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Reshaping business. Rethinking consultancy.

I needed an expert…I got an apprentice!

You might not think that the TV show, ‘The Apprentice’, has much in common with modern day management consulting firms but the idea of putting bright, ambitious people in to testing situations and assessing who can think their way through scenarios they are unused to handling might be a reasonable parallel.

At a recent event I attended, an independent consultant with a long career at a major global consulting firm described all of the big firms as using ‘apprenticeship models’ to deliver work to their clients.  To be clear, many of the large firms offer all sorts of routes in from traditional university graduates, through paid internships, formal ‘higher apprenticeship’ programmes and so forth – but the consultant I was speaking to was referring more to the standard client engagement model (the ‘pyramid’ model) and the corporate priorities that lead, inevitably, to work being delivered not by the smartest person in the room but by the person (or people) most likely to learn on the job.

Much of the time a client will reach out to a consulting firm with a problem or question which requires an answer.  This may be a formal, standard approach or could be to a relationship manager type, a contact who is known to the client or maybe to a trusted connection who might have led an engagement in the past.  The work will be discussed, a solution offered and a fee proposed.  At this point an internal staffing or resourcing machine takes over and a number of considerations come in to play such as professional development for the consultants, utilisation rates, availability and the desire to sell more work in the future to this client. 

There is nothing inherently wrong with this model and a huge amount of valuable work is delivered around the world this way by consultants as well as law firms and other professional services organisations.  However, going back to the title of this piece and my conversation with the independent consultant – clients go to big name firms because of the assumed expertise, quality and perhaps ‘safety net’ of partnering with a big firm – what they get is a group of trainees, of apprentices, who are training ‘on-the-job’ and then charged what is often seen as a disproportionate fee.

Ah, the fee.  We already know that fees can be astronomical and often the 50% to 60% (70% at the top strategy firms) fee margins can be hard to justify when the work is so often delivered by the lower paid consultants at the base of the ‘pyramid’.  In fact an oft-discussed topic amongst consultants is the yawning gap between the financial rate at which they discover they are charged out to clients, and their own salary.  Firms are of course in business to make money but there is a highly competitive alternative which leads me back to my friend, the independent consultant.

Trained at big name firms, plenty of on-the-job experience, mistake made with lessons learnt and now focused on specific industries or sectors providing extensive track record and credibility.  All for a fee significantly lower than traditional big name firms given the lack of shiny offices and associated over-heads.  Independent consultants, it is reckoned, delivered around 20% of all consulting work in the UK last year – and I’d bet on this proportion growing.

At Odgers Connect, we believe 2018 is set to be a great year for independent consultants and a year of reduced consulting spending for many clients as a result.  There is, as one client remarked to me recently, a ‘perfect storm’ gathering with increasing understanding of the range of services that independent consultants can offer as well as a growing number of senior clients who themselves come from consulting firms and so understand the internal, corporate priorities of the firms themselves – and want an alternative.

Clients want to feel that their aims and priorities are aligned with those who are providing the answers.  And at a reasonable price. 

The bottom line is that independent consultants do not have the staffing team or big brand organisations to fall back on if an engagement isn’t successful and instead depend on happy clients and positive references to win their next piece of work.  This, then, is a perfect example of a win-win business engagement. 

Please do get in touch if you’d like to discuss working with an expert.

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