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Strategy, analytics, and the dangers of cannibalisation
Cannibalisation is all the rage. The downside to all the growth we’re seeing in multidisciplinary projects is that the more digital transformation, cybersecurity, etc., expands to embrace different capabilities, the less time and money there is left to spend on more traditional services. Even strategy consulting, that bastion of archetypal consulting, isn’t immune to this: We estimate that, if you exclude the digital transformation component from strategy, for example, demand for traditional strategy consulting shrank by 14% last year.
But what about the relationship between strategy and analytics? After all, what is strategy if it’s not analysis? That’s a rhetorical, only semi-serious question: Even so, it’s fair to assume that clients, who see bigger datasets and more sophisticated analysis being applied in other parts of their business, will expect it to be incorporated into their strategy development process. And that is, indeed, what appears to be happening—we estimate that around 20% of strategy work would now be re-badged by clients as data and analytics. Even more striking, though, is the extent to which the growth rates of analytics significantly outstrip those of the non-analytics remainder of strategy consulting, typically by around half as much again. In some markets the difference is even greater, as the following chart, which plots the 15 largest strategy consulting markets globally in terms of the rate at which demand for analytics (the Y axis) and the non-analytics component of strategy consulting (the X axis) are growing, shows. Analytics in the US, the biggest market, is growing at twice the rate of the non-analytics component of strategy (16% compared to 8%); in the slower-growing UK market, the rates are 8% and 3% respectively; in South Africa, the non-analytics part of strategy consulting shrank by around 2% last year, while analytics grew at 7%.
But does any of this matter? You could argue that it simply indicates a logical and unsurprising evolution of strategy consulting. On the other hand, there has to be a real danger that strategy consulting becomes even more left-brain focused in the future, that consulting firms, beadily eying the growth rates of analytics invest in this space, rather than in other aspects of strategy. As clients become ever more dazzled by the quality and depth of data analysis becoming possible, do they, too, neglect the extent to which they also need to act on those insights? Will analysis squeeze out change management? If you’re a client in India—another of the markets with the widest variance between analytics and non-analytics strategy—is there a danger that your consulting team spend most of their time looking at the data they’ve gathered and not enough on ensuring that any recommendations can be implemented in practice? Where digital transformation cannibalises other services, you can argue that it’s being driven by opportunities to exploit new technology, but with strategy consulting the shift towards analytics threatens to make what is already a hyper-rational activity even more so, reducing the opportunity for new perspectives rather than increasing them. Analytics really could end up being the death of strategy.