What's your approach to innovation?

Innovation, if we’re honest about it, has never been the core competence of most consulting firms, even (some would argue, especially) of the large firms.  Excelling at the dissemination and commercial application of new management ideas and techniques, consultants have rarely been their originators – and for sound economic reasons.  Innovation is costly and high-risk: most clients, although they may lip-service to creative thinking, are looking for tried-and-tested methodologies that deliver nigh-on guaranteed results.  What they don’t want is old ideas re-peddled or standard methodologies applied irrespective of the circumstances.

The opportunities to use innovation as a source of growth for consulting firms therefore fall into three distinct camps:

• Originators bear the highest level of risk; like the classic pharmaceutical company, some place all their bets on a single, blockbuster idea and in theory they reap the highest returns – assuming they get any return at all.
• As the name suggests, the role of the disseminator is to take new ideas or tools, developed by other organisations, to clients.  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.
• Finally come the adapters: a classic low-risk, low-return approach focused on adapting standard methodologies to suit clients’ particular needs.

In the current climate we perhaps shouldn’t be too surprised that there aren’t many consulting firms willing to stand in the originator space.  Those that are fall into two groups.  First are those who believe that there is something in their DNA which may allow them to come up with better ideas than their competitors.  For the second group of firms, being originators comes from necessity rather than choice.  At the other end of the innovation continuum are the adapters, firms that 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.

It is, perhaps, only to be expected that the majority of consulting firms therefore fall into the ‘disseminator’ category.  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.  Competitive advantage here comes from being to spot ideas earlier than other firms, so relationships with the organisations or individuals who are the originators are 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 if they’re to succeed.