Posted , in Brand
Industry knowledge: plenty of room for improvement
Finding points of difference between consulting firms is something clients have always struggled with, but there’s one characteristic that’s coming up again and again in our conversations with clients: knowledge of their industry.
Increasingly, it seems, people only want to work with consultants who understand their sector. For consultants, being a functional specialist isn’t enough, especially if you want to stand out from the crowd, and charge a premium price. We’ve talked elsewhere about the bifurcation of the consulting industry into ‘low cost’ and ‘high value’ work – and industry knowledge is critical to the latter market. “If a consulting firm can’t demonstrate expertise in our sector, then we automatically put them in the ‘low cost’ category,” was how one client summed up his attitude.
But what clients want isn’t always what they’re getting. We asked a range of senior executives in major corporations, spread across several major markets, to give us their feedback of how well the consulting industry is performing in this respect, alongside a whole host of other characteristics. At first sight, the feedback is positive, but only just. On average 54% of those we surveyed rated firms’ sector knowledge as ‘good’ or ‘very good’, second only to their analytical skills, and well ahead of attributes such as the ability to coach. But more than one in ten rated this as ‘poor’ or ‘very poor’. Moreover, if we dig below the surface and we find a lot of variation by country: clients in the US and UK were the most positive; those in France, the most negative (17% of clients here had a negative view, as did 14% of those in Germany).
Overall, the top-scoring firm earned plaudits for its industry knowledge from almost 70% of its clients, compared to just 45% for the lowest-ranked firm. Typically strategy firms do best, aided by an organisational model that typically allows people to specialise on a specific sector relatively early in their careers; technology firms do least well, pulled back by their emphasis on functional skills; the Big Four tend to hover somewhere in between.
The fact that clients see strategy firms as having the deepest industry knowledge is a huge opportunity for them – and one they’re already exploiting when we look at, for example, clients’ feedback about which firms they’d chose to work with on transformation projects. For the Big Four, eager to dominate the transformation market, projecting greater industry depth will be critical. For technology firms, the challenge is even greater and more urgent: if they want to avoid what we’ve previously described as the ‘gravitational pull’ of commodity work, investment in industry knowledge can’t come too soon.