Consulting on the Cusp of Disruption

After years of debate and study, in 2007 McKinsey & Company initiated a series of business model innovations that could reshape the way the global consulting firm engages with clients.

One of the most intriguing of these is McKinsey Solutions, software and technology-based analytics and tools that can be embedded at a client, providing ongoing engagement outside the traditional project-based model. McKinsey Solutions marked the first time the consultancy unbundled its offerings and focused so heavily on hard knowledge assets.

Indeed, although McKinsey and other consulting firms have gone through many waves of change—from generalist to functional focus, from local to global structures, from tightly structured teams to spiderwebs of remote experts—the launch of McKinsey Solutions is dramatically different because it is not grounded in deploying human capital. Why would a firm whose primary value proposition is judgment-based and bespoke diagnoses invest in such a departure when its core business was thriving?

For starters, McKinsey Solutions might enable shorter projects that provide clearer ROI and protect revenue and market share during economic downturns. And embedding proprietary analytics at a client can help the firm stay “top of mind” between projects and generate leads for future engagements. While these commercial benefits were most likely factors in McKinsey’s decision, we believe that the driving force is almost certainly larger: McKinsey Solutions is intended to provide a strong hedge against potential disruption.

In our research and teaching at Harvard Business School, we emphasize the importance of looking at the world through the lens of theory—that is, of understanding the forces that bring about change and the circumstances in which those forces are operative: what causes what to happen, when and why. Disruption is one such theory, but we teach several others, encompassing such areas as customer behavior, industry development, and human motivation. Over the past year we have been studying the professional services, especially consulting and law, through the lens of these theories to understand how they are changing and why. We’ve spoken extensively with more than 50 leaders of incumbent and emerging firms, their clients, and academics and researchers who study them. In May 2013 we held a roundtable at HBS on the disruption of the professional services to encourage greater dialogue and debate on this subject.

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