The four business models of the future

I wrote at the end of last week about how Dutch consulting firms are in the forefront of pioneering new consulting organisational models and that we expect to see firms in other countries follow suit. Although conventional thinking about how consulting firms are structured has focused on the continuum from generalist to specialist, a more complex picture is emerging in which mode of delivery matters as much as skills base.

No one would deny that the long-term evolution of the consulting industry has taken it towards ever deeper specialisation – a trend reinforced by procurement processes and the rise of internal consultancies and/or consultant-managers. Inevitably, this has led to more subcontracting and it has tended to make generalist consulting less valuable, driving a wedge between expert and non-expert consulting that has far-reaching consequences.

But this picture is complicated by the existence (at least in some markets) of a substantial pool of freelance consultants and by multinational corporations which, emerging from recession and keen to make up lost ground, are short-staffed and are looking to consulting firms fill the gap, giving an unexpected boost to the generalist model.

Suddenly, instead of competition primarily being between familiar enemies – the specialist against the generalists – it’s now also between firms and freelancers. Boutique consulting firms may be more focused than broader-based firms, but they also compete against the more flexible delivery model of expert networks. The latter, meanwhile, need to leverage their expertise in order to put more space between them and body-shoppers, and the body-shoppers are striving to take market share from the generalists because they’re cheaper.

At the heart of this discussion is not which model is best, but whether it’s possible to accommodate more than one model within one firm. Historically, that’s been the case: large consulting firms would sell clients resources on a body-shopping basis alongside higher-end consulting; small firms would provide consultants on expensive, short-term contracts or as longer-term interim managers; specialist firms would operate informal networks of expert associates without cannibalising their core consulting services. But as the different models become more clearly delineated, that may not continue to be the case.