The humble and the rich

Segmenting the consulting market is a bit like skinning a cat: there are many ways to do it. Size is a useful way of thinking about it: small and medium-sized businesses don’t buy much consulting and, when they do, they buy it from their auditor or from freelance consultants.  Sector is much less reliable as an indicator of difference: at the moment, you can take two banks of a broadly similar profile and find that one is buying a lot of consulting services while the other is buying virtually none.

So I’d like to propose an alternative segmentation: the humble and the rich.  In days gone by, when consultants bestrode the commercial world like Colossi, the organisations that bought their services were both rich and humble.  They were profitable so they had money to invest in the new ideas and technology consultants were helping to introduce; and many of their senior managers were in awe of people – consultants – who were typically better educated, more articulate and more widely experienced.  You didn’t always like what consultants had to say (and that, perhaps, gave an additional frisson of excitement) but by golly you listened to them.

But as time has passed what we thought was a neat circle with ‘humble’ and ‘rich’ in the middle has turned out to be a venn diagram: the one circle has become two – and they’re moving apart.

We still have humble organisations out there, those which genuinely want to listen and learn, but most are not so much humble as humbled.  Brought low by a difficult economy, the challenges of globalisation, the burden of regulation or the lingering implications of poor decisions, they know they need new ideas and help to reshape their business.  The problem is that they’re not rich, so the money for investment (and consultants) is limited.

Then there are rich organisations.  Speaking to a senior executive in a leading high-tech and highly profitable company recently, he was very clear that consultants had no role to play: their business moved too quickly and even the most experienced consultant was behind the curve from his point of view.  Money to spend then, but no desire to spend it with consultants.

Our two circles still overlap: there are still companies that want help and can pay for it.  And as long as that remains the case, there’s still demand for consulting services.  But consulting firms might like to give some thought to how they tackle a bifurcating market and develop propositions and business models which meet these two very different needs.