Strategy consulting

By Fiona Czerniawska.

Size has long mattered in the consulting industry: in the last five years, we estimate that firms with more than 1,000 consultants have grown by 46%, 2.3 times the rate of smaller ones.

That’s not new: if you went back to the 1970s and tracked firms’ growth since, allowing for all the inevitable mergers and acquisitions, you’d see that the firms that dominated consulting then are still those that rule the roost today. Smaller firms come and go, but the big firms march relentlessly on.  There are several reasons for this. Big firms are more likely to work on big projects for big clients: if you’re the CEO of a major corporation you’d don’t hire a ten-person firm to do the global roll-out of your new strategy. You may bring small firms in for specialist advice, and you may well be prepared to pay a premium price for that, but you don’t expect them to cover the ground. With more money coming in, big firms have been able to invest in account management, so they’re alert to upcoming opportunities and are more likely to win them because they know those involved. The biggest firms, too, have been able to attract the best people because they pay more and claim to offer more interesting work with iconic brands.

By Fiona Czerniawska

At last he rose, and twitch'd his Mantle blue:
To morrow to fresh Woods, and Pastures new (John Milton, 1608–1674)

There’s comfort in the familiar - and nowhere is this more true than in consulting, where levels of repeat business (new work sold to existing clients) are typically between 70% and 80%. The fact that clients keep coming back for more is a testimony to the good work being done - and our research shows that around two-thirds of clients would describe the quality of consulting work as ‘high’ or ‘very high’ (only a small proportion are explicitly negative). But the obvious danger is that this situation makes firms vulnerable to sudden change and - at worst - complacent.