The legend says that the Phoenix is a supernatural, birdlike creature that lives for 1,000 years. Once that time is over, it builds its own funeral pyre, and throws itself into the flames. As it dies, it is reborn anew, and rises from the ashes to live another 1,000 years.
Sounds a little like the business consulting industry in slow motion.
In order to remain relevant, and commercially viable, business consulting must re-invent itself continuously. Taking the lead from innovative companies, and academic thought leaders, business consultants instigate, navigate and propagate change in pursuit of improved business performance for their clients. When successful they leverage their positive references to win new work with new clients, thus growing their own business.
Over the past ten years we have seen an incredible rise from the ashes for business consultancies at the big four professional services firms (Deloitte, PwC, EY & KPMG). In 2002, regulatory changes were thrust upon the Big Four as part of the Sarbanes Oxley response to the Enron affair, restricting their ability to sell consulting services to their most valued client base; their audit clients. Facing the risk of declining revenues, EY and PwC sold their consulting businesses to CapGemini and IBM respectively. KPMG Consulting did an IPO and called itself Bearing Point. Deloitte toyed with spinning off their consultancy before electing to hold onto it.
In 2003, I was into my third year as part of the senior management team at CapGemini Ersnt & Young when PwC called. "We're restarting our consulting business and looking for the leadership team who can rebuild it. We'd like to talk to you about leading the technology consulting business". At CapGemini we were faced with demands to continue growing revenues quickly while simultaneously migrating 40% of the effort to offshore centres. It felt like a race to bottom; chasing ever lower prices and higher risk staffing models. It was becoming a grind. The opportunity to focus on management issues and trusted client relationships was appealing. And so began a wonderful 10 year ride to first build the Canadian, then the global technology business, into a $1 billion enterprise.
But, here we are again. The bird has grown and needs to be fed. In mature markets like Canada, audit and tax services are not growing. To achieve the growth required to maintain their rankings, fund partner pensions, and create career opportunities for staff, the consultancies of the Big Four must all grow revenues faster than the market. Like their ancestors they are pursuing larger projects in search of revenue and ignoring projects too small to meet their economic thresholds. They are adopting offshore and contingent staffing models to meet competitive prices set by well entrenched systems integrators and outsourcers.
Where will we go from here? Like the Phoenix from the ashes new consulting models are rising. Free from the obligations shouldered by the Big Four, these new consultancies can fill the gap as trusted advisors and they can do so with greater innovation and flexibility. By leveraging new technology and business networks a small firm can collaborate globally, access knowledge anywhere, and respond quickly to the goals that matter most to its client.
Perhaps this helps explain why I elected to call my firm ember advisory.
For a brief video explaining the concept of "disruptive innovation", click here: http://hbr.org/video/2688242135001/the-explainer-disruptive-innovation