We previously discussed the impending rise of asset-based consulting and what exactly it entails for consulting firms in today’s business climate. Given the impending disruption consultants face, it would seem as though every consulting firm should be jumping at the opportunity to realize asset-based consulting benefits. While certainly the world of consulting is being driven towards asset-based consulting, however, adoption is not without difficulties. At the same time, asset-based consulting provides consultants with a number of exceptional benefits. In this post, we will examine both the barriers that curb the rise of asset-based consulting and the benefits that will doubtless accelerate its adoption.
While every consulting firm will face unique challenges when changing its processes, there are a few difficulties that nearly every firm will encounter.
Because the consulting business model has remained virtually unchanged since its birth in the early twentieth century, many consulting firms will find it difficult to change. The traditional business model has met with great success in the past and continues to be successful for the top firms in the industry. While there is no doubt that the consulting industry is facing disruption that will ultimately change this business model, the most successful firms still have the assurance that at least for the time being, they can continue successfully as they always have. As long as these firms continue to attract clients through their reputation and the rapport they have held with businesses for decades, many will be reluctant to overturn the traditional business model.
Asset-based consulting requires more than simply adopting a new tool or a new process. It is a new business model that revolves around the productization of services rather than relying on talent.
Because it requires such deep-rooted change, many consultancies are not structurally ready to adopt it. Adoption brings with it the same change management challenges any business faces when it undergoes deep-seated change: buy-in from both the top down and bottom up, understanding how the new model will affect the organization as a whole, new pricing and expectations, keeping everyone aligned, etc. The entire firm needs to be on board with the new tool, and everyone needs to understand that the consulting practice is changing at its core, not that there’s simply a new tool available. In order to effectively realize asset-based consulting benefits, a firm needs to be highly familiar with its own DNA: where its strengths and challenges lie, what doubts or expectations employees have, how well things are being communicated, how open people are to change, and so forth.
Perhaps because consulting has remained constant for so long, there are firm customer expectations around how a consultant should do his job. While customer expectations of what they should receive are certainly evolving, many still expect consultants to operate more or less as they always have. In addition to universal adoption by the consulting firm, therefore, customer buy-in is also necessary. Proving ROI is thus key to the adoption of asset-based consulting. Additionally, the asset-based consulting model requires customers to become more self-sufficient in understanding their own businesses. Whereas before management consulting was involved largely with informing client organizations as to industry best practices and the state of their own internal operations, asset-based consulting revolves more around providing clients with the means to solve their problems. Client organizations must therefore have a thorough understanding of their own organizations to be able to effectively adopt these solutions.
Although barriers certainly exist to the adoption of asset-based consulting, these barriers are by no means impossible to overcome. While some consulting firms may be slower to adopt than others, the tangible asset-based consulting benefits will doubtless continue to draw consultants in.
Because asset-based consulting relies more on products than on people, engagements have more consistency in output. Tools do a better job than people at performing more or less the same way every time, so the product at the end is more consistent. This consistency makes both benchmarking against other players in the industry and marking internal progress far easier and more accurate, as an engagement is far more repeatable.
The top firms today rely on talent as their primary differentiator. They market themselves as talent pools and only hire from the top business schools. The problem is that while in previous decades consulting was the top choice for business school graduates, graduates today are frequently looking to enter more innovative companies. Talent retention is also an issue, as most junior-level consultants do not plan to remain in the consulting industry for their entire careers. Asset-based consulting benefits place the focus on products instead of talent, decreasing the pressure of hiring and retaining only the top talent.
Asset-based consulting relies on technology rather than human functions. Therefore, it has the ability to perform the same or similar tasks at far greater speed. The most time-consuming parts of the consultant’s job, such as client discovery and analysis, can be replaced or complemented with products that speed up the project as a whole considerably. Complex data sets or overwhelming amounts of data can be more easily sorted, and better-connected data leads to deeper insights and better ROI.
Although the adoption of asset-based consulting will require some effort from consulting firms, today’s business climate is pushing continually towards it. Fortunately, the benefits that consultants gain from asset-based consulting will surely help accelerate its adoption.