Posted , in Business model
Same, same, not different: Clients’ perceptions of consulting firms in the US
Youngme Moon’s book, Different: Escaping the Competitive Herd, came to mind when writing up our most recent research into clients’ perceptions of leading consulting firms in the US. In it, Moon makes the case that in trying to differentiate in so many ways—adding product here, bolting on something else there—companies have actually ended up doing the opposite. Instead of coming up with something truly different, they follow what others have done, and ultimately, end up looking more and more like the rest of the competition.
I think we’re seeing something similar in the US consulting market. Every year, we ask senior end-users of consulting to tell us about three firms that they either work with or know by reputation, asking them to rate firms for the quality of their work. What’s striking this year is just how little perceptions vary from firm to firm.
This year, the top-rated firm for the quality of its work is IBM Global Business Services: 79% of its clients described its work across ten different consulting services as of “high” or “very high” quality. It’s closely followed by McKinsey on 78%, and A.T. Kearney on 77%.
But it’s not just tight at the top. Eighteen of the 19 firms we ask about score between 70% and 79%—hardly anything separates one firm from another.
It wasn’t always this way. Rewind back two years, and the range of opinion about quality was far larger—most firms fell within a 28 point range, with a couple of outliers. The following year, that shrank to 19 points, before we saw a further tightening in the market this year.
Similarly, we see quite a homogenous picture when we ask clients to rate each consulting firm on a range of attributes. Which firm is best for implementation? It’s hard to say—most are bunched within a nine point range. And it’s a similar story in many other cases: innovative approach, global reach, responsiveness and flexibility… clients in the US see very similar levels of ability in each of these attributes, and many more.
Which brings me back to Moon’s theory. Being the largest and most mature consulting market in the world by some distance, consultants in the US have been most exposed to the winds of change blowing through the market, changing its shape. It’s where convergence, particularly around digital transformation, started to happen first, upending all the traditional rules about which firms do what. With transformative change making up an ever-growing proportion of the growth in the consulting market, all firms are investing in making sure they’re up to scratch across the board, just to be able to compete. As a result, firms have worked on their weaknesses and invested in the services their competitors have—but have ended up looking more and more alike. Firms have gained capabilities, but not capabilities that differentiate them from one another.
Will we see this trend play out in other markets? We don’t see it yet, but with the US usually a leading indicator for what’s going to happen elsewhere, the chances seem pretty good that we will. Perhaps it serves as a lesson to those in other markets: Being competent—or even very good—at everything isn’t enough; it pays to really stand out in something.