The dangers of surprise

By Fiona Czerniawska.

Sixty-six million years ago. In the apocalyptical gloom, the world’s last dinosaur is dying. Snout down in the icy mud, its eyes starting to close, the dinosaur glimpses movement: A small animal, whose fur has kept it warm, is scurrying. “I wasn’t expecting that,” thinks the dinosaur as extinction finally closes around it.

The world is full of surprises.

We were interviewing a consulting firm recently that, on the cusp of winning a multi-million-dollar transformation deal, found themselves out manoeuvred by a much smaller firm, against all expectations. “We’d dismissed them,” said the partner we spoke to. “Not only had we never heard of them, but they hadn’t listened to the client’s brief, had questioned the scope of the project, and come back with a proposal that didn’t deal with the key issues.” Just a minor detail, then, that the client loved a genuinely innovative, more challenging approach.

We do a lot of competitor analysis for consulting firms (and, when I say a lot, I mean a lot…). For all the focus on putting clients’ needs first, nothing quite tickles the brains of senior consultants as knowing more about their competitors. Endlessly competitive, they want to know if their market share is bigger, if clients like them more, if their fee rates are higher. Trying, as we do, to raise the tone of the debate, we like to introduce other dimensions: The value a firm adds; whether clients see the firms as a market leader in a specific area (and, if so, why); and so on. But the central problem we encounter is not that the people we speak to always want to evaluate the same attributes or dimensions, but that they always want to evaluate the same firms. Strategy firms want to be compared to other strategy firms; technology consulting firms want to see how they stack up against the Big Four; the Big Four say they want to compare themselves to other types of firms, but default to obsessing about each other. Like the dinosaur, they’re surprised when something happens that they don’t expect.

The unexpected competitors are those hidden in plain sight, the mammals scampering between the gigantic legs of the diplodocus. Competitor analysis should involve looking at consulting firms that are outside the usual frame of reference. In one of my perennial sources of inspiration (Talking Politics), Cambridge professor David Runciman discusses why politics has become so surprising in the last two years (not just Trump and Brexit, but the election results in Germany, the rise of Emmanuel Macron in France, and others). One of the points he makes is that social media now allows us all to inhabit parallels universes: On Facebook, the feeds you set up and the news you receive may be completely different from another person’s.

For as long as there have been newspapers, people have chosen to read what they agree with, but the difference now is that social media creates enveloping waves of news, so it becomes harder for us to see that other things may be happening elsewhere. One of the comments we hear most often, even from very senior people in the consulting industry, is that there’s no point looking at Competitor X, because they don’t encounter them at client pitches, missing the point that they could well be a parallel set of opportunities that they’re not invited to in the first place.

Furthermore, some of the competitors consulting firms should be looking at won’t even be consulting firms. A year ago, who’d have put Bloomberg’s consulting practice in their competitor set? Would they do so now? Should they?

Consulting firms watch the competitors they want to watch, not those they need to watch. We all know what happened to the dinosaurs…