The goal of this study is to gain an understanding, from the standpoint of management consulting, the disruption of traditional established consulting firms and what can be done to avoid the threat of disruption. Information gathered from this study will allow a clearer understanding of the forces of disruption and how the process negatively impacts marketing consulting. Literature Review In 2007 McKinsey and Company started a series of business model innovations to reshape the way global consulting firms engage with clients (Christensen, Wang & Bever, 2013). The most fascinating of the processes was McKinsey Solutions which was software and technology-based analytics and tools that could be embedded with the client while providing ongoing engagement outside of the traditional project-based model (Christensen, Wang & Bever, 2013). This event marked the beginning of consultancy unbundling – an offering focused on hard knowledge assets. These knowledge assets in consulting can be unstructured, tacit knowledge which is the broad expertise of the consultants which take time to share with the clients to aid them in business success (MacMillan, 2015). The primary question was why an organization that had a primary value proposition would depart while core business was thriving? To answer this question, there is the need to understand disruptive innovation theory and the process of creating the strategy in the management consulting industry. Disruptive Innovation Theory Innovation is the translation of an idea into a good or service that creates a needed value for which people will pay. The idea is also replicable at a reasonable cost satisfying a specified need. However, Christensen (2018) shares that disruptive innovation is the process whereby the product or service takes root initially in the simple applications at the bottom of a market then relentlessly moves up the market displacing established competitors. The path of technological change is sometimes problematic to predict. As an example, research has revealed that when technology and the market experience a change, established organizations are usually well-ahead of their industries in leading incremental and profound innovations which address the future needs of the organization’s existing customers. However, there are times when the same organizations fail in the introduction of new technology that fails to meet the needs of the customer (Christensen, 1997). The new technological changes usually take place in the miniature and new market offering different features that were not valued by the current customers in the established organizations. The common characteristics of disruptive technologies tend to be cheaper and smaller providing ease of use (Danneels, 2004). The performance attributes of the new technology continue to improve while also invading the established markets (Bower & Christensen, 1995).
Disruption is a process beginning as a small-scale experiment that can take time which aids in the explanation of why incumbents sometimes overlook the disrupter. An example of this process is Netflix. When the business began in 1997, it was not appealing to Blockbuster customers. Because of this factor, Blockbuster’s did not view Netflix as a serious competitor. However, over time, people began to take an interest in Netflix because of the convenience of the Internet and not having to leave their homes to have the service. By 2010, Blockbuster was bankrupt with Netflix being a $28B company (Satell, 2014). Blockbuster’s failure to respond to the trajectory that Netflix was on led to the collapse of the company overtime (Christensen, Raynor & McDonald, 2015)
The Business of Consulting
When viewing the business of consulting two types are well known to include management consulting and marketing consulting. Management consulting services include management audits, business plan development, operations planning and implementation and organizational restructuring (JMPA, 2017). Marketing consulting services include marketing audits, client satisfaction monitoring, web site planning, design and development, public relations, office location studies and competitive analysis (JMPA, 2017). There is the need to have an understanding of each of these consulting types to understand the business of consulting. Traditional marketing consulting has been in existence for many years with the business model remaining the same for decades. The business model was a process of sending experienced consultants into the organization for a set period with these consultants recommending the solution for the significant problems that face the client (Parsaud, 2018).
However, in the business environment today, there is change on the horizon with early signs of disruption in the consulting industry including companies that now have non-traditional business models that are beginning to gain traction. Tom Rodenhauser who is the managing director of advisory services at Kenney Consulting Research and Advisory shares that the percentage of work that is classic strategy has been consistently decreasing and is approximately 20% down from the 60% to 70% some 30 years ago (Parsaud, 2018). There are also problems with the traditional management consulting process to include (Varjan, 2018):
The consultant taking all of the initiative and responsibility with the client doing nothing and demanding results. Consulting is about collaboration bringing together the client’s functional expertise and the consultant’s process expertise.
The objectives of projects defined regarding the number of hours worked, the tasks that are to be performed and the creation of the deliverables. This process has become obsolete with the need for defined objectives concerning either qualitative or quantitative improvement meeting the client’s condition.
The consultant offering a sizable comprehensive solution. The consultant must know how to offer projects in increments so that the client can see measurable improvement in a short time.
When the tasks and the deliverables are defined, a team of consultants invades the business to start performing the ‘magic.’ There is the need for the consultant today to focus on supporting the organizational implementation team who will do the work.
Drivers of Disruption
There are three primary drivers to disruption today including (a) clients have increased access to knowledge that the consulting firms previously considered proprietary; (b) clients becoming more equipped with technological and talent competencies as that of the consultants; and (c) clients becoming more cost conscious and concerned with implementation versus receiving advice (Parsaud, 2018). These drivers of disruption will be discussed further in the research process.
Management Consulting in Other Countries
Management consulting is of importance to businesses all over the world. The examination will be given to management consulting in the countries of India and the United Kingdom. The Country of India In the country of India, management consulting is an industry that draws its boundaries by highlighting the unique contributions of management consultants and consulting firms with the responsibility of interpreting the challenges that are faced by the management consulting industry (Srinivasan, 2014). The research was performed with a specific focus on the India context through a panel discussion with the primary objective of the panel to elaborate on management consulting as an industry and elucidate the critical role of management consulting firms (Semadini, 2006).
An analysis of the information shared by panel members revealed that the management consulting industry in India uncovers the nature of the competitive positioning decision. While it is of great importance to position products or services near the more significant competitors for the benefit of gaining legitimacy, reducing uncertainty, and the gaining from the spillover benefits, it was discovered that businesses position themselves farther from the older as well as directing competing businesses for sustaining competitive differentiation (Srinivasan, 2014). Management consulting in the country of India is positioning itself for a significant transformation as the days when a consultant would present his/her strategy and walk away are now in the past (Srinivasan, 2014).
Consulting is now about walking along with the customer in their implementation journey and enabling them to achieve tangible business outcomes. The new world order in consulting will be set by the consulting firm that understands how to leverage networks, technology, and data & analytics (Srinivasan, 2014). The process is a measure to avoid disruption. Strategic Challenges – The United Kingdom The United Kingdom or the UK sees the consulting industry facing a landscape in transition. There is a broad range of opportunities that will be used to guide clients through the new landscape of consulting that is unfamiliar (Consultancy.uk, 2018). The challenges or risk within the consulting industry include the low-cost, commoditized part and the high-value traditional management consulting part (Consultancy.uk, 2018).
According to the director at Source Global Research, Edward Haigh, consulting firms in the UK must understand how to address both markets so that the consulting firms with understand how to capture the very lucrative digital transformation market which will lead to the discussion concerning the consulting business model, pricing and the brand architecture (Consultancy.uk, 2018). Digital transformation is second being an opportunity and is proliferating as more client organizations recognize the need to approach digital from the top-down strategic perspective. Digital transformation will require a combination of strategic consulting and IT implementation with firms that have historically specialized on one or the other area will now need to restructure the model and operation combining the two. Trends and Challenges Management consulting firms must understand how to embrace change while also adapting to the changing landscape that is occurring in the industry.
The change is vital as these firms must retain clients in this new digitized world to remain sustainable in business. As an example, on the surface, the UK management consulting industry is looking positive. Figures published in Source Global Research which is the provider of market intelligence on the sector shared that the UK consulting grew approximately four times faster than the economy in 2015 showing an 8.2% increase from £6.02 billion to £6.79 billion (Consultancy.uk, 2018). The United States consulting market also had growth in 2015 growing at over 7.5% reaching almost $55B (Consultancy.uk, 2018). Within the country of Europe, Source Global Research identified the countries that make up the DACH region that includes Germany, Austria, and Switzerland as being the most attractive for consulting firms. This sector grew by €1 billion to a value of €8.7 billion or (£7.5 billion) over a two-year period (Consultancy.uk, 2018). This information reveals the importance of management consulting firms and their contribution to the success of organizations.
Research Questions, Objectives, and Aims
The primary research question is: Has opacity and agility aided disruption in management consulting? Secondary questions include:
How must management consulting firms position themselves to deal with disruption?
What business models can be used to encourage change?
What path do management consulting firms need to create to become transparent to the client?
The objective of the study is to understand disruption of traditional established consulting firms and the changes that are needed to assist management consulting firms to be sustainable in business while meeting or exceeding client business needs. The SMART goal process will be used enabling the success of the project. The study aims to add new knowledge relative to the subject of disruption in traditional management consulting. There is the need to examine positive steps that can be taken by management consulting to become innovative and creative in aiding business organizations in effective organizational change.
The study will investigate how management consulting firms have responded to the disruption of traditional established firms including contributing factors. The study will reveal the factors and changes that should take place to bring about positive change. The investigation will occur through qualitative research with the examination of literature relative to this subject. Three management consulting organizations in the United States will be chosen for the qualitative study. Qualitative research is the most suitable method allowing for the exploring of the how, why, and what types of questions relative to a process. A questionnaire will be used to gain primary data from a minimum of seven consultants who have worked within the organization for five or more years.
Secondary research will also be used to gather information concerning disruption, traditional business models, and the changes that management consulting firms have found to be necessary to assist organizations in being successful. Past research articles will also be used to gain insight relative to the global market. Qualitative research design or the interactive approach has a flexible structure as the design can be constructed and reconstructed to a greater extent by the researcher enabling success in the research process (Dudovskiy, 2016). The researcher will also ask the professor for any suggestions that can be offered to aid in the success of the research process.
Data Collection and Data Analyzation
Data from the qualitative study will describe processes relative to disruption of traditional management consulting firms revealing qualities or characteristics that have been used. The data will also reveal a variety of information that is essential in the discovering of what has been successful as well as unsuccessful in the past. Since information inclusive of past research and information from traditional consulting management firms will yield information concerning successes and failures, the secondary research process will allow for the observance of patterns that can be understood by the researcher. The information will be gathered, placed in organizational order and reviewed which is the data collection process. To effective analyse the data, there will be a review of the information analysing information gained from research participants, each article, journal, or website to ensure the information is correct and will aid in the success of the research process. Understanding the reasons for the need for change as well as how that change should take place can enable the continued success of an organization.
This document is the proposal for the research study concerning the disruption of traditional established consulting firms. The goal of the study is to understand from the standpoint of management consulting, the disruption of traditional established consulting firms and what can be done to avoid the disruption. A review of the literature reveals the disruptive innovation theory, traditional marketing consulting, drivers of disruption, management consulting in the countries of India and the UK, and strategic challenges. The research questions, objectives and aims are discussed and the methodology of the study. Data collection and how the data will be analysed have also been discussed. While there may be the need for some changes within the proposal, those changes can be made in time to allow the continuance of the project.