It’s survival of the fittest for agencies and management consulting firms in 2019. While it’s no secret that services businesses have undergone a massive transformation over the past five years, I foresee these changes reaching a critical inflection point in 2020.
The big picture: Rapid consolidation, digital partnerships, and major acquisitions in every conceivable discipline have forced the hands of organizations big and small, with large holding companies swallowing up entire firms and micro-agencies popping up in response to company culture that often gets lost in the transition.
Somehow, consolidation has led to fragmentation.
“It’s the beginning of the next wave of change, which is the building and acquiring of digital capabilities. Every one of the ‘Big Four’ consulting firms known for their accounting prowess are now seen as experts in digital. And Fortune 500 clients rely on them to help with these digital transformation projects,” I explained on a recent episode of This is Product Management. “It’s literally more difficult than it’s ever been before for Fortune 500 clients to keep pace with the market.”
If we can identify the next wave of change, it raises the question: what’s the next wave of growth?
I believe 2020 will be the year for managed partnerships between big firms and tech startups, which offers a more efficient path for growth than pure consulting solutions, traditional mergers & acquisitions, or building in-house solutions from scratch.
“Future professional services business models will be focused on capabilities, not companies, and outcomes over billable hours.”
What many savvy consulting leaders continue to realize is that business models are evolving faster than ever.
“People are used to selling service hours, and they’re experts at selling service hours. And now we’re saying, ‘Hey, we’re going to sell product licenses in addition to service hours, partner with us to do that,’” said Adam Judelson, VP of Product at Deloitte, on This is Product Management.
It’s no longer about selling service hours, but instead going to market with products and partnerships. Future professional services business models will be focused on capabilities, not companies, and outcomes over billable hours.
Outcomes Over Hours
As the market changes, product management and a focus on the voice of the customer must become core consulting capabilities.
Historically, consulting and agency teams have used market research, industry reports, and expert interviews to generate customer feedback and prioritize decision-making. The incentive for large firms is clear: large fees are generated from this traditional way of doing business. The value for clients is not: This type of research often solves for only one business case and takes months to complete.
Clients are demanding speed, more targeted consumer feedback, and faster iteration cycles for new concept ideas. Meanwhile, firms must meet those expectations, create products that customers love, become more product-minded, and scale their businesses.
Emerging technologies and partnerships with startups will close that gap.
Eventually, consulting and agency teams will catch up to their product manager counterparts, using customer-centric techniques like idea validation, iterative user research, prototyping and testing, or regularly updating products with user-requested features and functionalities.
Embracing Change and Experimentation with Partnerships
I’ve worked at and partnered with agencies and consulting teams for a little over seven years, and I’ve seen quite a few examples of how product management best practices have helped firms evolve. Here are three of my favorites:
1. Use software to speed up and scale iterative user research, instead of relying solely on in-person interviews and “one-and-done” surveys
Mullenlowe Profero was helping their client, a leading U.S. healthcare system, to better understand their Spanish-speaking consumers’ reactions to their marketing messaging and targeted health content. Rather than spend hundreds of hours and tens of thousands of dollars to conduct individual in-person interviews to ask if the messaging was impactful and culturally relevant, they partnered with Alpha to get feedback from Spanish-speaking patients with niche healthcare conditions on a recurring, weekly basis.
They put the company’s existing website, content, videos, and page layouts in front of the audience, and testing their reactions to each. Then, they took that feedback and created prototypes and mockups with enhancements that consumers asked for. Doing it this way, the Mullenlowe team helped the client ensure that the messages resonated with intended audiences. It also dramatically reduced the costs associated with creating new content and experiences that did not resonate.
2. Prototyping low-res concepts quickly, and testing those often vs. prototyping high-res concepts based on gut feel and never asking users if they’d adopt it
Magenic, a digital technology consulting company, partnered with Alpha to embed iterative prototyping and testing into their toolkit for B2B product development. This rapid testing and learning capability allows consulting teams to build data-driven digital experiences for a variety of clients across industries much faster than traditional user research alone. Plus, by building new prototypes based on data from real users, Magenic’s work gives clients complete confidence that the right mix of features and functionalities are being prioritized appropriately. This approach is cutting-edge given the frequent weekly iterations and sheer volume of testing completed in a very short amount of time.
3. Treating every digital touchpoint with a consumer as a “product” opportunity that should be optimized via testing. Rather than build solutions and hope consumers click, use testing strategies for content and creative optimizations
As the Ad Council began to embrace digital transformation and product management best practices, they faced a familiar set of challenges. Ad Council’s ad campaigns are beloved and well-known — Smokey the Bear just turned 75 this year — but they wanted more control over the messaging decisions. Their nationwide public service campaigns have historically been designed by outside creative agencies based on gut-feeling and creative inspiration, but they felt they couldn’t only rely on their creative agency partners’ expertise to guide decisions.
When the Ad Council partnered with Alpha, they began testing thousands of creative, digital, and messaging related assumptions for each of their 60+ campaigns. They now save hundreds of hours each year by using Alpha to streamline the research setup and execution process, instead of starting from scratch every time.
“We used Alpha to get a pulse on the cultural landscape. We had done a lot of exploratory research a couple years ago but knew that there were a lot of events in recent months that had changed things and we wanted to validate our assumptions,” says Rachelle Reeder, Director of Strategy and Evaluation at Ad Council.
What Will Consulting Look Like in 2020?
Consulting leaders must be open to new ways of working via partnerships, instead of trying to buy or build alone. Leaders should ask where software might augment or support human-led services, and consider partnering with emerging technology firms.
I wish I could tell every Principal, Partner, and Managing Director at every big consulting firm to think like a product manager. Embrace experimentation, encourage account teams to make data-driven decisions based on customer wants, needs, and expectations, and don’t be afraid of iterating with experimental models.
To talk more about changes in the industry or for more information on Alpha’s Strategic Partnerships team, reach out to Chris Kluesener at firstname.lastname@example.org, or on Twitter @chrisklues.