The Goldilocks positionWednesday 27th Jun, 2012For some time now one of the truisms of consulting has been that you can either be a (big) brand or a (small) specialist; anyone in the middle ground will either be absorbed by a bigger player or dispersed among smaller ones. Certainly, the economic structure of the pyramid firm makes it difficult to be mid-sized. Mid-sized firms often worry that their market is too small (it usually isn’t) and/or that they’re too dependent on one field or sector and therefore vulnerable to changing market conditions (they usually are). They respond by diversifying, a process which distracts management time from their core business and clients and brings utilisation down to dangerously low levels. Needing to win bigger projects to keep their growing number of consultants busy, they don’t have the brand or credibility to do so. All this we all know. But perhaps that’s not the whole picture. If we ask clients about the kinds of firms they want to work with in the future they always say they want to work with specialist firms. We know that the need for specialist skills drives around a third of all consulting – and that that proportion will increase in the future. Clients, sceptical of bigger firms’ claims to be multi-specialists, like the idea of going to boutique firms. That’s the theory, but we also find that reality can be very different. In practice, clients say they end up reverting to the big firms they know well for two reasons. First, a third of all consulting now has at least some international component to it – but most boutique firms aren’t international. Sometimes that doesn’t matter: “We’re working with a Belgian company to do psychological profiling of our senior executives,” a UK company told us. “Given the brief was international, it didn’t matter to us where the company was based as long as it had the necessary expertise.” But more often it does: “We chose a small firm because they were down to earth and more hands-on than most other management consultancies,” said a Scandinavian manufacturing company. “You can always find small, local firms who do this well, but the problem is that you don’t get the critical mass.” The second hurdle is to know where to find the best firms. Niche firms abound, but are any of them any good? “If we don’t know anyone in particular, we’ll go to a big firm,” continued the Scandinavian company. Using a big firm isn’t always a positive choice, but niche firms are usually too local and not sufficiently well-known. So if we were seeing things purely from a client’s perspective, we’d conclude that the middle ground is the place to be – a firm that’s small enough to be specialist, but big enough to be international. Rather like the porridge in the story of Goldilocks and the Three Bears, big consulting firms are too hot, but boutiques are too small. It’s the firms that are in between which are just right. Blog categories: |
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