Life outside the fortress

By Fiona Czerniawska.

In previous articles on this blog, we’ve talked about ‘Fortress Strategy’, the idea (originally voiced by a client) that the major strategy firms remain firmly in a segment of their own. Clients, looking for independent support around a strategic, probably contentious decision, that will re-shape their businesses, will only turn to one of a very small number of players. But what sounds like a fabulous position has serious disadvantages: while clients see a big wall between these firms and the rest, they’re as reluctant to let them out, as they are to let others in. The fortress, in other words, becomes a prison.

Even that wouldn’t be a problem if the volume of consulting work inside the castle was growing, but it’s not. Instead, clients’ attention first switched to more operational issues in the aftermath of the global financial crisis, and have now moved to digital transformation. Strategy firms have done well out of both, but only by diversifying and acquiring new capabilities.

With 2-3 years of that approach under their belt, how are the strategy firms faring, at least in the eyes of their clients? The data we gathered from more than 3,000 senior executives enables us to put forward a tentative answer.

If we confine ourselves to ‘direct clients’, the people that know a firm best, then McKinsey, Bain and BCG (the archetypal inhabitants of the inner sanctum of Fortress Strategy) all feature in the top six firms for strategy work. That A.T. Kearney also features there is reasonable, but it’s worth bearing in mind that far fewer clients mentioned the firm, so it’s doing good work, but with a very limited market. The only other firms that look as though they’ve got their feet under the portcullis are Accenture and Deloitte. But if we move to operational improvement work, the MBB firms (McKinsey, Bain and BCG) slip down the rankings, their places taken by mid-sized strategy firms such as L.E.K. and Roland Berger, while the Big Four firms are pushed down even lower. Now, Roland Berger—and A.T. Kearney, which does well here too—benefit from more hands-on, practical reputations, but what happens if we look at some of the ‘newer’ services now being offered? In fact, L.E.K. also garners a lot of praise around data and analytics, while McKinsey languishes near the bottom of the list.

The MBB firms don’t tend to score as well on areas such as operational improvement as they do in strategy, but they are doing better than the Big Four firms. To this extent, their forays outside Fortress Strategy, to win work in new areas, appear to be paying off. But the firms that do best of all are the mid-sized strategy firms, those often written off in the big-brand-or-specialist theories of success.

Clients, we infer, don’t mind if strategy firms leave the Fortress. As long as the big ones stay where they are.