Large consultancy firms are incubating new business models. Their aim is to compete for smaller projects at acceptable profits. It sounds alarming for the smaller consultancy firms. It in fact is. McKinsey Solutions, a smaller consultancy arm of McKinsey & Co. is selling its services to SMEs, essentially the target market of S&M consultancy firms.
Global consultancy industry revenues have soared to $431 billion in 2014.
Yet, large proportion of these revenues flow to the name-brand firms, such as McKinsey & Co., BCG, Bain & Company, Booz & Company, Deloitte Consultancy. Small and Medium (S&M) technology and management consultancy firms are faced with hyper-competition from big companies. The main reason is that consultancy industry is on the cusp of disruption, observes the HBR publication.
Take the following four steps and thrive in the industry.
- Explore, develop and sell consultant capabilities
The biggest asset for any consultancy firm, large or small, is the capability of its consultants. S&M consultancy firms should practice competence development (CD) for each of their consultant. Rather than adopting ‘laissez faire’ style of developing consultant’s competence, firms or partners should counsel each other on vertical and horizontal up-skilling. Partners in S&M consultancy firms should answer narrower questions and in fewer industries. This will help build the consultant’s competence and you can market the consultancy partner as a well-regarded expert.
- Build Your Brand’s Persona
Your brand persona is a blend of the strategy you adopt, the calls-to-action you send, how you deliver customer services, your people, and the optics you communicate to the target audience.
Perform this 10 Minute Exercise to uncover your brand’s personality.
Be one key link in the customer’s value chain. Smaller firms should try being an agile and lean boutique consultancy shop before becoming an integrated solution-shop.
- Client Contacts
Client contacts are very important asset for S&M consultancy firms. Use this resource to obtain qualified referrals.
Edward D. Hess, a leading growth consultant for S&M firms observed that businesses usually adopt two paths of growth; either by selling new services to existing clients or by selling existing services to new clients. Client contacts are a key asset in both these paths to growth.
- Big Data: Small Data
‘Big data’ reports can help small companies to assess the industry and service sector trends that are helpful in tapping distant opportunities. However, ‘small data’ analytics can help your business sustain and thrive in the near term.
Small data is a term that refers small distributed packages of data residing across different but interrelated social and organizational databases. The major acquisition points for ‘small data’ are CRM database and software of your consultancy firm, e-commerce sites and transactional data. Five small-data sets can bring in new business.
- Purchase history of all clients
- Service preferences of clients
- Failed services
- Repeat purchases
- Social preferences of clients & their partner firms
S&M consultancy firms can imitate the successes of large firms through a four-sided asset-structure. It composes of:
- Consultant capabilities
- Brand persona
- Client contacts
- Big & Small data
Key to success for small consultancy firms will be developing agility that allows them to serve customers with greater responsiveness, speed and precision. In the next article, I will explain the four ways that S&M consultancy firms can use to grow their business.