As Niclas mentioned in his last blog, our ambition at the outset was to transform the $250bn market for consulting service. We are passionate about changing what we feel is a broken market where the status quo has been far too long accepted. During my time working in a large corporate environment, I’ve often sought external expertise to fill either capability or capacity gaps. From that experience it is clear to me that the task of finding the best quality support options at fair value quickly is as much of a challenge in developed markets as it is in developing markets, it is just more acute and has more significant social and economic ramifications in growth markets like Africa and Asia.
Big Brand Vs Boutique
The current options are stark: default to one of the big brands such as the Big 4 or Top 3 Strategy Houses, or go it alone using word-of-mouth recommendations and hope for the best. Making a decision to go with a boutique, relatively unknown firm is a brave choice that not many are willing to take when considering business critical projects. To date their just hasn’t been the necessary infrastructure required to allow clients to make these choices with confidence. Therefore, far too often large consultancy firms are selected not because they are the best match for the project, but because they are perceived to be a ‘safe’ choice and carry the brand stamp of approval that provides clients and their associated boards with a comfort that everything will be ok. If not they have someone else to blame or the well-versed phrase “but this is what <insert big brand firm name here> told us to do”. Very similar to the ‘olden days’ when the the saying was that no-one got fired for buying IBM.
I’m not saying the Big brands serve no value, my frustrations come when they win projects where they just aren’t the best option. Clients may get the brand comfort, but at the same time they may also get poor outcomes at an extortionate price.
Having spoken to lots of business leaders and procurers of consultancy services, it seems they are also becoming increasingly sceptical and frustrated about what has over time become a bit of a racket. This is compounded by an unrelenting pressure to come up with new thinking and innovative ideas that cut through the noise and reach consumers bombarded with choice. Most clients we speak to have done the thinking, they’ve got the strategy decks, but now they need to execute and overcome the implementation hurdles. As the saying goes, ‘Good ideas are a dime a dozen, but implementation is priceless’.
This growing need for value for money, fluid resources that brings different thinking, specialist expertise and deep practical execution experience is why this is the time of the boutiques.
The rise of the boutique
The benefit of a great boutique is that they bring agility, innovative approaches, new thinking, a desire to be accountable and a need to deliver. They are driven and motivated by the fact that every project needs to be a success for them to prosper and grow. They often have deep specialist execution experience which brings the practical knowledge that is priceless for any business. Being specialists allows them to become masters of their field offering high quality and deep rather than broad knowledge. They price fairly and you get blood sweat and tears for your fee.
Indeed, we’re seeing this across different industries where there is a shift away from seeking out one large traditional brand who offer a bit of everything and to instead a desire to use multiple specialists. Consumer demand for more personalised, specialist and unique services and products is driving this change. From food through to fashion, music and the arts there seems to be a consistent move to finding the unknown specialist that offers something a bit different.
Consumers have always enjoyed finding that unique product or experience, the small specialist that offers that extra bit of quality and something a bit different from the mainstream providers. The challenge for these boutiques is ease of access, cost of distribution and a lack of brand awareness leading to some favouring a more familiar option. Consumers, both businesses and individuals, have increasingly less time and demand immediacy. They just don’t have the luxury to find the alternative. This has allowed the larger brands to dominate. However, things are changing. Digital has enabled smaller boutiques to quickly access large markets, from marketplaces and aggregators to the use of social media the barriers are being removed. More transparency and ease of access mean that choice can be made based on who best meets the requirements, rather than traditional defaults.
The workforce of the future
Many of the larger firms are seeing this shift and are doing their best to defend their market. There has been an increase in big firms acquiring their more agile and innovative competitors seeking to respond by simply eating up the competition. A very wise move, however, this is in my opinion is a short term fix, it protects against market share competition, however, does not protect against the inevitable transformation of the skills purchasing market. The workforce of the future will need to be more dynamic and fluid, allowing businesses to flex their talent in order to both drive innovation and manage costs.
The use of specialist external expertise and partnerships will be increasingly important in enabling traditional businesses to move with agility, bring in new thinking, bridge capability and capacity gaps and cut through the competition. This is where Outsized is focusing, we aim to build the infrastructure to support the fluid movement of skills and expertise globally, quickly matching skills demand and skills supply through a single platform.
I am by no means predicting the demise of the Big 4, however, like the businesses they serve, their market is changing. The financial services industry is a great parallel, where challenger brands are unsettling the status quo. What we can call is that tier two firms, or maybe even the ‘Small big 4’, are the ones that are likely to struggle. Lacking the size, scale and brand strength of the big guns and at the same time without the agility, innovation and lower overheads s of a boutique, a re-positioning may be required, and quickly too.
Levelling the playing field
When speaking to our boutique firms I get very excited as I see the amazing talent on offer and pleased that we are doing something to unearth this expertise. The frustrations these businesses have is that they aren’t even in the shop, let alone the shop window. The toughest challenge is getting in front of clients and just being in the conversation. It can take a boutique two years to win a project, the business development costs and time associated with this are debilitating. What they are calling out for is an advocate, someone to champion their skills and expertise and level the playing field. May the revolution begin.
Written by Anurag Bhalla