What is the future of Management Consulting?
By Yohan Albo
Management consulting is a client-driven industry and as clients’ needs change in an ever-changing technological world, management consulting firms must adapt appropriately in relation to their services, methods and strategies to remain relevant and effective. Based on financials, the management consulting industry is flourishing. In the United States alone, the industry was worth $55 billion, growing at 7.7%. We see even faster growth pace in our local market, Israel, although the way consulting is consumed in the Israel is a bit different.
However, beneath the numbers, the management consulting sector is by no means a safe and naturally growing industry. Increasingly, there is a divide in the management consulting industry between a low cost, boutique, freelance segment and a more classical business consulting segment.
This begs the question: What is management consulting’s future?
The pace of technological advancement in high-tech and other industries creates new business models, such as global market place, freemium models, or data-driven revenue based models. If management consulting firms want to stay relevant and not become redundant, they must have deep knowledge of these industries so that they are able to provide effective solutions and strategies to these businesses.
To quote Marco Amitrano, UK head of consulting at PwC, “Innovation cannot be achieved purely by investing large sums”. Most importantly, management consultants, just like any other industry, must learn from their mistakes quickly in order to cope with the rapid pace of innovation. The moment management consulting firms cease to provide value to their clients, is the moment they will fail.
Management consulting firms will need to create large networks of industry and academic experts to assist in their operations. Building relationships with professionals outside the consulting industry is becoming increasingly popular and vital to the management consulting industry’s ability to offer effective advice to its clients. Our approach at DataToCapital, from day one, was to try to capitalize on this phenomena and try to leverage industry leaders and not necessary consulting rock-stars…
There is growing belief that management consulting firms will use AI and machine learning to enhance their service services and validate their recommendations. This is clear… on our side, we have actually started in 2015 with a predictive analytics offering for business… Although, we have proven our value to our clients via several successful pilots, this offering was a commercial failure at the time; the local tier-1 firms we were working for in Israel were not yet ready to integrate the gained insights into their internal processes and go production with these solutions… We believe 2018 will be a better year on this front.
No longer will management consulting firms be able to work in the dark without a company’s employees’ knowledge. Rather, consulting firms will need to be transparent increasingly engage with employees and embed themselves within the culture of the company they are consulting for. Consulting firms will need to work with employees rather than separately from them. From what we experience, this transition involves some new challenges we need to address. Being open is not always easy and even natural many times, but we are definitively seeing the gains for our clients.
Areas of Expansion
The consulting industry is expected to grow at a rapid pace in the fields of healthcare and defense consulting. As these problems become more pressing in an age of rapidly rising healthcare costs and increasing tensions around the world, there will be high demand for consultants to solve these conundrums respectively. At DataToCapital, we have decided not to strategically address the huge local defense market, but rather focus on digital healthcare. During the past 2 years, we have been working for tens innovative start-ups (in the following sub-segments: Medical device, Therapeutic, Elderly monitoring, Remote Patient Management, Tele-consultation and Medical AI) and tier-1 companies such as Teva Pharmaceuticals.
As consumers increasingly only want to pay for what provides them value, management consulting firms will charge less and less based on billable hours and more based on the value they provide their clients. It is therefore crucial that consulting firms have only the success of the client in mind. In the age of social media, a few bad client reviews can completely undermine a consulting firm’s future ability to engage clients.
*Please note that we are discussing the future and therefore nothing about the future is certain and it could be that there are unforeseen events that completely reshape the consulting industry in a way no one could have imagined.
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DataToCapital is a boutique management consulting firm that supports global tier-1 firms and start-up companies operating in Israel in their route to excellence and market dominance. Our core services, designed for CEOs, Executives (VP-level and above) and Entrepreneurs, can be divided into three areas: Market Intelligence, Corporate and Product Strategy, and Execution Support on top-down strategic initiatives.
The quality of the work we deliver in the three areas mentioned above is equivalent to what your company may already get from the top-3 consulting firms that operate in the Israeli market, BUT here’s the twist and why our tier-1 clients think we are superior.
We don’t only provide smart recommendations, we work closely with the management team and can also support driving the execution of their strategic initiatives behind the scenes or as a proxy.
We are at the strategic intersection of Business and Technology. Thanks to our rich background, we know how to connect the dots between the two worlds, and how to be very creative when it comes to disrupting business models or addressing sub-optimized processes with the help of advanced technological solutions (Machine Learning, Big Data, Data Visualization, Enterprise Software Solutions, and many other tools present in our toolbox).
This is a built-in feature.
No account manager, no complex communication chain, etc...
This is why our firm aims to dominate the management consulting market in Israel with no more than eight talents (...on steroids).
Our long-term vision is to become the trusted advisor to the most influential businesses and institutions operating in Israel, and help them become global leaders in their markets.