Posted , in Differentiation
Consulting service design: To bundle, or not to bundle
To bundle, or not to bundle, that’s the question:
Whether it’s better for a firm to offer
An integrated service, as in the past,
Or to break it down into a Sea of parts,
And, by proposing this, to create value—
More than it has done; to end the doubt,
The heart-ache, and the thousand natural shocks
That consulting work is prone to? It’s something—
Surely—to be wished for.
OK, I admit it: It’s hard to imagine Hamlet, half in, half out of the grave, applying his existential angst to consulting. Yet the question of how to construct consulting services has become something of a life-and-death concern to the industry, and in the wider professional services sector.
As with most difficult debates, there are good points on both sides. In favour of bundling is clients’ desire to consolidate their expenditure on consulting services: Our research suggests that three quarters of clients would like to buy a wider range of services from a smaller number of firms (but not everything from one—the idea of the one-stop-shop has never been attractive to clients who are nervous about handing over too much power to a single supplier). To see evidence for this, we only need to look at the high-growth consulting services of the moment. Digital transformation is the ultimate bundled solution, where success depends on combining capabilities from strategy through to technology, and from user experience through to cybersecurity. Winning work here depends, not only on being able to field a wide range of skills but demonstrating an ability to integrate those into a single, coherent mode of execution. Against bundling is the growing extent to which clients struggle to tell big consulting firms apart. Everyone is offering the full range of capabilities, everyone claims to be able to weave them together, though no one seems to be ahead of anyone else when it comes to living the dream: “Consulting firms seem to think that it’s enough to call a group of people a team, even when they don’t know each other, let alone ever worked together,” one exasperated client commented to us. Bundling services together also makes it harder for clients to see what they’re paying for: They worry that they’ll end up paying too much for some services or grades of consultants, effectively cross-subsidising other parts of a firm’s business.
At the heart of this, I think, is what’s being bundled and how the bundling is done. Too often, when a firm offers an “integrated” service it uses that term to disguise the fact that it can’t clearly and precisely articulate what the parts are that make up the sum. Bundling thus becomes an exercise in increasing woolliness (Hamlet would not have approved). Let me illustrate this with an analogy: When my son was small, he enjoyed making “cakes”, throwing together a random selection of more-or-less edible ingredients into something that looked vaguely cake-like and which his doting parents would pretend to eat (to my horror, one toddler visitor did actually eat the proffered item—fortunately he survived). My point is that recipes itemise the amount of each ingredient we need: If a recipe simply said, “combine some flour, eggs and butter” we’d probably end up with a fairly disgusting mess, too.
Consulting services are usually bundled to conceal uncertainty. Most firms, large and small, struggle to articulate what makes the way in which they deliver a specific service distinctive (they don’t have a sufficiently precise understanding of the ingredients). Bundling therefore becomes a means to hide this rather than an exercise in creating a genuinely unique offering. We need to start by decomposing services into their constituent parts and honing our offerings at this level, and then re-combining them in a way that accentuates what makes the approach special.
“There is nothing either good or bad”, Hamlet might have said, “but fuzzy thinking makes it so.”