Management Consulting Management Consulting in the Global Marketplacein the Global MarketplaceTrends and Challenges

April 12, 2023 2

30+ years in technology 20+ years in consulting Published author (four books) and

columnist (CIO Insight) World’s top 25 most influential

consultants (2003) Computerworld 100 Leaders in IT

(2005) Retired head of Innovation and

Strategy at Ernst & Young LLP (September 2001)

Retired CTO of Capgemini (July 2005)

© ParkWood Advisors LLC, 2005 All Rights Reserved

john@parkwoodadvisors.biz+1 847 235 1791www.parkwoodadvisors.biz

AgendaAgenda

Analysis: Why companies use advisors

Trends: Where do we go from here?

Six challenges for the future

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Why do companies use Why do companies use advisors?advisors?

The simple view: Three “E”sThe simple view: Three “E”s

Efficiency: “You do this all the time, we only need it now and again. So you can build capacity and expertise through investment and practice and we can’t”

Experience: “You’ve done this before; this is our first time – at least in current memory”

Expertise: “Your people are smarter than our people”Let’s elaborate on this somewhat

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Why Use Advisors?Why Use Advisors?

Procedures and Practices

Grey hair Rocket Science

Client Problem Efficient Solution to common problems

Customized solutions to generic problems

Unique or first time solutions to complex problems

Application Skills and quantitative analytics

Judgment based on accumulated experience

Creativity, imagination, innovation

Critical Success Factors

Established “infrastructure”

Models, methods and practices

Efficient delivery

Experience

Body of knowledge

Technical depth

“First of type” analytics

Creativity

State of the art knowledge

Pioneering concepts

Selling Proposition

Faster, better, cheaper

Capital efficiency

Demonstrable track record

Relevant references

Reputation

Cognitive authority

Leverage

High leverage

Low margin

Low leverage

High margin

Based on David Maister’s Spectrum of Practice Model

Efficiency Experience Expertise

Outsourcing and managed services

“Core” management consulting and niche optimization skills

Emerging skills, research commercialization and innovationApril 12, 2023 6

Market positioningMarket positioning

Applying the body of knowledge

Customizing the body of knowledge

Extending the body of knowledge

Creating a new body of knowledge

Client Problem:

Efficient solutions to common problems

Client Problem:

Help in making an informed choice from a variety if options and guidance through the process

Client Problem:

A major, complex and ill defined issue where the client has little or no experience

Client Problem:

A major “bet the company” issue that the client has no similar experience of

Key skill:

Efficient low cost delivery of established methods, models and processes

Key skill

Providing confident, user friendly advice that reduces anxiety and uncertainty in the selection process and during implementation

Key skill:

Real time diagnosis, judgment and decision support

Key skill:

Providing innovative first of type solutions

Critical Success Factors:

Established methodologies, models and processesEfficient low cost delivery systems

CSFs:

Established methodologies, models and processesEfficient low cost delivery systemsRelationship skillsSG&A cost management

CSFs:

Knowledge management in the problem domainIn depth technical and functional knowledge

CSFs:

Highest level of diagnostic and synthetic skillsState of the art knowledgePioneering concepts

Profit Drivers:

RepeatabilityHigh Volume; high leverage

Profit Drivers:

Above average feesGood leverage

Profit Drivers:

High fees, low leverage

Profit Drivers:

Premium feesVery low leverageEcosystem referrals

Selling proposition:

Better, faster, cheaper

Capital efficiency

Selling proposition:

Use us. We’ll help you make a better choice and support your decision until it works

Selling proposition:

We’ve been there, done that, made it workRelevant references

Reputation

Selling proposition:

Smartest people around

Leverage

Based on work by R. Lees and J. Gabarro

Low differentiationMultiple providersExecution guaranteesHigh LeverageLow margin

High differentiationLimited providersDiagnostic focus

Low LeverageHigh margin

Efficiency Experience Expertise

Outsourcing and managed services

Orchestration “Core” management consulting and niche

optimization skills

Emerging skills, research

commercialization and innovation

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Why advisors remain Why advisors remain importantimportant

85 95 00 05 10 15

Efficiency Inside the Business

Competition in Global Markets

We are here

We are here

Uncertainty

Planning Trajectory

Reality

Expectation Gap

Early adopters shorten the expectation gap by switching curves ahead of the market…

We must avoid being trapped between ‘S’ curves as families of enabling ideas and practices evolve

Based on work by Geoffrey Moore and Clayton Christiansen

Disruptive Innovation

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Emerging Trends in the Emerging Trends in the Advisory RoleAdvisory Role A requirement for objectivity

◦ Clients want advice to be free of both overt and covert benefit to the

advisor

A willingness to underwrite outcomes

◦ As external advice become central to shaping strategy and operational

performance, clients expect their advisors to have “skin in the game”

The emergence of a broader range of advisory options

◦ Lawyers, bankers, mentors, specialists, generalists

◦ “Best of bread” vs. “All in one” choices

A new demand for real innovation from advisors

◦ Moving beyond the “strategic monoculture” of the graduate MBA

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Six challenges for the futureSix challenges for the future If objectivity is a requirement, how should we rethink our

business models to be less dependent on cross selling and more focused on orchestration of associated capabilities?

If “outcome underwriting” is increasingly a requirement, how do we all move towards this model, what (if any) is an appropriate “share of reward” and should we be thinking about “insurance”?

If “competency leverage” – having the best people - is to replace “capacity leverage” – having the most people - for most firms, what is the “right size” for a consulting firm?

If public markets are increasingly short-term casinos what’s the appropriate ownership and capital structure for a consulting firm?

If “reputation” is a critical differentiator, how do we design attractive careers for the majority of our staff?

And How will we deal with the continuing commoditization of

business knowledge, competency and experience by the major business software vendors?

Questions & commentsQuestions & comments