Innovation and leadership in the French consulting industry

By Fiona Czerniawska

Multicité and Extramuros may not be the most famous consulting firms in world, or even in France, but they may tell us something about the future shape of consulting.

The two firms, based in the north of the country, have pooled their expertise in sustainable economic development, urban planning and HR consulting (the venture is so new it doesn’t yet have a name).  They’ve been exploiting regulatory opportunities (‘Article 21’, which forces local communities to come up with plans for cutting greenhouse emissions, has been a particular cash cow for consulting firms), beating bigger well-established firms for some of the bigger contracts.

It might be possible to ascribe their success to price: this type of work is notoriously low-margin and big firms often struggle to push their rates down to an acceptable point.  But it’s clear that these firms’ pooled resources offer deep expertise and a dedicated focus on the issues – a combination that results in innovative approaches (helping schools finance the installation of solar panels is just one example).  More than this, though, is the sense of passion and commitment from the leaders of the business: their consulting isn’t just something they do, it’s something they believe in.

By contrast most consulting firms remain pretty faceless institutions.  Consultants, especially partners (who are, after all, supposed to be equals) rarely stand out from the crowd; consulting firms (which need to ensure they don’t become too dependent on a small number of individuals) prefer to emphasise their collective expertise. But clients love real experts, people who are prepared to be opinionated, even contentious. They may not always agree with everything the experts say, but they’ll always find the conversation stimulating and thought-provoking.

Leaders like this may end up being a trump card.  Small firms are struggling, particularly in France.  We estimate that the French consulting industry shrank by just under 3% in 2012.  Against this backdrop, the Big Four managed to stay just on the side of growth but other segments shrank – most of all the small to mid-sized firms (down by more than 5% on average).  Some of this is driven by the economy: in times of uncertainty and shrinking budgets for consulting work, clients prefer bigger firms.  For obvious reasons, small firms also find it especially hard to win multi-geography projects.  But a small firm, focused around an informed and impassioned guru, can become a magnate for clients who are looking for something a bit more distinctive.

Certainly, Multicité and Extramuros demonstrate that small firms can thrive, even in France.