Re-invigorating your consultancy business

Mike Exon asks business thinkers and luminaries for the inspiration to help differentiate your design consultancy, but , he says, you will still have to take risks

How many times have you heard someone complain that ‘consultancies are all the same’? (If the answer is ‘never’, try asking a friendly design journalist for an objective view).

The fact is businesses in the field of design are remarkably similar. If you took the names off all the consultancy brochures, would anything really distinguish one from another? Such similarity, if it exists, raises some serious questions for the industry.

Business luminary (or should that be guru?) Gary Hamel doesn’t give you very favourable odds if the above is true. He’s been asking one big question recently: how likely is it that your business will outperform its rivals over the next few years?

In an unfortunately all too rare UK seminar last month, Hamel opened himself up to interrogation by a clutch of senior executives. The aim was to thrash out a few issues; to get some things straight with the guys at the top table. Most of them, it’s fair to say, went away imbibed with Hamel’s call to arms: ‘let innovation flourish’. All were unsettled. They couldn’t answer his first question.

You need only look at the design industry to see that businesses grow in clusters. They reach similar sizes, offer the same kinds of products and services, sport identical structures and employ people who play football at the same time, same place every week. Key metrics like their operating margins and rates of revenue growth also bunch together. This result is what Hamel describes as ‘competitive stalemate’. It’s a shortcut to mediocrity and even failure.

‘Design consultancies and others in creative services are having to work out how they are going to survive and prosper in this new world and some are tripping up badly,’ admits Design Business Association chief executive Ian Rowland-Hill.

‘Convergent technology and increasing competence have both reduced the real points of difference between design consultancies,’ he continues.

‘There’s greater acceptance that there is very little to choose between many design groups on the basis of their skills. It boils down to how well their teams work with the clients’ teams. This has meant that design consultancies are having to find new ways to differentiate themselves,’ he says.

There’s that word again – differentiation.

Ian Worley, the former creative lead of e-business group Viant, invested considerable time in building a new model of consultancy, which fused creative, technology and business strategy skills together. It was a truly innovative style of business, replicated by hundreds, even if a little disavowed in this post-E era.

Worley makes the point that ‘difference is a function of risk’ – in other words, the more you are willing to take a calculated gamble, the more you can break new ground.

‘What seems to happen is that as a business moves from being a demand-led organisation to a supply-led one, heavy with process and method, the level of risk goes into free fall. Companies simply stop taking risks,’ Worley explains. This regularly happens when independent groups are taken public, or acquired by public companies, where shareholders are king.

Breaking what Hamel calls the stalemate comes down to forcibly changing what your business does and how it does it. It’s about being distinct and breaking away from the strategy convergence that seems to dog so many. Rethinking the fundamental concept of a business doesn’t just mean growing grass in your lobby or buying some Castigliani lighting either. It’s about reviewing your product, your customer needs, your structure and the ways you generate revenue. It’s about being innovative with your business. Redesigning the whole notion of a design group, in fact. And the bad news is that it’s much easier not to.

To reinforce his thinking Hamel presents some evidence from a recent Mori/ Gallup survey, in which chief executive officers voted ‘new competitors’ in their industry as being the most effective at taking advantage of industry changes (traditional competitors lagged bottom of the pile). These new entrants, he says, are businesses like EasyJet, Red Bull, Vodafone, Dell and Pret A Manger.

The reason attributed to their success by voters, in two thirds of cases, was their ‘changing of the rules’. Not innovating is not an option it would seem, unless you want to get left way behind.

Hamel is a great thinker and strategist, but no magician. He has no super-safe prescription for transforming businesses. How could he? His one plank of advice is to be wholeheartedly receptive to innovative ideas from within (and without) an organisation. Historically, he claims, there is no magic formula to seeding the next business-transforming idea like a Playstation or a Body Shop. These innovations happen more by chance and certainly irrespective of the organisations from whence they emerge.

But there is something to be done, wouldn’t you say? This is the ideas business after all. We innovate, design, create and offer inspiration to our clients, don’t we? More than anyone in traditional big businesses, the creative minds of this industry know a thing or two about dreaming up the future. Isn’t it time we applied a bit more imagination to our own businesses?

Survey of chief executive officers

Over the past ten years, which companies took best advantage of changes in your industry?

New competitors 38%
My own company 31%
Traditional competitors 26%
Other 5%

Have the most successful newcomers in your industry succeeded by:

Executing better 31%
Changing the rules 62%
Other 7%

Gary Hamel says:

Today’s media overload means it’s impossible to know more. Now you have to know different

Economic prosperity is a function of the number and quality of connections between people

How do we build organisations that are worth dedicating our lives to, because that is how we live today?

Organisations are failing at an unprecedented rate

Books celebrating the past are becoming irrelevant because the world is changing so quickly

People dramatically over-estimated the power of the Internet in the short-run, but have under-estimated its long-term power

You can’t get outlier financials without an outlier strategy

Strategies are going to die faster than ever before

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