Let’s start with the external marketplace:

#1 A better proposition: Our model—of a market that’s splitting into low-cost and high-value consulting—continues to generate a lot of interest, and there’s an increasing recognition that the key to future success will be to come up with propositions that sell well in this bipolar environment is a challenge. While some firms are opting for muddle, others are trying to find crisp, clear ways to describe the parts of a given service, and how they move together in unison.

#2 Robot wars? The biggest topic of discussion in 2017 seems unlikely to disappear in 2018. If anything, the debate about who wins and who loses from what could be the biggest revolution in the consulting industry in the last 40 years (since the arrival of mainframe computers paved the way for a whole new area of work) looks set to intensify.

#3 A massively bigger market—in theory: We’ve long since moved on from a world in which clients did everything for themselves and used people, rather than technology, to help. But we’re only just entering one in which clients automate a significant proportion of their white collar/ knowledge-based work. This creates opportunities for consulting firms, not only to help them implement this technology, but also to provide technology-enabled, managed services clients will be seeking. In this new world, consulting firms will oversee a lot of the work clients do for themselves.

#4 Innovation: It came top of the things clients consider when choosing between consulting firms in our 2017 survey of client perceptions. New problems (e.g., cybersecurity) and new opportunities (e.g., digital transformation) demand new approaches, and everyone—clients and consultants alike—want to avoid a vicious circle in which the failure to innovate leaves us with a commoditised industry in which no one is willing to invest.

And then, of course, we’ve got the internal challenges:

#5 Frictionless delivery: It feels as though clients’ patience is wearing thin where consulting firms are concerned. “There’s too much baggage and complexity,” one complained to us recently. “They should be much easier to deal with.” It’s a rare consulting firm that puts itself in its clients’ shoes and sees just how sclerotic some of its processes have become. And that matters because most of the high-growth opportunities in the market (think digital transformation, cybersecurity, customer experience, and data and analytics) all require some degree of cross-practice working.

#6 An integrated approach: The chief cause of friction, the force that slows delivery down in a consulting firm, is organisational structure. Decades after consultants told their clients to pull down the walls between departmental silos, most consulting firms remain riven by internal divisions. “Silos” doesn’t even begin to cover it…

#7 The future of talent: In interviewing senior people in consulting firms around the world, we’re accustomed to hearing that the biggest challenge they face is the ubiquitous war for talent. We’re still hearing that, but we’re also hearing the first rumbles of discussion around how, in a world in which at least some of the work done by junior consultants is automated, the talent model needs to change. Most firms are optimistic, confident that a combination of reskilling and changes in recruitment will allow them to navigate waters brimming with potential reputational damage. But are they right to be so?

#8 Pricing: Such as small word, such a big issue. From interviews we’ve done with clients in the last few months, it’s starting to emerge that attitudes to fee rates are undergoing a quiet but remorseless change. Digital transformation, cybersecurity, customer experience, and data and analytics, may all be driving growth, but winning work depends on providing a combination of low-cost and high-value services. In the absence of a narrative, explaining to clients how they can achieve this without muddling up the work done and the types of skills required, pricing is becoming a free-for-all, a chaotic mess that’s as close to a rate card as fog is to a summer’s day.
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Fiona Czerniawska is a leading commentator on the consulting industry and a co-Founder of Source who provide specialist research on the management consulting market to consultants and their clients.