Posted , in Business model
in TechnologySign up to our blog here
Suppose you moonlight as a small business owner and you want to start selling your products online; maybe you make a line of high-quality cashmere socks embroidered with inspirational Paul Drucker quotes. And further suppose that—for one of any number of perfectly valid reasons—you have a strong ethical aversion to working with Amazon.
Ok, you say to yourself: How hard can it be to avoid giving money to Jeff Bezos? There are plenty of e-commerce sites, after all. All you have to do is not list your products on Amazon; sure, you’ll lose out on some sales, but it’s not the end of the world.
So far so good. But wait! How are you going to get those socks to the people that need them? You’ll probably be using a third-party fulfilment service. But have you checked that the service you’re using never stores stock in Amazon fulfilment centres, or uses any part of their delivery network? And what about that nice contractor who did your website for you? Have you checked that nothing on there is reliant on Amazon Web Services? Oh, and while we’re at it, better delist your business from Yelp—because they also run on AWS. You started off just trying to do right by your principles, but now it seems like you’re tilting at windmills.
What can this little parable teach us about consulting? To be sure, our industry is not like online retail; even the largest firms could only dream of the sort of many-tentacled industry dominance enjoyed by Amazon (or Alibaba in China). But it does seem at least theoretically possible that the conditions could be starting to come together that would allow a savvy firm to achieve something like the same level of ubiquity.
And that’s because of the pace with which new technologies are being incorporated into the consulting process. After a few false starts, it now finally seems that consultants are ready to embrace digitisation. McKinsey—with its suite of over 85 “McKinsey Solutions”—already sometimes sounds more like a software company than a professional services organisation. And even the firms that are less vocal about it have invested considerable time and energy into building up their own asset bases and developing product management tools.
In other words, our industry is on the threshold of crossing over from being people-driven and technology-enabled to being technology-driven and people-enabled. And it is at precisely these transitional moments that monopolistic players are most likely to emerge. The fundamental constraints of project delivery mean that no one firm will ever be able to run every project for every client; but it is definitely possible to imagine a world in which a single company—be it McKinsey or Accenture or Google or an organisation that doesn’t exist right now—offers a suite of products that are used in virtually every project.
Just as Amazon provides the underlying infrastructure that makes web commerce today possible, an enterprising firm with the right product mix could end up as the de facto standard for consulting software. Already, we have seen evidence of larger firms who have developed their own in-house technology starting to license it out to smaller boutiques. Perhaps one of those firms will decide that being a platform for consulting projects is a more lucrative business model than actually delivering them—and start down a journey that sees them become as essential to the consulting landscape as Amazon is to online retail.
We might not know at this stage who will be the Amazon of the consulting industry—or even if one will ever emerge. But what once sounded far-fetched now seems like a real and imminent possibility. And regardless of how it plays out, we expect this question of who owns the technology plumbing underneath consulting projects to be one of the defining stories of our industry over the next few years.