In the UK there has been an excellent study looking specifically at the client and consulting relationships through the provision of innovation services. It was published in October 2011 entitled “Management innovation in the UK consulting industry”, by Dr. Joe O’Mahoney, a Fellow at the Advanced Institute of Management and a Lecturer at Cardiff University and commissioned with the Institute of Consulting.
The aim of the report is to stimulate consultancies to be more innovative and therefore add more value to their clients. For me, this is an objective I really welcome looking around at all the ‘safety first’ approaches going on in this area by many consultants, big and small, when it comes to exploring innovation and not pushing innovations ‘edges’ more.
The report can be viewed here: http://bit.ly/tQdeld
I’m sure many points are equally applicable to innovation consulting globally as many interviewed have global practices.
For some time I’ve been puzzled on where the bigger innovation consulting projects have gone and this report points to one logical reason. The main conclusion in the study was: “more sophisticated clients, the need to share costs, higher utilisation levels and the increasing role of procurement mean that innovation tends to be client-specific, shared and based around improvements rather than large-scale, industry-wide innovations.”
Some key finding emerging from the study
Certainly some of the conclusions from this report seem to offer a bleak future for innovation consulting unless things change.
I think pictures tell a thousand words, in this case it is four tables from the report, that do ‘paint’ a certain picture.
I really feel the ‘modifications to existing practices’ serves up much of the same, with the costs spread out across multiple clients is not great consulting practice. Equally tapping into existing other practices for making ‘changes to internal processes’ utilizes Six Sigma, BPR and other consulting practices but this is not innovation. Innovation is hanging on the coat tails of other practices, more often around efficiency and effectiveness. The client leads, consultants follow is what I take from this table- more a ‘containment, limit cost’ approach.
Selecting an innovation consulting is not just in the way they differentiate but in what they can clearly deliver in depth of understanding, in demonstrating knowledge and excellence. Thankfully this table has the two as the most important. I’d suggest demonstrating knowledge leads to differentiating when it comes to innovation, or should. Demonstrating knowledge leads, differentiation comes out of this.
If you have clients taking ‘minimal risks’ and you have a lack of time to think about ways to innovate you are certainly in a constrained market. Then add in clients (lack of) budgets for innovation and low demand for services it really adds up to a grim picture that needs changing. How can we change the dynamics here? Painting a broader canvas of value and contribution that innovation advice can provide would be one idea.
So seeing that the constraints are increasing over time in this table is certainly worrying for me. Without the client demand for going beyond present more incremental and collaborative innovation, except for sharing joint initiatives that are sometimes likely to be mutually exclusive, the consultant has no real incentive to ‘invest’ in expertise and break out of this cycle. A lack of ‘bench strength’ of innovation specialists, a reluctance due to uncertainty and consulting in innovation (often intangible and not solution specific without serious work) the consultant industry is reluctant to make deeper investments really concerns me.
My review and some reflections arising from this study.
It seems innovation activities need to change within what consultants are offerings as services to their clients. The study makes for some fascinating reading and does seemingly answer a number of questions I’ve been recently having.
- One: there is increasing less time available within the mid to large consultants to train, research and development for their services so as to differentiate themselves in innovation, in what is actually becoming even more of a crowded market. Focusing on maximising utilization and containing overheads and costs leaves less time to think and develop.
- Two: equally the cumulative experiences of clients in dealing with consultants, especially through the practice of more central procurement, has added more pressure on consultants not providing ‘added extra’s’ or to take more radical approaches to innovation solutions for the risk of being compared badly, not offering clear returns and then screened out of the bidding process.
- Three: these trends are pushing it seems more incremental innovation in my opinion, but to overcome the concern that the often provided ‘one-size’ fits all that clients seemingly are wary of, what is increasingly happening is having more joint initiatives between clients and consultants. This gives the client more control- in my opinion where it should always be- and gives the consultant the potential for reducing overheads.
So it seems innovation consulting is being managed through some constraining issues. My concern here is it can limit the potential that external advice can contribute and so it can fall short on stretching thinking around innovation that might actually, limit the final result the client is looking for out of their innovation activity. Not a great place to be.
Identifying constraints and applying imaginative solutions
This report helps identify the constraints to current consulting /client models and allows some excellent insight for those wishing to expand their consulting services in innovation to think through. They can see if they want to explore the potential and seize a different value proposition by restructuring differently around the depth of their innovation services and ‘jump ahead’ in the innovation learning curve.
- I would argue from reading this study we are seemingly downsizing collaborative innovation between clients and consultants, restricting the potential for pushing out innovation. The consultancies as restricting their innovation practices and don’t make the type of investments that would help advance thinking? If I am right then we are actually constraining innovation.
- Consultants are possibly behind the game and are learning from emerging practices within the client and can only then provide limited support. Consultants are seemingly not providing “thought leadership” just reporting on best practices and what they are learning from this to apply it elsewhere. So consultants are reduced to supporting subsidiary roles. That is a pity if this is the case.
- Many clients are actually desperately seeking a more robust set of innovation activities to get more growth back into their businesses and good external advice can shorten the learning curve considerably if this is recognized as such. The ‘rub’ is, it needs investment by both sides to advance these.
- We need to remember much innovation is emerging work. Innovation simply has rawer edges to it in itself to be explored and investigated. Clients want to push innovation ‘out’ and achieve real competitive advantage but seem reluctant to do this through the smaller, less known more specialized innovation consultant. They look for the ‘reputation tag’ yet the bigger consultants are failing to invest in leading edge thinking, offering perhaps one of those ‘catch 22? situation.
- If any innovation is managed thoughtfully and piloted well in its introduction the ‘risk’ is no different than thousands of other decisions made within organizations on new adoption of technology, changes in processes or launching new products, actually much less. The boundaries of innovation do need more pushing. Some ‘intelligent’ conversations to scope and explore prototypes would help more.
There are plenty of imaginative ways to do this exploring through different collaborative ventures that can continue to contain costs in the early stages, that would certainly fit with these economic uncertain times, and then, apply the ‘gas’ as the recognition and value can be seen by present day reluctant clients.
The ‘foreword’ within the study is worth highlighting here.
The Institute of Consulting council chair, Judy Craske, offers in her foreword the challenges that need to be addressed as innovation consulting will remain constrained unless it makes some radical changes based on changing economic conditions.
She remarks: “As international, national and even local economies change and react to markets in turmoil; our clients’ outlooks reflect these changes, often defensively. Consultancies need to identify and respond to these factors, and then modify their responses to fit their clients’ changing needs and expectations. Developing creative capital within the industry will remain essential”.
She goes on to state: “Whether lone practitioners or multi-disciplinary practices, consultants need to become more innovative and adaptive in their proposals, methods and solutions, while traditional client/consultant boundaries need to be challenged, stretched and even broken”.
Her most important point from my perspective was the following: “Consultancies may also need to be more open to partnership working with other agencies, such as academia or even competitors, if they are to respond effectively to the pressures of the current high-cost, low-resource business environment”.
This point on collaboration is for me the most potentially potent- if only larger consultants learnt to collaborate more with others within the provision of ‘services’ – it not only spreads costs, allows for greater potential for fresh thinking but brings into play a richer ecosystem platform of innovation advice to offer clients and that is where we should be heading I suggest.
In summary I certainly drew out a lot from this study by Dr Joe O’Mahoney.
I feel this study does provide us all involved in providing consulting or advisory services some real food for thought on managing innovation services differently. The study lifts the lid well for reflecting on the challenges and offers some sound advice to move forward
- Innovation does needs to advance, consultants can help in this but it seems clients need to see more value in this before it is going to happen. Presently the CEO who consistently laments about his innovation performance might raise the game by reducing one of the constraints perhaps holding innovation back of constraining client- consulting relationship around innovation.
- For all their often perceived sins, consultants and advisors should be providing a richer set of resources of advice on innovation. For this to happen it does needs greater investment and recognition of mutual value to ‘break into’ this current relationship and some recognition of some ‘upfront’ investments to alter the current environment.
- It is suggested that both consultants and clients are acting defensively, it’s a little the opposite of what you would expect in ‘pushing’ for innovation in leading practices and many clients and markets desperately seeking growth. This growth does come from pushing at the edges not staying in the (incremental) comfort zone. You need to explore and experiment in innovation.
Finally, we need to ask “should the current client/ consultant consulting model for innovation services change for these tougher times?”
I, for one, believe it should be changed- not just for personal reasons- but I believe you cannot ignore any ‘unturned stone’ when it comes to wanting to manage innovation and extract as much as you can from its possibilities in such volatile times. Of course, innovation has plenty of uncertainly but still does hold out the promise for a better future and risk and opportunity might need re-evaluating after reading this study.
The Copyright for this report is with the Chartered Management Institute ©. All rights reserved. Except for the quotation of short passages (and in this case selected tables) for the purposes of criticism and review has been granted.
image credit: rcbryan.com
Paul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.