Internal consultants

By Fiona Czerniawska.

Our recent article about the market opportunity for internal consulting teams clearly touched a nerve. From the emails and other comments we’ve received, everyone sees the potential in expanding into markets outside their parent company, but there’s widespread debate about the best way to exploit it. So, rather than responding to everyone individually, we’ve decided to draw up a list of what we think matters most.

#1: Know what makes you special
When you start a conventional consulting firm (or any other type of business for that matter), you get the luxury of choice. You’ve spotted a need out there in the market and have a good idea of why you’d be better placed to serve it than anyone else. But internal consulting teams start from where they stand: If you’re the internal consulting team within a major automotive manufacturer then your market is probably limited to other automotive companies or to sectors which have similar issues (with complex supply chains, for example). Setting yourself up as an expert in clinic trials in the healthcare sector would be a bit of a stretch. But necessity drives invention: The fact you don’t have much room to manoeuvre means that you can be a lot more thoughtful about what precisely is your unique selling point. Broad-based consulting firms squander this: With so many possibilities to choose from, they struggle to say why they’re special at any one.

By Fiona Czerniawska.

Internal consulting units are cyclical things. Typically, a large corporation suddenly wakes up to the fact that it’s spending millions of dollars with consultants who may bring lots of value, but don’t hang around. Surely, senior executives reason, we’d save ourselves a lot of money and equip our business better for the future if we created our own, in-house consulting firm. But, after an initial flurry of excitement, the idea starts to pall. Over time, consultants, poached from external firms, lose their knowledge of best practice elsewhere; without a big brand behind them, many also find it hard to earn the respect of their internal customers. Objectivity, critical to so much consulting success, is inevitably eroded. Under pressure from its cost-conscious organisational parent, internal consulting groups are asked to look for work outside. Some manage the transition well, becoming highly-respected specialist firms, but others fail to find a market and are ultimately disbanded.

If you talk to consultants in Germany one of the post-recession trends they’re most likely to mention is the rise of in-house consulting units in multinational companies. Driven by a desire to build internal skills as much as cut the amount of money spent on consultants, these units pose a genuine threat to consulting firms there.

Internal consultants have a chequered history: one minute they are on the up, eager recipients of corporate largesse; the next they are on the down, seen as a luxury the organisation can no longer afford. Lacking the brand and independence of external resources, they have widely been seen as the “poor manager’s consultant”, the people you use only when you don’t have the money for the real thing.