The consulting firm’s strategy

28.2 The scope of client services

Some consultants are reluctant to be explicit and precise in describing the services that they are able to provide. Some think that such a description could be restrictive and that they may not be considered for work that does not exactly fit the service description. Others feel confident that their analytical and problem-solving expertise is so strong that they can handle virtually any problem. Yet service and product definition is a basic building-block of consulting strategy. It determines the firm’s identity and profile, tells clients what they can ask for and expect to get, determines the expertise that the firm must build up and maintain up to date, and has considerable impact on consulting style and methodology. Increasingly, clients want to know precisely what services they can expect from their consultants. They want to be sure that, if the consulting firm includes a particular service among its offerings (e.g. organizing sales networks or assessing staff competencies), this has been a deliberate and responsible strategic choice, which is consistent with the firm’s resources and experience.

The firm’s core competencies

A useful perspective in choosing products and services is that of the firm’s core competencies. Core competencies are defined by activity areas (these can be subjects, intervention methods, sectors, special skills or others) in which the firm has developed excellent knowledge and know-how, employs a sufficient number of well-trained professionals, keeps abreast of developments and can without any major difficulty undertake various assignments and serve a wide range of clients. The firm would normally confine its service offerings to its core competency areas, without trying to branch out into areas where it does not feel strong enough. If there is a need and demand for work outside the core competencies (e.g. in complex assignments), rather than improvising or doing second-rate work the firm would turn to subcontracting, sharing the work with an alliance partner or another convenient formula. A firm recognized as highly competent for certain sorts of services would not spoil its reputation by amateurish work in other areas.

The concept of core competencies cannot be static. Competencies change with changing experience and as a result of changes in the professional staff structure. They can be enhanced by staff development, or lost because of inertia, lack of dynamism and poor personnel policies.

Your special product

Some consultants have found it useful to develop, and offer to clients, special products, different from services or products available from other consultants. Such special products (which may be a training package, a problem-solving

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approach, a business diagnosis methodology, a risk assessment and management model, or other) can constitute the consultant’s competitive advantage if they meet a perceived client need and if the consultant is successful in marketing them. As mentioned in Chapters 1 and 2, there has been a clear trend towards commodification, with some services offered by consultants attaining high levels of standardization.

Special products should be different from, and superior to, comparable products offered by other consultants. It is not wise to try to fool clients by using fancy brand names to market standardized consulting services that offer nothing special or different.

Product innovation

Like any other product, a professional service has its life-cycle; it passes through periods of design and development, testing, launching on the market, growth, maturity, saturation and decline. Some services become obsolete and have to be phased out sooner than others. As far as possible, in planning strategy the consultant should analyse the life-cycle of his or her particular services in order to avoid their obsolescence and be ready to change existing services or introduce new services at an appropriate moment.

A practical approach is to classify services in groups, using criteria such as the contribution of the service to the firm’s income, the rate of growth of the service, expected future demand or the cost involved in developing and marketing it. Various methods of strategic analysis can be used to reveal, for example:

●services that are not growing any more, but that continue to generate a substantial part of the total income;

●services that are growing rapidly, though their relative importance in the firm’s total income remains small;

●services whose volume is stagnating in certain markets, but that are in demand in other markets;

●services that could easily be redesigned and adapted for new markets (client groups, sectors, countries, etc.);

●services whose marketing and maintenance costs are excessively high;

●services that have become standardized and commodified, and can be handled by junior consultants;

●services that provide opportunities for developing new competencies and entering new markets.

To many consultants, product innovation has a narrow meaning. They confine their innovation efforts to mimicking firms that they regard as sector leaders and highly profitable professional businesses. Rather than developing their own products, they imitate or purchase products developed by others, especially if such products are in vogue and demand. It frequently happens that

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The consulting firm’s strategy

Box 28.1 Could consultants live without fads?

To business journals and other observers of the consulting scene, consulting today is almost synonymous with faddishness. Consultants are regarded, and criticized, as the principal force behind the creation, use and abuse of management fads. “Consultants have always had a role in launching fads . . . but they have been working overtime to roll out new fads since the 1970s” (Business Week, 20 Jan. 1986). And seven years later: “Fad surfing – riding the crest of the newest panacea and then paddling out just in time to ride the crest of the next one

– has been big business over the past 20 years” (Sloan Management Review, Summer 1993). And “there is a new-look menu over at The Consultants’ Café. Good old soup of Total Quality Management and Change Management pâté are off. Perhaps you would care to try some Business Process Re-engineering instead?” (Management Today, Aug. 1993). The story continues: “Old consultants never die: They just go ‘e’….And if you are one of the big, established strategy firms? You put out the message that you eat, drink, sleep and dream about infotech…. Everybody’s poaching on everybody else’s turf.” (Fortune, 12 June 2000). What will be the next act?

A management fad can begin as one consultant’s special product, and quickly turn into a popular and widely demanded and copied technique. But what is a management fad? Is it a gimmick, an irresponsible promise and a superficial approach, or can it be a new, practical and useful method whose popularity has grown beyond any expectation? It appears that the rise and fall of management fads is due as much to clients’ attitudes to change as to some consultants’ imagination and aggressive marketing. “A lot of American executives these days seem eager to latch on to almost any new concept that promises a quick fix for their problems” (Business Week, 20 Jan. 1986). Since American business sets the tone, managers in other countries quickly become infected.

If a client is looking for a fad and the consultant agrees to provide one only to avoid the real problem and please the client, it is appropriate to talk about abuse and unprofessional behaviour. If a fashionable method helps to shake up lethargic management and stimulate real improvements, it probably fulfils a useful role. Perhaps management and business practitioners need a periodic dose (not an overdose) of fads to stimulate thinking and change. Perhaps the impact of many management fads has been more psychological than technical.

large numbers of consultants simultaneously go for the same product in the belief that this is the best and easiest way of getting their share of the cake. This is how management fads emerge and their proliferation is fuelled by consultants’ fear that they could be left behind (box 28.1).

Research and development strategy

There is, then, the question of what research the consulting firm should do to meet its own needs, particularly for improving its services and keeping them up to date,

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