Why are traditional management consulting companies trying to get into the design and innovation game?
After decades dominating the world of business, the traditional management consulting firms are making strategic additions and extending their offering portfolio to compete with Tech and Design companies in the Digital Innovation game. Some forecast it to be a highly lucrative business that includes apart from consulting, the implementation of multi-million dollar projects over several years.
For traditional management consulting firms, Digital Innovation feels like the natural evolution of their corporate strategy. One in which due to their legacy, can thrive to be seen exceptional again. A reminiscence of an image they created back in the eighties when consultancies were viewed as magicians mysteriously working behind closed doors to solve the most significant corporate challenges. In today’s world, consulting alone just doesn’t cut it anymore.
Same goes for traditional design firms. Design Thinking is more than ten years old. While the essence is still good, it’s a long and expensive process that seems to be no match for more lean and faster approaches. The world of startups is undeniable proof that innovation is not about who invest the most money, but who can create products that people want to buy.
Likewise, Tech companies who are truly closer than anybody at crafting and producing digital innovation, are also trying vigorously to compete in this arena. After all, who could know more about the intricacies of implementing digital products? Agile development has helped these companies to have a more user-centred approach (similar to their design counterparts) and impact the bottom line at first hand. All while Agile continues to make its way into the world of business and management.
Within this context, we see a lot of movement in regards of Digital Innovation and how companies are taking the necessary steps to compete and ultimately dominate this space. To quickly extend their offering portfolio, management consulting firms are strategically acquiring iconic design and tech companies. Same goes for prominent Tech giants who are also participating in the acquisition frenzy.
Have a look at the M&A of the management consulting firms in the last three years:
ACCENTURE > acquires > FJORD and SINNER SCHRADER
McKINSEY > acquires > LUNAR DESIGN and AGILITI
KYU COLLECTIVE > acquires > a portion of IDEO
DELOITTE > acquires > HEAT and UBERMIND
KPMG > acquires > CYNERGY
CAP GEMINI > acquires > FAHRENHEIT 212
PWC > acquires > STAMFORD and BGT
ERNST & YOUNG > acquires > SEREN and IZAZI SOLUTIONS
BAIN CAPITAL > acquires > BERTAFORE
BOSTON CONSULTING > acquires > BRIGHTHOUSE and STRATEGIC&CREATIVE
SAPIENT > acquires > RAZORFISH
Here are some recent Tech acquisitions:
WIPRO > acquires > DESIGNIT
IBM > acquires > EXC.IO, APERTO and RESOURCE AMMIRATI
COGNIZANT > acquires > CADIENT
ARICENT > acquires > FROG DESIGN
While most of the acquired companies play a crucial role in the development of Digital Innovation, the management consulting companies, more so than the Tech companies, face a different kind of challenge: internal change management. Acquisitions make the process of finding and obtaining talent a lot faster, but it also exposes the dangers of a culture mismatch. The most common result are the loss of critical human capital. Usually, key employees who tend to be the most valuable resources in these types of companies. These talented individuals end up leaving the company to either set up their shop, work as freelancers or even get out of the game altogether. A lot of successful startups beget their beginnings to such employees.
A bigger issue is that from a client’s perspective; all these companies are looking more and more similar because of what they offer. The demand for efficient, faster and tangible results is a lot higher, and they all know it. Customers are more willing to pay for real products and solutions, rather than powerpoint presentations and frameworks. Execution and speed are now as much part of the game as consulting itself.
So, who will dominate? Technology, Business or Design?
We put our chips on Digital Business Design agencies which are born out of the modern mindset of lean startup methods, agile development, business model innovation and user-centred design.
Right from the outset, Digital Business Design agencies are created to be company builders. They can easily act as an independent incubator and accelerator of innovation. It’s not just about business, technology or design, but all parts are working together as a holistic system. The result is simple: a much more efficient use of time and budget while developing innovation.
When a company wants to bring a product to market, is in essence, expanding its business. Currently, here is a big disconnect between idea, implementation, and marketing of new products. To great enterprises, most of these parts operate in silos instead of working together. Digital Business Design treats all elements as a whole; this way progress is made iterative, based on evidence and not gut feelings. Another significant aspect, are the use of alternative marketing tactics such as Growth Hacking which significantly reduces the marketing spend while getting more efficient results. The lean mantra: “Build > Measure > Learn,” should be kept at the core of the process and the general mindset.
While the transformation of traditional management consultancies, design, and tech companies is on the way, it will still take some time until they can resolve their differences. Right now, you can experience better results working with Digital Business Design agencies instead. You’ll be pleasantly surprised at finding a lot more action and a lot less talk.
About the Author(s)
Juan Tejeda specializes in innovation and business development.