The black hole at the heart of the consulting universe

Consulting is a like a piece of string, I wrote earlier this year, with low-cost consulting (industrialised, standardised work in familiar territory) at one end and high-value consulting (focused on unfamiliar areas) at the other.

What’s changing at the moment is that clients are pulling the two ends apart (“We use consultants in two ways…”) and that will, we predict, force firms to choose which end they focus on. Also new is the fact that traditional consulting services don’t easily sit on one side or another. In the new order, strategy isn’t high-value any more than technology is low-cost: parts of strategy (due diligence but, arguably, some areas of corporate strategy) fall into the low-cost box, while some areas of technology (digital is the big example) are high-value.

Although both markets are viable, the low-cost market is bigger, but the high-value market is growing more quickly. For that reason, in order to attract and retain the best people, and for a host of cultural preferences, most consulting firms want – indeed, expect – to be at the high-value end. But our research suggests it won’t be as easy as that.

Many – most – consulting firms have spent the last decade trying to make themselves more efficient, going from craft work to mass production in a modern version of the Industrial Revolution. That made perfect sense at a time when clients were pushing down prices but it sits less well in a time where demand for innovation, new intellectual property and industry knowledge are in high demand. Consulting firms now aspiring to position themselves at the high-value end of the piece of string, they may find that legacy business doesn’t simply hold them back, it actively pulls their business towards low-cost consulting.

A good analogy here is with a black hole. Imagine if you will that the black hole represents the low-cost work a firm does: its sheer size creates a gravitational pull that sucks in the rest of the firm’s business, however much it wants to position itself as a high-value firm. As with a black hole, there’s an event horizon, the point at which it becomes impossible to escape the black hole: some firms will find they’ve already past it. For those still circling the black hole, the only hope is to send out the escape pods, new businesses and/or brands that can cut the ties with the mothership if necessary. It’s consulting, as Jim Kirk didn’t say, but not as we know it.