Consultants Face Their Demons

Three seemingly unrelated events within the consulting world add credence to the industry’s altering landscape.

First, LEK, the highly respected strategy boutique, filed its inaugural annual report, which detailed its restructuring from a partnership into a corporate group. The rationale was “based on a desire to grow and develop the business through greater investment.” Translation: partners’ own money probably couldn’t underwrite the business enough to keep pace with larger players.

Second, Bain announced a strategic partnership with Endava, a “next generation technology service provider.” Further, the partnership would expand Bain’s Alliance Ecosystem, which is a collection of relationships with various data, tool, technology and thought leaders. Translation: strategists must continue to demonstrate technical expertise to remain relevant.

Third, McKinsey was dragged into the horrific murder of journalist Jamal Khashoggi at the hands of Saudi’s ruling regime. The guilt-by-association thread tied McKinsey’s work with the Saudi government and a seemingly innocuous report the firm produced measuring social media impact and identifying leading critics. Translation: client/consultant confidentiality barely exists in the age of ubiquity and information produced by consultants can be grossly misused by anyone who gains access.

Viewed in isolation, each of these occurrences appear reactionary. LEK bucks the traditional ownership model for public investors while hoping to maintain its private culture cultivated over the last 35 years. Bain acknowledges that hiring smart people isn’t enough to convince clients that it has the best technical people. And McKinsey’s situation reinforces the tasteless stereotype of consultants-as-mercenaries who will overcome clients’ moral shortcomings through their own virtue.

People love to pick on advisors as a crutch or cudgel for weak-willed or wicked executives. I’d posit that these events, taken collectively, offer the opposite view.

Acknowledging market realities by restructuring or partnering should be seen as a sign of strength. Recognizing that your work can be distorted with awful results must lead to tighter controls and client relationships.

Consultants’ fight for relevancy seems ever more challenging. The industry’s historical position of staying above the fray is no longer possible. Every firm will face a demon that forces uncomfortable decisions. Successful firms will act.

 

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Tom Rodenhauser