By Arthur Mansourian and Aykut Cakir.
Consulting Transformation Trends in 2021
1. Business shaped by legislation. Legislation played a big role in many industries in 2021. As legislation changes, it will continue to affect how management consultants do business, and impacted the transformation trends in 2021. Brexit still continues to affect how businesses conduct themselves in the UK, and decisions in the US regarding work-for-hire and intellectual property, as well as liability insurance coverage, continue to affect companies as well. These are just some of the legal issues that must be resolved so that business can run more effectively.
2. Market focus. Management consulting is growing, and as such, it continues to split into both a low-cost, commoditized sector as well as a high-value, specialized consulting sector. By having two markets, each consultant group will need to find ways to address them, which will cause a transformation with respect to business models, pricing structures, and brand architecture.
3. Integrate digitally. As there is a growing need to adapt to client needs more quickly, especially in the areas of operations, structure, and terms of services, we expect to see digitization and digital responses continue throughout 2022. This trend is transforming consulting from its current model of time-based, billable hours into a flat-rate model. COVID-19 kept management consultants very busy in 2021, helping companies cope with issues related to digital technologies and novel business models.
4. “Fail-fast” methodology. Leveraging the fail-fast notion, consultants have adopted an agile development mentality. The industry will continue to help clients realize that money alone does not buy innovation. Digitization comprises part of the business growth. The consulting industry will also continue to adopt relevant pieces of its tenets in order to adapt to the growing changes in their business models and operations.
5. New talent will be recruited. As a Bachelor’s degree is still an entry-level requirement for consulting agencies, those agencies still look past only the top few schools’ graduates instead of looking at skill sets. Recruiters discover people through conference presentations and area internships, and firms will move from a person standpoint to a product standpoint.
6. A model of multi-sourcing. Management consulting is moving toward a multi-sourcing model, so they work with niche firms and other similar consulting firms. Multi-sourcing takes many forms, from large generalist firms who partner with smaller niche specialists, to consulting firms that partner with consultants outside the industry, to those that partner with academics, and digital and technical companies.
7. Talent that is crowdsourced. A crowdsourced consulting firm uses a disruptive business model that allows clients to hire piecemeal from niche firms or from freelancers. They quickly turn around necessary products and services with little to no overhead. Crowdsourced talent is a similar partnership, but it beats the large firms on price, turnaround time, and quality.
8. Selection price in a consulting firm. When researching and choosing consultants, clients use online services to help them determine which consultant best suits their needs. They can quickly find the best subject matter expert, and it eliminates referrals as well as any aspect related to reputation. Therefore, an established consultant that has been in business for decades may be overlooked in favor of a subject matter expert.
9. Education will continue. Management consulting will continue to need new consultants and analysts with developing skill sets. These people can innovate in the field, and keep up with the pace of technological change in the industry. Everyone must be able to transition to a growth mindset and continually educate themselves, not just in their field of expertise, but in new skills such as big data analysis, data mining, data cleansing, and data strategy.
Overall, the most important trend for clients and consultants alike is to move forward in using automation and big data in order to displace and overtake competitors. This trend must continue for companies to grow, regardless of the industry, their company size, or their historical methods.
About the Authors
Arthur Mansourian has a 12-year track record as both a management consultant and investment banker, advising clients on valuation, capital markets, structured financing, mergers, acquisitions and divestitures and general corporate strategy.
Mr. Mansourian served as Vice President while at NMS Capital Advisors, when the company achieved cumulative sales growth of over 5,100% with annual compounded sales growth in excess of 120% from 2012 to 2017.