Consulting Disruption Redux: From Noise to Signals
It’s been three years since
Clayton Christensen argued
that the forces of disruption
were reshaping the world of
consulting. The pattern was
familiar and apparent, he
wrote at the time: traditional
consulting firms were ignoring
new competitors with nontraditional business models that the market has increasingly accepted and considers the new basis of competition. To be fair, there has been some movement by
traditional consultancies since then to defend against
the market disruptions outlined by Christensen. The
examples are few and far between, however, and most
providers appear resistant to the signals.
The case for denial is strong. Traditional consultancies
are returning to growth following a protracted recession-ary cycle. According to ALM Intelligence, global consulting market revenues grew by nearly 5 percent in 2015
over 2014. While all domains saw some degree of uptick,
digital consulting is the most significant driver and the
only segment where double-digit growth is estimated
through 2018. Let’s face it: Disruption has always been
good business for consulting, but only when it is the client being disrupted. What about those pesky signals and
what do they mean for the consulting firms themselves?
The essence of Christensen’s argument is that consulting
disruption is due largely to the redistribution of knowledge.
What was once the exclusive purview of the McKinseys of
the world has transferred to the open market through a combination of economic and technological trends.
The recessions of 2002 and 2008 dumped large numbers
of consultants into the market as clients cut spending and
firms reduced consulting headcount. Many of those who were
let go migrated to positions in industry, shifting the balance of
bargaining power to the buy-side. Consultants were essentially facing themselves across the table, negotiating with savvy,
cost-conscious buyers who were familiar not only with the
core tools of consulting, but also its profit model.
At the same time, a growing force of independent con-
sultants was spawned by the entrepreneurial spirit of the
dot-com economy. These were the consultants who loved
their work, but were ambivalent about their place in the
Darwinian up-and-out culture of the traditional consulting
model. They wanted more control over their product, client
relationships, career, and personal lives.
As independent, freelance consultants, they posed little threat to the incumbent market leaders. With the advent of the digital networking revolution, however, they
were empowered to collaborate and create a marketplace
for their services, giving rise to the network-based consulting firm embodied by Eden McCallum and Business
It doesn’t take a big leap of the imagination to see
how these two disruptors—the sophisticated buyer and
the networked consulting firm—are combining to reshape consulting. But what of the incumbent market
leaders, the consulting firms that continue to dominate
mindshare and market share? Are they truly on the cusp
of disruption or on the path to disintermediation? It’s
highly unlikely, but some are not taking any chances as
they explore new business models.
One such example is Mercer PeoplePro, a digitally
driven, on-demand HR consulting market launched in
May. PeoplePro targets companies in fast-growth mode
for whom premium consulting services are typically out
of reach. The marketplace leverages the freelance trend,
as well, by offering HR consulting flex workers the opportunity to monetize their expertise.
Deloitte Pixel, also launched in May, is another example, but one that seeks value from the talent crowdsourc-ing phenomenon as a source of innovation. Deloitte
consultants and clients alike collaborate with external
crowds to access specific, hard-to-find expertise in service of new product design and development, including
While it’s too early to define success, these are exciting examples of experimentation that also indicate respect for some well-worn advice from Professor Christensen: “If you defer investing your time and energy until
you see that you need to, chances are it will already be
too late.” In other words, that noise that you’re hearing?
Those are signals alerting it’s time to take action.
BY LIZ DEVITO
Liz DeVito is the Lead for HR Consulting Research for