Consulting in the Age of Disruption

How do you stay in business when the tools of your trade are always changing?

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The curious strategy of sticking your head in the sand…

It’s human nature to change, adapt and reinvent in the face of life’s little challenges, just as it’s human nature to hate having to do it. It’s waaaaaay easier, at least for a time, to run your business the way you’ve always run it, to rely on the same strategies and tools that have worked in the past, and to eat, drink and be merry like you did in your twenties. So – heart attacks and liver disease be damned – we only change when we absolutely have to. The problem is that profound economic and social transitions are coming faster than ever, and we absolutely have to reinvent ourselves to keep up.

The Age of Ridiculous Disruption

Today we’re experiencing unprecedented disruption across all sectors. Wharton recently looked at the turnover rate of Fortune 1000 companies over the last 40 years, starting from 1973. By 1983, about one-third of these companies had fallen off the list. By 2013, 70% of the companies were replaced by new ones. Their conclusion: the pace of change will continue to increase, with only a third of today’s major corporations expected to survive the next 25 years.

In 2013 the Harvard Business Review wrote a nice piece examining why the consulting sector was immune from disruptive change for so long, the point of which is that it isn’t any more. Consulting firms – both strategic and operational – are just as subject to marketplace disruptions in technology, social megatrends, alliances and legislation as every other sector. As such, consultancies face the same two broad options for dealing with disruption:

  1. Meet change head-on by evaluating and then implementing most-likely-to-win strategies to adopt disruptive new technologies, create surprising alliances, serve different verticals, rely on modularized products/services, etc. etc. etc.; then analyze the results and pivot quickly when necessary.
  2. Pretend it’s not happening and that your business will be just fine the way it is, thank you very much.

A Case Study: The Alberta Water Tool

This summer a new Canadian technology was released with the effect of disrupting the status quo in decision-making about water use in Alberta, a province whose major industries (oil, gas and agriculture) require substantial amounts – sometimes in conflict with landowners, communities, First Nations, and the environment.

Designed for scientists, industry explorers, communities and government decision-makers, the Alberta Water Tool provides real-time information on surface water resources, existing water allocations, and the needs of the natural environment through a point-and-click map that allows users to select a specific stream or waterbody, and generate a comprehensive, up-to-date report in seconds.

That last bit is critical: this disruptive new technology takes seconds to generate a report that used to take consultants 3-4 weeks to prepare. The price point for the service is about 5% of the cost of traditional information gathering, analysis and report writing activities.

So far, the uptake of the service has been mildly surprising. Government scientists and decision-makers are embracing the new tool, seeing immediate value in vastly lower cost for vastly faster delivery of the same quality. At the same time, consultants who serve the sector have been much slower on the uptake – the only common reason cited being a sheepish “It’s new and I’m busy.”

On the other hand, a few consultants, known for their innovative approaches to problem solving, have adopted the Alberta Water Tool in favour of old data gathering and analysis methods, charging their clients the same rates despite the drastically reduced cost. Good on them; this entrepreneurial spirit will keep them alive as their sector continues to change in perpetuity. The other guys? That remains to be seen; the technology is new, so there is yet time to catch up with the innovators… Maybe.

Disruption is Inevitable

fast-car-emailRace car driver Mario Andretti said, “If everything seems under control, you’re not going fast enough.” He might just as well have been talking about business complacency in the face of change.

The pace of change faced by the consultant sector will continue to accelerate, with devastating effects on providers that don’t keep up. If you’re running a consultancy and you’re inclined to be sanguine about disruption, well, okay-cool. But ask yourself: is your company changing as fast as your most demanding clients?

by David Sovka
david@foundryspatial.com