How did consultancies come about?
First of all, the model as we know it emerged after the industrial revolution. In the early decades of the 1900s, to help companies be more efficient. Today, traditional consultancies (management consulting firm), such as Falconi, which is a leader in management consulting in Brazil with more than 6 thousand projects implemented in its 30 years of existence, work primarily with strategy and management.
Currently the largest firms in the world are: McKinsey (founded in 1926), Accenture (founded in 1950), Boston Consulting Group - BCG (founded in 1963) and Bain & Company (founded in 1973). There are also in this market the famous Big Four, as the auditing and accounting firms are called. They are the main ones: Deloitte, EY, KPMG and PwC.
How the traditional model works
Consultants dressed in suits and ties, most of them graduated in first-rate MBAs (Harvard, Wharton, Insead, etc.), organized in teams with junior and senior professionals. These, dive into specific projects allocated during a certain time.
In this sense, they collect information and study the scenarios, access global databases with similar cases, prepare spreadsheets and analyzes that generate a plan to be executed. They present to the senior leadership of the contracting company and, yes, they move on to the next challenge. This cycle is repeated with each new project, except for particularities and exceptions.
Why can this work be relevant and important for organizations?
Right now, I believe that there are several ways to answer this question. We can look at the benefits from the perspective of having an external team, supposedly without vices and bias, analyzing specific problems until elaborating robust analyzes. These, based on data and benchmarks, that help define next steps and create strategic action plans.
The world has changed and the traditional model starts to be put in check
An article from The Economist with the subtitle Disrupting the Management Priesthood (something like Breaking the Priesthood of Management), drew attention to the warning that Clayton Christensen (who was a professor at Harvard Business School, author of books on innovation, consultant and creator of the theory of Disruptive Innovation and Job To Be Done) did seven years ago: “the management consulting industry is on the verge of disruption”.
According to Tom Rodenhauser, who until recently was at Alm Intelligence (a company that analyzes the sector), big companies no longer want to hire legions of people, however smart they may be. They want consultants to execute, including implementing new technologies. Strategy Advice, which are usually rice and beans from traditional consultancies, are losing relevance.
And it makes perfect sense, for example, nowadays nobody can accurately state where the competition is coming from. While Carrefour disputes the market with Pão de Açúcar, Amazon launched in Brazil “Programe e Poupe”, a convenience service that regularly delivers to the home of subscribers, personal care products, cleaning items and food and beverages, directly from manufacturers like Procter & Gamble and Reckitt Benckiser.
In addition, there is a criticism quite present in the corporate world, regarding the absence of real results in practice, as well as the reasons why executives rely on hiring (which is not usually cheap) traditional consultancies.
- Managers / directors need someone to take the blame if the project fails
- They want an external look to endorse change
- Afraid to change
- Much of senior leadership is part of the generation Greed is Good, while Silicon Valley entrepreneurs / executives preach the Customer Centric
- Justify a decision by the current management
- Learn what the competition is doing
- It is politically accepted (do you know someone has already been fired for hiring consultancy A or B?)
- We’ve always done that
In a recent discussion on this topic on twitter, some quotes caught my attention:
Rob Campbell used your account on twitter to say: “I was once invited to give a talk at Consultoria X. I started by asking: 'how many of you have started or led your own business?'. Nobody raised their hand. Then, I announced the name of my presentation: 'Everything is easy when you don't have to perform'. They never invited me again ”.
Geoff Lewis also in twitter announced “I need a consultancy, but to help companies undo / reverse everything that a traditional consultancy has recommended in the last thirty years. If it exists, I invest! ”
Some people remembered Steve Jobs who said in a video available on Youtube, what he thought "of these companies that sell plans": "they are a kind of 2D, because they go up to the beautiful slides and have no commitment with the execution, nor with the results of what they propose" .
New world context calls for a new consulting profile
When we launched ACE Cortex in early 2018, we already had 4 years of experience in carrying out innovation projects with the corporate world. In 2014, while we had a successful startup acceleration program, the main demand we received was help companies connect with startups. Which made a lot of sense to us, given our expertise in digital business and our DNA of Innovation and Entrepreneurship.
Since then, the Brazilian startup ecosystem has matured a lot, as companies have started to realize more and more the need to have innovation hand in hand with strategy. Concepts like open innovation, corporate venture and digital transformation gained strength and constant presence at meetings.
Including, the COVID-19 crisis accelerated the digital transformation and the search for innovation through startups. Today, all companies must be technology companies, just as all companies must put innovation at the center of the strategy. It's a matter of survival!
Companies want - and need - to innovate
Demand has increased dramatically for open innovation, connection with startups, digitalization of channels, new digital businesses, new forms of agile work, etc. In fact, according to a KPMG Global Manufacturing Outlook study, 67% of CEOs affirm that “being agile is the new currency of business, if we are slow we will be broke”.
I remember a meeting I had 2 years ago with one of the most recognized CEOs in Brazil, where he took my arm and said: “LG, ACE Cortex is a new category of consultancy”. I was intrigued and asked to talk more about it.
He continued: “I can't stand working on the traditional model anymoreI need help to think and plan innovation initiatives, I am being attacked every day and I don’t know where the attack comes from anymore, but I also need help to make it happen in practice, in operation, I need help with execution ”. Bingo!
ACE Cortex is a different consultancy
Following Steve Jobs' line of reasoning, I can say that if traditional consultancy is 2D, The new consulting profile is 3D, that is, it has as much commitment to execution as to results in practice.
With ACE Cortex, we put skin in the game (the skin at stake) together with the clients in the execution of the projects. Because we have practical experience from the operational level to top leadership, we develop digital transformation based on the belief that it is about people and not technology, we create new businesses with the potential to be the next wave of the market, and above all, we have a team with practical experience and entrepreneurial mindset (that makes all the difference!).
When Marc Andreessen wrote the famous article “Why Software Is Eating the World”, Published in 2011 by The Wall Street Journal, he sent a message to the world that the digital revolution was happening. More recently, in May to be exact, he wrote a new article, this time with the title “IT'S TIME TO BUILD”. The central point is that it is necessary to leave the bubbles, fiefdoms and truths hitherto established, to make it happen, to innovate, to build.
Therefore, different points of view show us the need for a new way of doing business in this market, and in this sense, the traditional consulting model is put in check.
More than ever, the new context of the business environment demands changes.
How an innovation consultancy helps large companies
New times call for new attitudes, new ways of thinking, new ways of working and doing business. It is not enough to implement agile methodologies or acquire an artificial intelligence bot, which is already enough to innovate.
Scrum is Scrum anywhere, just like kanban is kanban anywhere. If technology is a means and not an end, methodology is also a means and not an end. The way to execute is what makes the difference, how to do it is what makes the difference, generating value for the customer is what makes the difference.
There are few innovation consultancies on the market, if compared to the number of management and strategy consultancies. The focus is usually on an arm of open innovation that is the connection between startups and large companies, through programs with business challenges to be solved.
In case of ACE Cortex, our proposal is a little more comprehensive and holistic. No accident. We learned that any and all innovation initiatives must be related to the company's strategic planning, follow a structured governance to give speed and follow the evolution of the projects, define the KPIs that will be evaluated during the journey and accompanied by an innovation management based on data, find and train the intrapreneurs who become true agents of transformation, support the HR in cultural transformation and, mainly, participate in the execution until the delivery of the results.
Some results of ACE Cortex
We help and generate value for more than 50 customers, such as Natura, BTG Pactual and Gerdau, in three ways:
- Digital Transformation: to increase the company's capacity to adapt and succeed in a changing environment and to do so in a sustainable way.
- Efficiency and New Business: to validate and develop new business with agility and resource efficiency
- Corporate Venture: to innovate from the relationship with startups, but also making investments and even buying top-of-the-line startups (M&A).
In short, I believe that consultancy models will coexist for a while, but that very soon there will be a new composition in the market, where they will survive and achieve real success in delivering results, those who know how to act in this new world context, more digital, more agile, more entrepreneurial.