Frontiers of knowledge

Star Trek has been lying to us all these years.  Space isn’t the final frontier because there is, of course, no end to the frontiers we face.  Passing through each frontier is a bit like breaking the sound barrier in the 1940s: once you’ve realised you go faster than the speed of sound, the next frontier becomes travelling at twice the speed of sound, and so on.

What we can, however, be sure of is that, with every frontier that’s crossed, crossing the next one becomes more difficult.  As a particular area of science matures, future discoveries take more effort, depend on increasingly specialist skills and yield fewer benefits.  We see this in, for example, the development of certain classes of drugs, but the same is true in consulting – and the implications are as profound for consulting firms as they are for pharmaceutical companies.

You could argue that, in the early days of consulting, it was as easy for a consultant to stumble on a new, fertile management idea as it was for James T Kirk to stumble across yet another new alien.  You could also argue that remains the model for most consulting firms today, the hope that they will ‘discover’ a new idea, that a client project will serendipitously yield an idea that no one has already had.  In reality, the next frontiers are only likely to be crossed – as pharmaceutical companies have found – with greater investment in research and a more focused approach.  So what are the options for consulting firms?

Our forthcoming report on consulting in Europe, the Middle East and India examines the various strategies for growth being adopted by consulting firms across the region – one of them is clearly innovation.  The level of risk and lack of dependable return mean that a vanishingly small number of firms will want to position themselves as ‘originators’ – firms that are prepared to place all their bets on a single, blockbuster idea and in theory they reap the highest returns – assuming they get any return at all.  At the other end of the spectrum will be the ‘adapters’, firms who follow a classic low-risk, low-return approach focused on adapting standard methodologies to suit clients’ particular needs.  These firms are valued because they’re prepared to cut their approach fit their clients’ cloth, rather than because they have developed a new, over-arching idea.  Unlike the originator path, a return here is almost guaranteed: it would be hard not to win more work if you take this approach.  But its disadvantage is that the potential for growth is by definition limited: a firm that demonstrates adaptability will undoubtedly win loyal clients, but will find it hard to communicate the advantage of that to organisations it hasn’t worked with.

Most firms are therefore likely to fall into the ‘disseminator’ category.   As the name suggests, the role of the disseminator is to take new ideas or tools, developed by other organisations, to clients.  Without perhaps a clear sense of their competitive advantage or a burning platform, they still want to grow more than an adaptation strategy would allow.  This involves less risk – the cost of innovation is borne by someone else, but there’s a danger that other firms are able to jump on the same bandwagon.  Competitive advantage here therefore comes from being to spot ideas earlier than other firms, so relationships with the organisations or individuals who are the originators is essential.  Increasingly, though, it will be the exclusive rights to such resources which will determine success: as in the race for any scarce resources, ‘disseminators’ will have to stake their claim.