| Topic Name: |
The Death of Strategy Consulting |
| Message Name: |
thoughts on your message |
| Date Posted: |
02/20/2002 |
| In Reply To: |
My North American colleagues might be interested in the view from down under. I live and work in Perth, Western Australia which is almost exactly on the opposite side of the world to New York, geographically speaking. Things look pretty bleak here for consulting at the moment. PriceWaterhouseCoopers, the state's largest consulting firm have just pulled out and Andersen have just axed many of their consulting staff. Everywhere, consultants are saying "not much work around". And Australia is currently being touted as the success story in the OECD. So, is this just a temporary abberation or is something more permanent happening? I think the latter. I have been a strategy consultant for more than 15 years. Personally, my view is closer than that of zxcv than the other writers on this board.
For many years now I have been looking for a new career to get into. I think that consultung is a fad that is coming to an end. Why? Because, fundamentally, the profession does not deliver what it promises. It does not deliver value for money to clients. All it mainly does is create glossy reports that no-one reads, fancy strategies that no-one implements and recommendations that no-one accepts unless it's the answer that the client told you to come up with in the first place. The other thing that is dealing a death blow to consulting is the great influx of new entrants to the profession. Anyone who has ever held a managerial position is advised to become a consultant after they've been retrenched. When I started out as a consultant in W. Aust in 1984 there would have been between 50-100 strategy consultant in the local market. Now there would be between 5,000 and 10,000.
zxcv advises consultants to seek new employment. I'm 53 and am running up against age discrimination so I'm not likely to be too successful there. But I am busy trying the reinvent myself. I'm too young (and too poor) to retire and I'm not yet ready to throw in the towel and join the ranks of the unemployed. But I don't see my future in consulting. |
| Message: |
Let us be very careful to distinguish in this discussion between a business downturn caused by overcapacity and a downturn caused by a fundamental flaw in consulting's value proposition.
Dave, our Aussie friend, is correct that too many consultants just deliver glossy reports and don't actually deliver results. I think the larger problem is the "influx of new entrants" combined with clients' growing tendency to treat consultants as being like any other vendors rather than as professional service providers. The effects of these forces have been:
(1) Clients are less able to distinguish between the increased number of rival firms
(2) New entrants lack consulting experience and are less able to justify their fees. These new entrants undercut on price and often deliver inferior results, which can prejudice clients against the established firms
(3) The rise of "consulting supermarkets" means that some clients no longer see consultants as professionals with whom they build trust-based relationships. Instead of trusted advisors (the status of clients' lawyers and tax advisors), some clients have come to see consultants as mere vendors.
But as I pointed out earlier, the more weaker players to close their doors, the better for the survivors. The supply of consulting services has greatly exceeded demand for the past year and a half, and the sooner that supply contracts, the better.
|
|
