Management consulting is one of the great business inventions of the twentieth century. The early twentieth century was a time of corporate growth, consolidation and the creation of true management services. Originally a side business to his law practice in 1926, James O. McKinsey was first to build a company advising business executives on strategic matters. His creation was fast followed by Booz Allen, Cresap McCormick and Paget, Arthur D. Little, and later on by BCG, Bain, and others in the US, along with firms like Roland Berger and Egon Zehnder in Europe.
A measure of the impact of management consulting is how it has grown. According to the Bureau of Labor Statistics, approximately one million US professionals now work as “management analysts”, up from only 50,000 in 1970, according to the New York Times. Management consulting is forecasted to grow 10% annually over the next decade and offers opportunity and pay that’s far above average. US revenues for management consulting in 2022 are estimated at $300 billion USD.
A decade ago Clay Christensen released his HBR article Consulting on the Cusp of disruption, arguing the traditional consulting model no longer meets the need and will be disrupted. While he may have been early, it’s clear his prediction is now coming true, and change is certainly coming to management consulting. Technology advances are disrupting both the supply and demand sides of the industry, and that’s leading to changes in how clients think about and use consultants, as well as how consulting is sourced:
- Traditional management consulting is focused on the C-suite, on big projects and big dollars. But consulting is in greater demand because of an array of external challenges and internal talent gaps, and those challenges exist at all levels of the organization. The old model can’t service the vast majority of need.
- As consulting demand increasingly moves downstream, it must adapt to a broader range of requirements: shorter engagements, greater cost sensitivity, and a greater insistence on consultants with the specifically deep expertise and prior experience required to solve “their” problem.
- Now, as technology advances, digital connectivity enables organizations working with consulting marketplaces to “discover” and access the best talent for the project anywhere in the world.
- This creates more effective and cost-efficient ways for firms to deliver consulting services. It also enables teams to be more opportunistically curated, drawing on unique expertise “on demand”, working remotely, without the time and expense of travel.
While the big traditional firms – MBB, the Big Four, and hybrids like Accenture – continue to play an important role in a global consulting ecosystem, a new and important actor is the independent management consulting platform. Consulting talent marketplaces with names like Comatch, Talmix, Expert Powerhouse, and Business Talent Group have grown. Operating from an office in the Seaport district in downtown Boston, at the top of the independent management consulting food chain is Catalant.
Catalant CEO Pat Petitti winces when reminded that the original name of the company he and Rob Biederman created 10 years ago as students at Harvard Business School was “Hourly Nerd.” Catalant was a pioneer in the independent management consulting space and the firm today is quite a bit different than their original plan on the proverbial napkin. Catalant boasts a platform of 100,000 consultants, a much larger and more diverse population than any of the traditional firms. About a third are ex-MBB (McKinsey, BCG, and Bain), Big Four, or equivalently large consultancy at the Engagement Manager or Partner level. Two-thirds are former senior level industry executives and functional experts.
As you would expect, their consultants live in over 190 countries, and typically have strong international experience. Petitti explains: “We’re not just a consulting firm, our ongoing investment in technology makes it possible to find the consultant or team that brings the skill and background to solve your problem, whether it’s an urgent but smaller deliverable that requires unique expertise, or a transformation team of industry experts led by a former McKinsey partner. When you combine easy digital access to a global community of experts in a wide variety of fields, with the ability to flex up and down as needed, it creates something new that we call Consulting 2.0.”
If the airplane, computer, and the end of WWII, sparked the golden era of traditional management consulting, Consulting 2.0 will be known for harnessing the digital potential to deliver outstanding consulting support that is no longer constrained by the limitations of traditional firms. Rather than the hierarchical employment model of the old firm – a partner surrounded by junior (and typically just out of school) associates – Consulting 2.0 offers the skills and specific experience of “been there, done that” expertise.
Unlike the old model, the Catalant talent team “curates” the best match of experience and skill to meet the job. Consulting 2.0 unbundles traditional consulting, allowing it to be more accessible across the organization, and often a better solution for executives, who frequently over-rely on traditional firms. In addition, the most forward-thinking companies have been using management consulting platforms to augment their workforce as specialized skills and expertise are required. Many companies were burned by over-hiring in 2021, with the wrong organizational structure for their future needs. Companies can now hire to a lower baseline and use on-demand expertise for their rapidly evolving key initiatives.
The lack of heavy overheads means it’s a better economic deal for clients, consultants, and Catalant. Unlike traditional firms that are usually senior talent constrained, Catalant’s community is elastic in its talent offering and its ability to meet specific client demands. The big challenge as Petitti and his team see it? Helping more and more enterprises or large global companies kick their traditional consulting addiction. As Petitti puts it, “It used to be less risky to hire one of the big firms, but they aren’t set up for implementation and transformation work below the C-Suite, and that’s where the biggest need is today. Companies know they need a better answer.”
Catalant has completed over sixteen thousand projects in the ten years since opening their doors to clients. The firm reports working with over 30% of the Fortune 500 and with many of the largest PE clients and their respective portfolio companies. Their typical project ticket size is smaller than the traditional consulting firms, which means they are able to take on the challenges – and the clients – that traditional firms can’t or won’t.
A key challenge facing independent consulting platforms in general has been limitations in institutional support; for example, access to the data bases, industry reports, and tools of the trade that are available at the traditional firms. Catalant, and others, are meeting that challenge by offering clients access to lower cost but highly qualified analysts, enabling consultant utilization all the important knowledge and business databases, as well as production services like presentation design that save Catalant consultants and their clients time and money while helping them deliver the same quality of work as offered by the traditional firms.
Catalant isn’t the only independent management consulting platform in the race to lead Consulting 2.0, but it has the strongest global brand and is clearly making the furthest strides. Most platforms in the space lack the financial and tech wherewithal to continue making the tech investments needed to stay ahead of the game. And, without doubt, it’s a matter of time before the major consulting firms – who already use independent consulting platforms to augment their own project teams – look more seriously at consolidation and bring the lessons and skills learned by pathfinders like Catalant into their consulting firms. Whether these marriages are made in heaven (or elsewhere) will reveal themselves in due course.
In the final analysis, Consulting 2.0 is the logical response to a perfect storm of increasing market demand, strong advances in tech that enable ready access to the best global talent, and a new generation of independent consultants who want the flexibility and opportunity that a community of experts like Catalant provides. Some traditional firms are trying to compete in this new way, but Consulting 2.0 requires a transformation of thought, talent, and process that is tough to create inside an older system that was based on a very different business concept and architecture. It’s a tough slog and we’ll see who else gets there. And as they say, it’s a lot easier to make it right the first time.
Viva la revolution!
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