Clients always tell us they want to work with specialists. After all, if the expertise they seek is commonplace, they wouldn’t need to look outside their own organisation for it. Specialists are scarce, and it’s scarcity—always in consulting—that fuels demand. But that doesn’t mean that clients are consistent about what they mean by specialisation... writes Fiona Czerniawska of Source.
In the last year, we’ve interviewed hundreds of senior people about their use of consultants. Inevitably, specialisation has come up. The starting point is always functional/domain knowledge. Got a supply chain problem? What you need is a supply chain expert. Cybersecurity compromised? Hire a cyber specialist. But the advantage of functional expertise can be short-lived because it’s hard to prove. Even when you can demonstrate a decade of—say—supply chain management, it doesn’t necessarily mean you have the skills required to solve a very specific problem. So for many clients, specialisation usually means consultants who understand their industry: I remember speaking to someone in the Norwegian energy industry who said he just couldn’t conceive of paying anything other than the lowest possible rates for consultants except where they could demonstrate a deep knowledge of his industry. Another, in the aerospace sector, still ruefully recalled work done a decade ago by a strategy firm to pull together the business case for a new plane but which didn’t model possible fluctuations in the price of aviation fuel with anything like the rigour the business could have done for itself. Executives in high-tech companies often complain about how hard it is to get consultants whose knowledge of the sector is anything less than six months out of date. Sector knowledge will always be a scarcer commodity than domain knowledge because it reduces the flexibility of a consulting firm (a supply chain expert can work in many sectors, a retail specialist can’t). Put these two aspects of specialisation—the functional and the industry—together and you get something more powerful and compelling from a client point of view.
Specialisation usually stops there, but it doesn’t have to. In our increasingly competitive world even people who combine functional and sector expertise can seem to be two a penny, so consulting firms need an alternative way to explain what makes their specialisations, well, special. The more I listen to clients, the more I think this third dimension relates to the way someone works: not what they do, but how they do it. The retail supply chain expert who focuses on behavioural economics is going to approach the problem of pilfering in stores, for example, in a different way to the retail supply chain expert who relies on advanced analytics. Neither one is better; they’re simply different. To a certain extent, this type of specialisation happens anyway, though often on an informal basis. The difference between our two retail supply chain experts probably only comes to light in conversations with the client. But think how powerful it would be if this specialisation expressed itself at a firm level, if firms didn’t just say, we specialise in supply chain in the retail sector, but in the application of behavioural economics as a means of understanding and ultimately changing the behaviour of employees and customers. Yet, when we ask consulting firms what they do, we almost always get an answer that’s couched in terms of the first two, traditional dimensions of specialisation. Very few firms can explain to us what’s special about how they work.
If the value of combining functional and industry expertise is 2 x 2, rather than 2 + 2, then adding in the “how” to the “what” is the equivalent of multiplying the original specialisation to the power of three. Clients, we’re sure, will be impressed.
Fiona Czerniawska is a leading commentator on the consulting industry and a co-Founder of Source who provide specialist research on the management consulting market to consultants and their clients.
© Fiona Czerniawska 2017. All rights reserved.
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