The Shamrock organisation revisited, but by whom?

Charles Handy, the eminent business philosopher, first started writing about the switch from permanent to temporary labour thirty years ago.  By the early 1990s his predictions had started to come true, as organisations redrew their structural boundaries and triggered an explosion of growth in outsourcing.  Since then, we’ve also seen a significant rise in the level of freelance work.

We’ve still some way to go before “shamrock organisations” – the term Handy coined to describe structures which made up of one third traditional permanent employees, one third freelance contractors and one third suppliers – become the norm, but our recent client research suggests that we’re about to take another leap in that direction.  Pressure to keep costs low while growing and to remain agile while operating on a global basis mean that structural change is the only meaningful option.

What’s less clear from our research is how much consulting firms will benefit from this.  There are two potential sources of competition, from freelance consultants and from non-consulting firms.

Research we did at the back end of 2011 suggested that almost 40% of the work provided by consulting firms is actually contingent labour – filling gaps in the organisational hierarchy – and this was reinforced by our more recent report in which clients said that around 45% of the consulting work they buy could be done by individuals (from expert networks or body-shops) and didn’t need the input of consulting firms.  The issues here are around specialist knowledge (the bigger the firm, the less likely it is that clients will be aware of its specialist skills) and flexibility (freelance consulting doesn’t come with the process baggage and even internal politics many clients associated with consulting firms).  To be able to address this market means changing the business model of consulting.  And that, of course, opens the door to non-consulting firms which can combine specialist expertise and flexibility with the means to deliver an on-going, knowledge-based service.  Consulting firms, by contrast, are accustomed to working on short-term projects.

Exploiting the opportunities of the shamrock organisation will require a different type of consulting firm this time around: one that has both distinct and demonstrable centres of excellence in specific fields and the ability to deliver its services in a range of different ways, individuals or teams, short-term or long-term, juniors or seniors.  Consulting firms can either lead the way or be left behind.