Is the Consulting industry about to go the route of video rental stores and the Dodo?

Perhaps. That’s the warning from Soren Kaplan, writing for Inc. on the upcoming disruption about to rock the world of business and management consultants everywhere. In an article titled, “The Business Consulting Industry Is Booming, and It’s About to Be Disrupted,” Kaplan states:

Here’s the issue: Festering underneath myriad consulting offerings, methodologies, tools, and firms lie some vulnerabilities that will eventually unravel the consulting business model — the same kind of dramatic disruption that other industries like photography, publishing, health care, and many others have experienced.

An industry becomes susceptible to disruption when it becomes entrenched in its longstanding solutions and financial structure. Disruptive innovations provide simpler or more elegant solutions to existing problems, enabled by new technology and often at a lower cost. Think portable calculators versus computers, Amazon versus bookstores, Netflix versus Blockbuster, or digital cameras versus film.

Notice that what’s at risk is the business model of consulting. What won’t go away is the need for outside input for identifying and resolving issues that are an impediment to efficiency, growth and long term sustainability.

So what are the problems inherent in the standard business consulting model? Kaplan outlines 5 fatal flaws:

  1. Labor intensive
  2. Billable time-based business model
  3. High margins
  4. Time-bound value
  5. Knowledge commoditization

You’ll want to read his full article for further explanation of his analysis.

What’s the Point?

I am still of the belief that the profession of consulting represents a truly noble pursuit that creates and delivers a significant amount of value to the world across nearly every industry there is.

That said, there are a lot of folks that call themselves consultants that are really just subcontractors or outsourced labor. What’s the difference? A true consultant improves their clients’ outcomes through the application of many years of experience, and often by leveraging unique intellectual property.

And just as the cliche goes regarding the cobbler’s children having no shoes, so too do many consulting firm practice leaders apply strategic vision to their own business models. The result is a situation that is ripe for disruption.

How will your consulting practice respond to the changes taking place around you?


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Image courtesy Wikimedia