencing right now, Innovation 360 was born, and we can humbly say that we work, after four years on the market, with three global 100 companies, several unicorns, and hundreds of scale-ups though our New York office, Swedish office, and together with our accredited consultants in +30 countries all over the world. Based on common frameworks, what we claim to be the largest database in the world for innovation management practice, the most sophisticated digital tools for analytics and operation, and endless practical experience among all of us, we have been able to claim a position at the start of the disruption of the management consultancy era. We now offer more sustainable value that is customized to the real situation, faster, more accurate, and anchored in science and data.
We are a movement, regardless of whether you are a client, a large consultancy house, or independent. We believe in sharing, we believe in digitalization, we believe in science, and we believe in charging for value and not hours spent. Our ultimate goal is that one of the U.N.’s 17 sustainable goals should be solved by someone using our methods and tools. You might ask: Why? Because these goals can only be solved by sophisticated methods for disruption and innovation, not simplified common frameworks applied over and over again, generating the same failure and the same side effects over and over again. The second reason is obvious: It is a bad idea to destroy the planet. Don´t you agree?
And the best part is: You are invited to the party! We share and accredit clients and consultants all over the world, and we don’t view any of them as our competitors! Join us, and together we can grow, build, and create true sustainable value over and over again!