In Italy: How to grow in a no-growth market

By B.J. Richards

A client base full of cash-strapped, frequently immature, and mostly smallish businesses means that the Italian market can be a tough place for consultants even in the best of times. And these, unfortunately, are not the best of times -- with a GDP that fell nearly 2% last year and a consulting market that grew less than 1%, no one doubts that. But as bleak as things may seem, Italy’s consultants and the clients they serve are far from giving up, and they’re looking for ways to make the best of what has been of late a rather hostile environment. Here are three of the top survive-and-thrive strategies they’ve shared with us:

Strategy #1: The best way out is through

Sure, times are hard, but as so often happens, the very fact of hard times has created some opportunities. Having watched so many of their friends and competitors go bust over the last few years, those businesses that remain are eager to make sure they’re in fighting shape – all the better to ensure they’re still around for the recovery. True, it might not feel like an ideal time to make big investments, but consultants tell us many of their clients are ready to roll up their sleeves and do whatever is necessary to make sure their businesses are built to last. As a result, demand for efficiency, operational improvement, and transformation services is starting to trickle in.

Strategy #2: In search of greener pastures

Businesses that are a bit better off have the luxury of thinking about growth rather than mere survival, and so long as the economy at home continues to struggle, many are realising the best opportunities may lie beyond the Italian border. International expansion, of course, often means moving into a whole new world with a very different set of rules – making those choosing this path natural customers for management consulting. To win this work, firms will need a global reach and cross-cultural knowledge. This gives big multinationals an advantage, but for small and local firms deft at forging partnerships, this can still be a great way to grow.

Strategy #3: Stoop to conquer

Finally, many consulting firms tell us that in such a strapped market, their best strategy for living to fight another day is to drop their prices down to a level that their struggling clients can afford right now. Price competition has become fierce as Italian firms dramatically slash fees in an effort to keep their oversupply of consultants busy and hang onto their market share. It’s a dangerous tactic, as one consultant pointed out when he expressed his worry that firms were only getting clients accustomed to deep discounts and would have a hard time raising prices again when the time comes. Others, however, are confident that good times are just around the corner, and if they can just hang on a bit longer and keep providing a good service in the meantime, they’ll be in great shape when the tide turns.

****

So, yes, things are hard out there, and we wouldn’t really wish the Italian market on anyone (with the possible exception of our Russian friends, who we’re guessing would love to be in a market as robust as Italy’s about right now). But we were very impressed by the optimism and fortitude we encountered among the Italians we spoke to this year, and they left us feeling confident that if there’s a winning strategy to be found, they will find it.