I took a break from posting here as I started a few new initiatives (which Ill talk about soon). But the break has also given me time to reflect on, and examine more closely, how the consulting industry is changing.
Frankly, this is what fascinates me most these days. I cant get enough of searching for and reading about new consulting business models, pricing, positioning, and everything in between. I’ll share my findings here soon.
One thing Ive been particularly interested in is how consulting firms are changing what they actually sell. Traditionally, its been time, expertise, projects, and deliverables. Today, we’re seeing firms sell ongoing capacity, embedded leadership, operational execution, working software, and access to specialized expertise.
Some of this feels like old wine in a new bottle.
But some of it represents a more interesting shift, particularly consulting firms developing and selling their own software. As firms incorporate AI into their operations and offerings, theyre also developing reusable accelerators, tools, and technological building blocks that can be deployed across multiple clients.
The economics are intriguing. Build something once. Use it repeatedly. Reduce the marginal cost of delivery. In theory, that creates an opportunity for significantly higher margins. But theres another force at work. Clients are increasingly aware that consultants are using AI, and the pricing conversation is changing. (“If youre using AI to do the work faster, why should we pay you the same fees?”)
So we have two potentially competing forces: technology that can make consulting more profitable, and clients who expect some of those efficiencies to be reflected in pricing.
Which business models will win? Which will be most profitable? How will they be sold? I think its too early to tell. But the more I examine these changes, the more I come back to something Ive believed for a long time, which is…
No matter how you package your offerings, how much technology you incorporate, or what pricing model you adopt, differentiation and profitability ultimately come down to three things:
– Deep domain expertise. What do you know exceptionally well?
– Intimate market knowledge. Which industries, markets, and customer segments do you truly understand?
– How you define problems. Which problems do you choose to solve, and how do you frame them? These are the foundations of a highly differentiated consulting offering.
AI may fundamentally change how consulting work gets done. Tech may change the economics of delivery. And new business models may change how firms generate revenue.
But I dont see these three foundations changing anytime soon. If anything, I suspect theyll become even more important.
Thats what I’m most interested in exploring as I return to writing here. Not simply whats changing in consulting, but what those changes mean for the people building and running consulting firms.
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