Digital Disruption in Strategy Consulting
All industries have been affected by digitalization. In sector after sector, companies are coping with a changed world in which power has shifted to the customer, decision-makers have access to knowledge, and cognitive labour is becoming automated. The leaders of nearly every industry are discussing and analysing the risks and opportunities of digital disruption.
Strategy consultants have been on the case, of course, but mostly as it affects our clients. However, I believe we’re already seeing the impact of three big shifts that will redefine strategic advisory business:
1. Democratized access to data and knowledge: Search engines, report libraries, APIs, online training courses, and expert networks ensure that anyone can access information, irrespective of how niche it is. A variety of different frameworks and best practises are now in everybody’s reach. To be frank, the challenge executives face nowadays is no longer getting information but filtering all the noise and drawing the most relevant insights.
2. New types of competition: Uberization has now entered the knowledge worker’s territory. More and more platforms match customers with freelance consultants who have specific domain knowhow. These lone wolves don’t have any administrative or marketing overhead, which pushes their prices down, commoditizing the more hands-on aspects of the industry. At the same time, the technology services and even service design firms are pushing into strategy consulting. However, these companies still have a few blind spots in their capability repertoire, such as missing some of the key finance- and strategy-related skills.
3. Sophisticated tools for everyone: Thanks to cloud services and affordable ‘pay as you use’ monetization models most companies now have access to advanced analytics and AI solutions, regardless of their size and financial muscle. The breadth and depth of these services is amazing – AWS even offers satellite ground stations as a service. Strategy firms are also profiting from these systems, which mean we no longer need a team of AI researchers to use the latest machine-learning algorithms. However, interpreting all that data is not as easy as it seems, particularly when it comes to identifying a truly strategic opportunity.
As these digital capabilities change the market, the value proposition of strategy management firms will have to change too. None of the old fall backs alone– proprietary data, specialized expertise, advanced analytics – will be a source of sustained competitive advantage. Yet we aren’t about to close our doors at August. Instead, these big shifts are making our own value proposition clearer than ever:
Fresh ideas and cross-industry insights. In most businesses, the commodity that’s in shortest supply is fresh, actionable ideas, and that’s not going to change. Big Data by itself will simply level the playing field for operations; it won’t necessarily tell us the right questions to ask or the better way to compete tomorrow. Furthermore, one of the most valuable aspects of working with a strategy consultancy is that such firms generally have experience across multiple industries and therefore can creatively cross-pollinate insights between industry sectors.
Structure and clarity. A valuable strategy consultant filters knowledge from the noise, directing the customer’s focus to the things that truly matter. The findings must be structured and communicated in a way that helps lead senior executives to the right decision.
A trusted advisor. As human beings, we all have a need to share our problems with someone we trust, who understands our situation. Business leaders need the same thing. Successful executives have always needed someone who can put himself into their position and offer objective, fact-based advice that won’t affect the dynamics of the boardroom, the shop floor, or the sales office.
This last point is crucial. Understanding the severity of a situation and sharing the client’s concern is an important part of helping the client solve their problem. I would even say that the key characteristic that distinguishes August and other above-average strategy firms is empathy. Over time, a good strategy consultant becomes a trusted member of the team, close enough to the company to see the challenge but distant enough to be able to bring the business’s leaders fresh insights about how to solve it.
Learning as we go
At August, I believe that the greatest value we bring to our client in this new era is the core of what we’ve always tried to bring: our empathy, our understanding of the challenges they face, and our dedication in helping them find better ways to serve their customers. We don’t have all the answers yet – no one does – but by working shoulder to shoulder with you, I’m confident that we will be able to figure it out together. Even in the digital age, the old Finnish saying still applies – Työ tekijäänsä neuvoo – work teaches the worker.