Disruption through innovation: a new model for business management consulting

May 15, 2019

The days of PowerPoint-focused consulting are drawing to a close. Big data and smart technology are rapidly changing the way people think about management consulting.

Because management consulting has been powered mainly by human capital, consultancies excel by allocating the people with the right expertise to the right projects. This focus on human capital gives them the benefit of flexibility because they aren’t burdened with many other resource allocation decisions.

This flexibility, paired with the intangibility of what makes a consultancy’s services so effective, has made this a $250 billion industry. Just as in any industry, however, disruption is inevitable in the realm of management consulting.

The traditional management consulting model, pre-disruption

A management consulting team typically consisted of one manager and two analysts working together to run structured problem-solving. They would then offer recommendations through data-driven analyses.

Management consulting has remained the same for more than 100 years. An organization that is struggling with a problem or project hires outside experts to come in and recommend solutions.

Businesses operate in an increasingly digital world, and consulting agencies who want to stay afloat need to adapt quickly. In the U.S., companies seeking guidance on digital transformation accounted for 20 percent of consultancy business, around $11.79 billion per year.

Today management consultants have to contend with all kinds of competitors and ever-changing technologies. Disruption of the industry on a large scale is on the horizon.

Disruption is imminent for management consulting

The field of management consulting has already changed drastically in recent history. For example, the ratio of work done by consulting firms that is traditional strategy-consulting has steadily declined over the years. That classic strategy work is currently at around 20 percent, compared to the 60-70 percent it was 30 years ago.

A management consulting company is likely to be resistant to changing its strategies if business is still thriving. But if a company waits until a dip in income before trying to adapt, it may already be too late. U.S. Steel, for example, brought in record profits in the years before the minimills disrupting the industry dethroned it.

Management consulting is similarly ripe for disruption. According to Kennedy Consulting Research & Advisory, there are close to 50,000 alumni of the Big Three consulting firms (McKinsey & Company, Boston Consulting Group and Bain & Company). These consultants, when hired to work in-house, lessen companies’ dependence on outside agencies, which leads to the disruption of the entire industry.

There are some repetitive data gathering tasks that artificial intelligence (AI) software can do much faster than any human. In the financial services industry, AI is already doing the bulk of the work of gathering, organizing and analyzing data.

How Evo can help in the disruption of traditional management consulting

Many of the business management problems that companies face today are best addressed by consulting that uses automated, machine-learning powered models. Clients will no longer call consultants in to offer one-time solutions. Consultancies will instead take on the role of helping their clients transition towards a blended management team of humans and computers working together in harmony.

Flexible tools such as Microsoft Excel were once sufficient for running traditional analytics. However, having to invest time and human capital by constantly building custom models from scratch puts consultancies at a huge disadvantage. This is where solution-driven companies like Evo come in.

When a business tasks a consultancy in solving a problem similar to one it has addressed in the past, computers are the best option. Software can easily work on repeat consulting tasks by sticking to established methodologies. This frees up humans to face new problems with more uncertain outcomes, or tasks that require the human touch of creativity, perceptiveness and social interaction.

The world of machine learning, specifically, is one of extreme specialization. Where the traditional model of ‘sell-then-build’ adopted by management consultants, to maximize flexibility and fit to custom client requirements, is being disrupted. Machine learning requires huge amounts of training data, context expertise, and specialized use-case knowledge. Therefore the winning model for management consultancies and clients alike is one of partnership and task division, where machine learning solutions are developed by dedicated sector experts.

However, still today, many managers and consultants alike believe the common misconception that automating processes and delegating tasks to computers means fewer jobs. This is not always the case. In business management consulting, allowing computers to do what they do best — process massive amounts of data — frees up human consultants to focus on what they do best, without being bogged down by repetitive tasks.

Disruption is inevitable. Failing to stay ahead of the curve, however, is optional. Consultancies who are willing to embrace automated, machine-learning software will thrive in the ever-changing field of management consulting.