| Topic Name: |
The Death of Strategy Consulting |
| Message Name: |
consultant vs contractor |
| Date Posted: |
02/21/2002 |
| In Reply To: |
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. |
| Message: |
Ken,
Thanks for your thoughts. Actually I find a more frustrating trend is the tendancy for clients to treat consultants as contract workers rather than as high level professionals (perhaps you're talking about the same thing when you use the term "vendors"). To my mind, a consultant is a specalist in a particular field and the client hires them because of their unique expertise. A contractor is a piece-rate worker who is hired to do the job that the client wants done. In the case of the consultant, the service provider knows more than the service recipient. In the case of the contractor, the service recipient knows more than the service provider. I can only talk about my experiences in my own local market but here it seems that there is plenty of demand for contractors but little demand for consultants. Maybe I'm not agressive enough in my marketing or have mistakenly believed that a strong track record and good reputation would be enough to continue winning work. But I'm obviously wrong. It seems that the slick talking salesmen still get the lion's share of the work and that clients are more interested in receiving reports that agree with their own perspectives or political agenda than in finding effective solutions or discovering reality. (I recently asked a colleague "what business do you think we are in?" He replied "the advice business", or "the information business" or something like that. I said "no, we're in the 'bulls..t' business - what we've discovered is that there is an enormous demand for 'bulls..t' but very little demand for honest, independant, professional advice". Maybe I've just grown cynical over the years - I've been a management consultant for 16 years). As for the economic situation, as I said before, Auzzie is looking pretty good at the moment by world standards. We had our recession last year and we're already coming out of it. A bigger problem for us in W. Aust is the fact that all of the big corporates have pulled out of the state and headed back to Sydney or Melbourne on the east coast.
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