Although I like to think that I have quite broad musical tastes, the hip hop music of the late 1980s – apparently now considered “Old School” – would feature heavily in my all-time Top 20. However, it is only recently that I realised that three of my favourite tracks from this era have served as personal mantras during my career in management consulting. 

I found that De La Soul’s excellent 1989 hit Say No Go would often start playing in my head during pipeline qualification meetings when it became clear to me that we had absolutely no chance of winning the RFP “opportunity” that we were being invited to bid on. 

Although I started my consulting life working at two global firms, I spent the majority of my career as a partner in a mid-sized firm. I relished the fact that we were invariably the challenger taking on the larger established firms, and would often play Public Enemy’s iconic 1989 anthem Fight the Power (usually at full blast in the car or on my headphones!) to psyche myself up on my way to an important client pitch. 

During my 25 years working in consulting, I’ve been fortunate enough to advise clients on the impact and opportunities created by a series of exciting new technologies. Each technological wave was acclaimed at the time as being ‘transformative’, ‘game-changing’ and heralding a ‘paradigm shift’ (I hope you are ticking each of these off on your Consulting Buzzword Bingo card by the way) and this ultimately proved to be the case. However, the advent of each new technological era was invariably accompanied by an initial period of hype where the claimed impact, capabilities and business value of the new technology appeared to be virtually limitless. Now, for the record, I have never considered myself to be a reactionary technophobe and like to think that I have always wholeheartedly welcomed any innovative new capabilities that could be leveraged by my clients. However, it has always served me well to employ a healthy dose of scepticism during these early formative days of a new technological era, thanks in no small part to my third hip hop mantra, Public Enemy’s 1988 hit Don’t Believe the Hype. 

My career switch from industry to consulting in the late 1990s coincided with the dot.com boom. The internet – and its alter ego, the Information Superhighway – ushered in a new and exciting connected age with apparently endless possibilities. The consulting industry moved quickly to capitalise upon this potential. The firm that I had joined not only sent all their consultants on an “Internet 101” training course but also introduced a new dress code for their male consultants – suits but no ties – presumably to send a clear visible signal that we were down with the dot.com kids (seriously…). Three years after the fervour of this initial hype phase, the so-called dot.com bubble burst, a salutary lesson that even the most innovative technology-enabled ventures need to be underpinned by a viable business model. 

The early 2000s saw the emergence of cloud computing. In the initial hype phase it felt like every consulting proposition now needed to offer “On Demand” capabilities. Today cloud computing and subscription-based business models are very much business as usual. 

Whilst the advent of smartphones heralded the boom in the mobile internet and the emergence of a new generation of connected consumers, in the hype phase many businesses were scrambling to launch their apps just so that they could say that they had one – even though they were often little more than brochureware offering minimal functional value to their users. 

My consulting work in the 2010s was dominated by digital transformation. During the hype phase there was a clamour for everything to be ‘digitised’, ‘automated’, ‘seamless’, ‘end-to-end’ and ‘frictionless’ (surely someone out there must be shouting “Bingo!” by now?). The technology was certainly now available to achieve this seductive vision, but digitally enabling broken processes or inefficient operating models would inevitably result in a suboptimal return on investment. 

Each of these technological waves were undoubtedly transformative, and the step change and business benefits that they created are now baked into our enhanced business as usual. However, each wave was also accompanied by an initial hype phase where there was a risk that their potential capabilities and associated business value became overstated. 

It feels to me that we are still sat squarely in the middle of the hype phase of the AI wave. For consulting firms, the initial opportunity is to provide guidance to their clients to help them make sense of the incredible potential that AI could offer. They’ve developed their “usual” initial offerings of AI strategy and implementation frameworks. However, more so than any of the technological waves that have come before, AI looks set to transform the consulting firms themselves whilst redefining the way that they will deliver value to their clients. In doing so, AI will create both opportunities and challenges for consulting firms and the wider professional services sector: 

• AI will undoubtedly deliver a dramatic increase in productivity for consulting firms by undertaking the ‘heavy lifting’ of research and data analysis in a fraction of the time taken by consultants. This augmentation of the consultants’ capabilities will change the profile of a typical engagement in terms of staffing and timeframe with smaller teams able to deliver value to clients much quicker. That said, a greater reliance on AI tools will also heighten the need for robust governance to ensure that the analysis and associated deliverables don’t result in any IPR infringement. 

• This increase in productivity will however have implications for both the operating and business models of the consulting firms. The larger firms have historically operated with resource “pyramids” with a significant profit margin delivered by the junior ranks who form the base of the pyramid and undertook the lion’s share of the time-consuming research and analysis tasks. With AI now taking over this effort, we are likely to see these traditional pyramid firms morph into “diamond” or “barrel” shaped resource models. Conversely, the boutique and mid-sized firms (typically diamond-shaped) can now take advantage of this new source of analytical horsepower that historically they could never afford to recruit. 

• We are already seeing evidence of this trend with the larger firms reducing their recruitment of graduates and juniors. Longer term this may have implications in terms of how and where they source their senior talent if it is no longer being developed and nurtured from within their junior ranks. 

• Equally, the internal consulting organisations that have been developed within businesses in recent years will be able to use AI to undertake the research and analysis tasks historically performed by the external consulting firms (see Openside’s recent Internal Consulting report here ) 

• AI is also likely to fuel the growth in IP or asset-based consulting. Firms will be able to codify their proprietary tools and methodologies and productise their intellectual property. This could lead to a potential associated shift in the consulting business model from fees generated from billable hours to licence fees and subscriptions. 

However, despite these potentially substantial changes to the operating and business models of the established consulting firms, their clients’ need for their experience, expertise, critical thinking and judgement has never been greater.  At the Openside Group we work with professional services firms to help their Partners and Senior Managers excel as ‘Trusted Advisors’ to their clients. Faced with a tsunami of AI-generated analysis and insights their clients are in need of the support of ‘Trusted Advisors’ now more than ever. Whilst AI can undoubtedly produce a compelling business case based upon robust and detailed analysis, it is just not well equipped to help clients navigate the nuanced world of market dynamics, corporate culture, internal politics, and decision-making processes that all too often default to “gut feel”. Moving forward, judgement and expertise will be at a premium and will underpin the core value that professional services firms must deliver to their clients in the new AI era. 

That said, I mentioned earlier that we still appear to be in the AI hype phase and there is evidence to support this: 

• A recent survey of senior executives by the international recruitment firm, Robert Half, found that 10% of respondents foresee the full automation of their strategic decision-making by AI. ¹

• An INSEAD professor has apparently invented an AI “McKinsey in a Box”. Xavier.ai will  put traditional firms out of business “within two years”, according to its founders, by creating data-rich strategically focused slide decks. ²

In summary, I am sure that AI will prove to be incredibly transformative in its impact on the consulting industry and the wider professional services sector, creating opportunities and challenges in equal measure. But, despite what we might be led to believe from all of the froth and fervour that surrounds AI, the business world will still need and value the expertise, sound judgement and critical thinking of ‘Trusted advisors’. Or, in the immortal words of Messrs Chuck D and Flavor Flav of Public Enemy: 

 “Don’t, don’t believe, don’t believe the hype…..” 

Sources 

¹Robert Half, “Towards the C-Suite 2035” 

² Management Today