Recently I was reminded of an article by Daniel Krauss, writing on the Forrester blog site about the “Path to Revolution In Management Consulting” which lead me to reply to his question of “what constitutes a management consulting firm 2.0?”
I’ve adapted my view here to reflect where it becomes even more relevant to the innovation consulting companies that I feel are in general struggling in today’s environment, for multiple reasons.
The challenge today lies by not providing consulting value to clients, and unless this will change it will continue to erode their confidence in these service providers.
In many ways, the consulting industry specializing in innovation is its own worst enemy. They are resolutely staying very internally driven, self promoting, still trying to convey the story of mastery, when clearly this is lacking and due to this failing the client. The client is increasingly requiring more organic or holistic solutions not a piecemeal of innovation offerings. These separate pieces often don’t dovetail into one complete innovation system because they are supplied by a variety of different service providers, all having their own ‘pet’ approaches.
Why is it when many clients who are actively working on innovation challenges have moved to a more open collaborative platform for obtaining and underpinning their own internal knowledge for product development? Clients have embraced (sometimes admittedly reluctantly) into entering strategic partnerships in supply chain, purchasing, HR management and a host of IT related activities, in research and development, They are pushing even closer to engaging the final consumer within the understanding of meeting their needs, or working to discover the ‘unmet’ needs. Yet the innovation consultants are still a different story of being closed up, reluctant to open up and gain from more divergent thinking on the problems these changes are causing to clients.
Consultants are far too cautious for their own good
Consultant firms on the other hand are moving far too cautiously to any form of collaborative form, they tend to bring ‘experts’ in for ad hoc, one-off assignments when they need deeper expertise. Wherever possible consultants want to manage as much as possible internally to ‘keep’ the fees generated inside. This is not a recipe for building lasting relationships that have mutual value in growing understanding. They stay in-breed and are not reflecting the commonly held view today, “that all knowledge does not reside within its own walls”; they still reluctantly hang on to the closed system of inventing only inside here. This you see in the host of variations on what is claimed as their versions of “common innovation” theme for processes, systems, idea management etc., and often ‘mutton simply dressed up as lamb’.
I see an awful lot of clients experimenting and learning internally and due to this becoming extremely selective for the use of any outside advice. For many of the innovation consulting firm this means they are often far too busy catching up, lagging in their own emerging practice and due to this ‘lag’ have lost any thought leadership position in many things relating to innovation. To overcome this you need to be engaged, to be able to piece together fragments of information to gain the insights that independence can offer. This requires dedicated experience and constant involvement in broader innovation understanding not in the way it is going of specialization, who let slip the critical insights as it is ignored as it did not apply to their narrow area of knowledge. Sadly general well experienced innovation practitioners are thin on the ground. You do need to search hard for these but they are available. Also large consulting practices can’t afford to have more than a few experts scanning this innovation terrain.
Exceptions and Client Needs
Of course we have notable exceptions; the value in what Bain, McKinsey, Booz and PWC have is often in their access to C-level people and their ability to provide reports on best practice to help in benchmarking industries and practices around organizations current thinking of innovation. The conclusions though are often are not translated into practical solutions, they remain research findings. These help all of us involved in understanding emergent innovation practice to relate and absorb the findings but these on there on are not enough of the answers clients are looking for from external service providers. They want to connect the thinking to improving practice. Clients often lack real deep insight or draw out the implications from these emerging practices, they want to work more alongside others in experimental practice spaces to truly figure out how to respond to them or understand the implications to their own business. It is only part of the innovation knowledge puzzle for the client. They need to constantly look elsewhere to piece this together, if at all they can, as so often the reporting looses much of its value as it is not translated into suggested solutions if the consulting industry fails to provide these services or knowledge laboratories.
Clients are forced to seek out for themselves, through informal groups or ones organized by industry necessity to piece together their understanding, a little like a patchwork quilt. Where is the previously respected “trusted” advisor, the consultant within this, often sidelined or desperately trying to muscle into the discussions for their own gain? The value of taking and translating all these disparate reports into new suggested models of practice seems not to be important. Why are consulting firms not working methodically through the “collective” summary of these reports and then distilling them into emerging ideas as a development engine? It does seem this “connection” to much knowledge is not being valued and pulled together and the ability of having these dissected and interpreted, is lacking by most consultants, even the ones providing the reports, so clients are left to interpret it themselves. This can’t help the client/ consulting equation and many mistakes can be made in wrong interpretation as environments and circumstances are usually unique. This is where external advice can score significantly in explaining differences and providing appropriate solutions that still merge in the emerging practices but to fit that specific client’s situation.
The absence of the large consultancy in innovation forums – why?
Why is it that the larger consulting practice is often absent from forums, conferences and internet live exchanges? Also due to their increased absence, others are gratefully filling this space but perhaps not as well. I’m not talking about the software solution providers here; I’m talking about the strategic consulting heavyweights. This has some advantage for the ones filling the space but without the large consulting companies driving innovation insight as they do have the global insight and resources; most innovation consultancies hang onto existing, tried and tested methods using existing tools and techniques and don’t push the boundaries. They are often not in the position to do this. So the reality is, Innovation is not evolving as well as it should do, as it presently does not have this ‘bigger muscle’ to drive and push for change often generated by the big consulting houses. They presently seem to be highly selective on their innovation focus and that is more constraining to all and not helping advance the practice of innovation management like it could be.
Global consulting practices are being driven more by the numbers, by the ability to utilize and leverage pieces of work to obtain a return. It is less in consistent, ever-present engagement in all avenues of social dialogue, consulting has become more of a “roll up your sleeves” and pitch in to help. This lack of reflective consulting between where the collective presence of consultants, clients and employees engaged in innovation can regularly meet to explore more of the “what if?” is not helping consulting firms, or clients in interpreting the sets of front line signals and turning these into consulting opportunities on shifting many current established practices, processes or methods. We are losing innovation opportunities as we fail to translate these ‘signals’ and advancement in leading practice.
The move of clients building their own internal innovation capabilities
Lastly in this critique, clients are increasing building up their own internal-in-house innovation consulting capabilities, not just in execution but in design work. This denies consulting the necessary working practice, or playing time to experiment, to explore, to learn and translate this to the benefit of many.
These shifts, along with others that make up an increasingly long list are eroding the position of the innovation consultants. I think there is a time for a sea-change to take place.
So let’s firstly summarize the bigger challenges in innovation consulting:
- Clients are facing an increasing fragmenting industry of many niche consulting players. This is becoming more the ‘boutique’ service providers who have limited scale and global practice but is really matching the clients’ ideal profile of global span and support? It is a constraint that requires clients to continue to build internal capability with its different but perhaps similar cost profile.
- The inability to provide broad innovation experience or capabilities. This is another negative working against many consulting firms. Many of the partners have been out of their respective industry for a number of years and fail to appreciate the real ‘heartbeat’ that someone closer to it can detect, they have been removed from day-to-day activities far too long and often the pace of change is hard to keep up with. They are increasingly reliant on others to form opinion and does that replace their experience that got them to where they are?
- Forward thinking innovation centers within consulting are rare. There is so little contribute into the fresh knowledge stock, always needed by consultants to present their constantly updated “case of relevancy”. Often research is simply a re-hash of older material. A new solution has to be found to strengthen the innovation knowledge stock.
- Sophistication & specialization is highly sought after but expensive to keep around. Having this expertise sitting on the bench within one consulting company is regarded more as a cost liability and not as a valuable asset.
- Strategic understanding in fast changing, complex markets and organizations is extremely hard for outsiders (consultants) to grasp in the detail required. To be able to contribute into clients that are facing complex problems and to navigate these ‘fast flowing rapids’ needs a real sense of the pulse. All these are within the challenges to be resolved within the consulting industry.
- Limited experiments are currently being undertaken in the innovation consulting practices. The focus is far more relating to taking best practices and applying them to as many clients as possible. Critical thinking in innovation is hard to justify. Experimental innovation is something clients are very unwilling to pay for yet they actually should be crying out for this, so as to gain competitive edges from these insights. This is a huge challenge to overcome. Trust and reputation as thinkers in innovation helps but there is equally a reversing on offering the same advice to all, willing to pay. Some client/ consulting advice should be mutually exclusive.
- Partners need to change their remuneration models that drive the consulting business. They focus in industry specific domains in general yet clients are seeking beyond their own borders increasingly to gain fresh insights and competitive advantage. Are innovation consulting companies leveraging across industries enough? A traditional breakdown, of which consulting company is best known for, and used to solve specific problems, continues to reinforce expertise and limit broader advice. This is not serving the clients well, although it is ‘claimed’ consultancies reach across industries for insight and possible application. This does need greater cross-fertilization focus as it is potentially very valuable. This lack of active search across industry is a vicious circle that needs breaking into more, so as to expand capability and capacity and offer broader innovation practice techniques and options for clients to explore.
All these are within the challenges yet to be resolved within the innovation consulting industry.
A bolder, more open collaborative model is required.
- Consultant companies should become the host and be the potential ‘orchestrator’ built through platforms for the ‘best’ to gather and collaborate.
- Clients are learning how to collaborate, to network, to leverage and tap into outside domains, I think consultants must make this fundamental shift- embrace the old (consulting) enemy, their competitors, and seek the places of complimentary knowledge that when combined can offers clients the very best, not the reworked second best.
- There are growing sources of advice alternative- clients are recognizing this and seeking it out. The growth of niche consultancies, the use of academics, and the ability to reach out and pay for the top expert in their field excludes the specialized consulting firms more often than not. Thought leadership is not residing ‘within’ but outside and consulting needs to find more imaginative ways to pull in this expertise to add the value clients want in diversity and understanding.
- Clients are increasingly willing to bring together diverse advice. The consulting company that provides a platform/ conduit for a community of experience extracted from a rich diversity of backgrounds to work together on bigger than usual challenges I feel would be appealing to clients. These collaborations do not have an in-built expensive overhead to support or a forced umbrella identity.
- The appeal of bringing together experts that can come together and work on specific complex problems and then disperse has great value. It is through these expert interactions it can offer a different approach than we are seeing today. These ‘event’s’ or challenge outcomes can then be broken down into the ‘discrete’ parts necessary to drive solutions and can be parceled out to increasingly specialized firms that work on the part within the value solution that contributes to resolving the complex problem.
- The need today is to have real access to great quality thinking and this does not reside within the walls of one consulting firm, however large in employees (often repeating the same thing).
A possible resolution or is it salvation for innovation consulting.
The resolution or (salvation) of consulting is to build transparent networks of expertise, brought together on platforms provided by the nominated host or consultant, so clients see and value the access to broader, best available expertise that is working through their own, often unique challenges, not being felt as ‘cookie cutting’ recipients.
Complexity, uniqueness and expertise need to be addressed in more customized ways and that challenges the existing global consulting model of maximizing repeatability.
A new model needs to combine the following on a given client platform, hosted an orchestrated by the lead Consulting Firm based on a reflection of today’s ability to pull in the best advisory and thought leadership to solve unique client challenges:
- Establishing clearly the Business Model coherence & the Challenge clarification/ analysis and ensure this is communicated across all the collaborators working on this solution platform.
- Providing the Platform Management through collaborative software that allows all the best parties to collaborate their ‘given’ piece and the lead consultant coordinates and extracts the best value from these parts.
- Open to all collaborators the strategic intention and the modularity construct so they see their contributions and part to play.
- Process analysis and mapping techniques that are common and freely available to all to use- a standard of tools and techniques that all participants are familiar with too leverage any exchanges or concepts between the participating parties.
- End to end customer and supplier interaction points, well thought-through and managed by the lead consulting party to extract the best insight, foresights and their value in unique combinations.
- Co-creation, co-production and collaboration being actively encouraged, integrated and visible to all to build this value even further.
- Provide common shared tools, standards, IP, protocols and know-how protection/ transfer and validation governance.
- Ability to experiment, test hypothesis, pilot and rapidly expand within the platform collaboration to advance and validate thinking and constantly search for the up scaling needed.
Henry Chesbrough wrote recently in his “Open Services innovation” book about the commodity trap, this applies equally to the consulting industry, it is certainly not immune. There are new disruptive forces in play, these are placing limits on the existing innovation consulting model as a healthy business model. Perhaps it is near to its end, and consultants need to change their thinking and then the approaches fairly radically to stay relevant and thrive.
Orchestrating a more open diversity of knowledge on collaborative platforms needs a significant change in consulting, that you could argue applies to all consulting practice. Clients demand more value and for consultants to regain their position as providers of expert knowledge they need to become the ’orchestrators’ to add value and deliver propositions that tackle clients increasing complexity in more open ways, otherwise they will face an increasing marginalized role.
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.