Posted , in Differentiation
The five dimensions of value
There was a time, not so very long ago, when “value” was a word you rarely heard senior partners at consulting firms use—at least, not of their own volition. The assumption historically was that if consultants focused on turning in high quality deliverables then they could leave considerations of the underlying value-add to client-side stakeholders. Now, however, there’s a widespread recognition that consultants need to be more proactive in broaching the subject with their clients.
But it’s all too easy, when discussing value in the consulting industry, to fall into the trap of thinking of it as a monolithic concept. The reality is that there’s no single type of value that clients are always looking for when they buy consulting services: Every client has their own nuanced drivers and motivations that explain why they turn to consultants, and they will be looking for value to be realised in different ways.
In our recently published report on “The Value Problem” in the industry, we’ve tried to untangle these various motivators. Taking the hundreds of interviews we’ve conducted with clients as a starting point, we were able to group the reasons clients tell us they use consultants into five broad categories—what we have termed the industry’s “dimensions of value”.
|Better||Consultants help us produce better project outcomes than we could achieve ourselves|
|Easier||Consultants simplify the project delivery process and make it easier for us to make decisions|
|Cheaper||Using consultants is less expensive than completing projects with internal resources or using other types of service providers|
|Faster||Consultants help us achieve results faster than we could ourselves|
|Safer||Using consultants minimises the risks associated with the project|
At the heart is a recognition that businesses bring in consultants to help them complete tasks in a way that they wouldn’t be able to themselves. Ultimately, most clients want to be able to measure the value-add of their consulting partners in concrete, financial terms—but the nature of the industry is such that hard financial metrics are often simply unobtainable. Without Nostradamus-like powers, how can you calculate the financial value of, for example, a new five-year corporate strategy? So, absent such metrics, most clients have to base their assessments of a firm’s value-add on the extent to which they delivered against these dimensions of value.
However, not all clients will weigh all five of these dimensions equally. Some primarily use consultants because they want to make sure they get the best possible project outcomes; others because they want to be able to sleep soundly knowing that they are working with a trusted partner who will do everything in their power to remove as much risk as possible from the delivery process. Some will even use consultants as a way of minimising project costs—despite the high fees charged by most firms, many clients recognise that it’s still more cost-effective in the long-run to work with consultants than to try to tackle on their own a problem in an area where they lack the necessary expertise and where they will inevitably make multiple false starts.
The diagram above shows the results when we asked clients to rank these five dimensions of value in terms of how important they were in explaining why they buy consulting services. While a clear hierarchy emerges—clients are, first and foremost, looking for better project outcomes—what is striking about the data here is the sheer diversity of opinions that it reveals. For example: despite it being seen as, in aggregate, the least important of the five, almost a tenth of clients we surveyed told us that “cheaper” was the dimension of value that they personally cared about the most.
If consultants really want to craft a reputation for themselves as value-adding partners, then they need to first ensure that they fully understand what value means to their clients. Partly, this will be informed by the industry they are working in: Utilities clients, for example, may be more likely to care about safety, whereas clients in fast-moving sectors like retail may want to see results delivered as quickly as possible. But even within the same industry, differing corporate cultures—or even simply individual personality differences—will push some clients to seek out some types of value over others.
But firms also need to think about which of these five dimensions of value they most want to be associated with. Our research suggests that a firm being generally well-regarded by clients does not necessarily mean that those same clients will trust them to deliver all five different types of value. While some firms are seen as generally competent—but not necessarily spectacular—across all five dimensions, there are others who are seen as excelling in just one or two categories.
We ordinarily think of firms as competing against one another based on sector expertise or on service portfolios—positioning themselves as the go-to partner for RPA projects, for example, or as the market leader in retail banking. But we would suggest that these dimensions of value represent a similarly important axis of competition in the industry. By thinking about which dimension they want to be famous for—and by ensuring that that comes through in their brand identity—firms can make sure that they are finding the clients who see eye-to-eye with them when it comes to value.