Digital consulting has emerged from the market move towards digitization. Companies have been actively adopting technology to augment their operations for decades, but many may not be doing so optimally. McKinsey recently published an article that discusses how businesses that successfully move to a “digital state of mind” are doing more than creating a branch of their companies that is devoted to “being digital.” Digital, therefore, is not an appendage to an organization; it is something that drives the way the entire business operates, even if that business relies primarily on human capital. For some companies, digital transformation may mean the creation of an entirely new business model. That sort of change may be intimidating, but evidence shows us that the payoff is astronomical.
“Companies that successfully adopt digital technology don’t view it as an extra; digitization becomes central to what they are because they transform their value propositions and evolve every level of the organization so that it becomes data driven, customer obsessed, and highly agile.”
~”What Digital Really Means,” Karel Dörner and David Edelman, McKinsey & Co.
McKinsey’s article applies to businesses in every industry, so we may assume that the authors would include their own industry in the mix, where most firms do not have a digital consulting approach. What the article doesn’t address is that, ironically, consulting and advisory firms are a key industry that has actually lagged behind in going digital. We all know by now that consulting is “on the cusp of disruption,” and while a few firms, such as IBM and Deloitte, are actively adopting a digital mindset, the majority seem content to do things as they always have
Let’s take a look at how digital consulting might look according to McKinsey’s breakdown. McKinsey divides the digital state of mind into three categories:creating value at the new frontiers of the business world, creating value in the processes that execute a vision of customer experiences, and building foundational capabilities that support the entire structure.
Creating value at new frontiers means either going after new business sectors or finding new value in existing sectors. It requires a deep understanding of the market and how it is changing. In the consulting world, creating value would mean understanding new client expectations and adapting to them. For example, clients today expect greater speed from consultants. They are no longer willing to pay hundreds of thousands of dollars for consultants to come in and spend weeks learning their businesses – that market is dwindling. Instead, they expect to receive value from the first billable hour. Consulting firms stuck to the old business model will find themselves starting to lose business. Those that find ways to overcome the time to value barrier through digital capabilities will be set for long-term success.
Another way consultants can find value in existing business sectors is by making better use of their data to actually improve on their IP. Without a connected way to collaborate and share IP, consultants fail to build on their internal knowledge by leveraging the most successful elements of their engagements and frameworks. As a result, consultants never get smarter about the questions they ask, nor do they substantially build on their knowledge their clients or the issues they tackle. The value of big data to the business world has been widely expounded, and the consulting industry is no exception. Consultants gather huge amounts of data from their clients, and they should be using it to build their expertise around how to ask the best questions and build the best frameworks.
Creating value in core businesses involves using digital capabilities to improve or even overhaul the way things are currently done in serving customers or clients. It is not simply a one-time upgrade, but a system of ongoing improvement that centers around serving the client. Key to creating value in core businesses is automation and real-time analytics, as these will enable companies to identify problem areas quickly and adjust to meet client needs. Businesses also have the opportunity here to use the information they gather from customer interactions to further expand business with that customer.
For digital consulting, creating value in core businesses would involve digitizing and automating manual methods to create a better client experience. For example, many consultants still spend weeks conducting manual interviews and analyzing data in spreadsheets, and the results of an engagement are often simply compiled in the form of a deliverable and handed to the client. To achieve the kind of value clients seek, consultants should offer solutions that go farther than simply making recommendations or even following up to see how successfully changes were implemented. Clients need living data that tracks their performance over time and that they can access and explore themselves. Consultants today, therefore, must provide a service that involves tracking progress and benchmarking against competitors. This type of service benefits the consultant as well as the client, as it sets the stage for a subscription-type long-lasting relationship with the client instead of a one-time engagement.
Building foundational capabilities means transforming the organization to adopt both the mindset and the infrastructure to support speed and agility throughout the organization. For consultants, this transformation would involve the digitization of IP and client data. Consulting firms today rarely have a structured means of storing IP, relying on spreadsheets on individual hard drives. As a result, IP frequently leaves the company when an employee does, and the firm is not able to build on and improve that IP over time. Firms may find themselves duplicating work, since IP is scattered. Moreover, IP and client data stored on hard drives is highly susceptible to data breaches. In order to build the necessary foundational capabilities, consulting firms must acquire the capability to digitize their IP and client data so that they can store it securely, share it throughout the organization, and build on it over time.
Consultants are helping their clients be successful in the digital world; it’s time for them to do the same. We recently interviewed one of our customers, a senior manager at a top-tier consultancy. In his words, “we need to practice what we consult.” Is your practice embracing digital consulting?