Management Consultancy: An industry ripe for disruption
Like many large things, the management consultancy industry seems impregnable from the outside. Yet, the industry is ripe for disruption from a cluster of AI-related technologies and the growing role of venture capital firms.
Last year, McKinsey made about $10B in 2018, BCG about $7.5B, and Bain & Company about $4.5B; and the size of the consultancy industry as a whole is estimated at $250B (Source: CBInsights), and this is even larger if we consider the related fields of IT consultancy, legal advisory, compliance, executive education, and training. More significant is that their alumni stretch far and wide across industry and government..
Yet, the industry is ripe for disruption and there are early indicators this is already happening. This is made clear in a very useful research report by CBInsights: https://www.cbinsights.com/research/disrupting-management-consulting/
McKinsey’s acquisition of QuantumBlack and Carbon12 in 2015 & 2106 respectively, signal the coming shift in the industry.
The disruption is likely to come from a number of sources:
- Big data and analytics removing the need for many data collection functions
- AI technologies generating data-driven insights, that are beyond the capacity of even really smart MBA-trained consultants
- The ubiquity of online management tools and software-as-service offerings, encouraging companies to be more resourceful and self reliant.
- The increasing influence of VCs in the boardroom, catalysing radical disruption rather than carefully designed organic strategy
- The spread of executive education and in-house training, providing many executives with equivalent (or better?) education than the business schools and consultancy firms can provide.
For example, companies seek real-time predictive consumer insights generated through social analytics, with consumer attitudes reflected in their social media activity rather than their responses to a questionnaire or structured interview with a stranger.
Underling these trends is a bigger question: What is the role of strategy in an age where whole industries can disappear due to unforeseen technological shifts? Take transportation for example. Or banking. Products and services which used to require a building full of high paid executives, is now just an algorithm built into a line of code. Businesses built around making excellent cars will need to to adapt to an age where people won’t own or drive their own cars anymore.
Of course, the better consultancy firms are already working in this area, and consulting to clients about these very shifts. The better firms already charge fees relating to value, recalling Bain’s early motto: “We don’t sell advice by the hour; we sell profits at a discount.
Yet, in the competitive heat of the industry, there are still far too many consultants billing for time, and rehashing commoditised know-how, relying on their skills at being “part of the team”..
Of course, the more agile and adaptive firms will continue to thrive, but they will morph into something very different than today’s management consultancy firms. These are likely to be the key shifts:
- Integration with technology consultancy and data science
- More focus on industry mapping and imaginative “recreation”, rather than traditional “visioning”
- More focus on design as an integral part of sustainability
- Disaggregation of larger firms into smaller agencies and niche firms, as in advertising and market research.
Read the CBInsights report here: Click
If you’d like to learn more about how different industries are adapting in the age of AI+, find out more on the Pivomo e-learning platform here
Dr Andrew Atter
Founder & CEO of Pivomo
Pivomo is a e-learning platform that enables people to learn and adapt in the age of AI. The Dynamiqe™ psychometric tool provides real-time insights to founders, investors, entrepreneurs, and change agents world-wide, supported by accessible online action-learning courses and modules.