Posted , in Business model
It’s not what you are, it’s what you could become that matters
There’s a concept in child psychology, put forward by Russian psychologist Lev Vygotsky, that proposes the idea of a zone of proximal development. At the heart of the concept is the idea that every child’s learning capability can be divided into three zones: The things she can do unaided, the things she can do with guidance, and the things she cannot do.
It’s the middle of those—the things the learner can do with guidance, which we might think of as locked potential—that forms the zone of proximal development (usually shortened to the ZPD). Critically, the ZPD is understood to be variable: It’s bigger in some children than others.
Among the many facets of child psychology that, I suspect, could be useful in helping us to understand the way the consulting industry works, this one stands out to me at the moment. That’s because, against a backdrop of convergence across the professional services sector, many firms are starting to ask not only how they might grow, but what they might become.
Let’s set aside the idea of the role of the guide/teacher for a moment and think about how we might assess the size of the ZPD they might have to work with in any given firm. In the case of consulting firms, some of the answers will be internal, others external. From an internal perspective, conventional approaches to assessing capability might make it hard to see a firm’s full potential: A firm that offers cybersecurity consulting services to financial services clients could probably offer those same services to clients in other sectors, or it could offer new consulting services to financial services clients. These are perfectly useful dimensions of growth, but they’re also limiting because they do little to change what the firm is, or to help it spot opportunities across the full spectrum of convergence. They just make it bigger. Could it become a firm of accountants, risk experts, or lawyers? Possibly. Hard to say.
But what if the same firm approached an assessment of its capability from the opposite direction? What if it approached it from the perspective of value? What that might allow it to see is that at its heart, everything it did was about protecting clients. Could a firm that was known around the world for what it did to protect its clients become a firm of accountants or lawyers? Probably, yes.
In which case, the external perspective becomes important, because however much potential exists within the firm, the size and health of the markets into which it wants to grow can still constrict or multiply that potential. A firm needs to fully understand the markets they’re thinking of entering, and what competition awaits them there. It’s a part of the story; a part of the ZPD.
That throws up challenges for firms like ours, too, because convergence means that a growing number of firms are crossing boundaries that were rarely crossed in the past, and that our data model needs to be a step ahead of them. We’re working on that now, and exploring our own ZPD as we do.