Your consulting firm will periodically face a conundrum: should you look for more clients who want what your firm provides, or should you pivot your firm to provide what clients seem to want?
Because you are analytical or creative or just like pretty colors, you have created a heat map of problems that prospects have that are even remotely related to what your consulting firm can provide.
The heat map shows the range of problems and highlights where demand for consulting services is highest.
(Even if you haven’t created such a heat map, you probably have some intuitive sense of what it would look like for your consulting firm’s market.)
One, common response to this type of market assessment is to maintain a flexible offering.
However, the vast majority of clients are looking for consultants who specialize in their particular situation. So, as a generalist, you lose far more opportunities to specialist consulting firms than you gain by staying flexible.
In addition, it’s considerably more difficult to scale a generalist consulting firm than a firm that has focused its attention on a specific target and precise, client problems.
Another common response to the market assessment is to claim you’re a specialist in multiple areas.
With multiple specialties, the more spread out they are, the less credible your consulting firm is for any one group of prospects. (“We work in the chocolate and automotive industries” doesn’t give the impression you have a cohesive focus as a firm.)
The obvious solution is, therefore, to specialize your consulting firm. As a specialist, you will know your target market’s issues intimately, can speak their language and demonstrate deep experience delivering the outcome they want.
Unfortunately, by specializing your consulting firm, you may miss the hot spots in the market. In addition, specialist consulting firms tend to calcify very quickly. If your firm has won a number of consulting projects with General Motors’ chocolate modeling division, you may start to think of yourself as an automotive modeling specialist.
Specialists (like most consultants and consulting firms) define themselves by what they’ve done in the past. If the market needs in the future don’t match your past, then you’re stuck without demand for your consulting firm’s capacity.
Hence the conundrum: specialize your consulting firm and end up searching for clients that need your specialty, or be a generalist firm that’s less attractive to prospects?
The best answer is for your consulting firm to act like a self-aware, iron ingot, concentrating your weight solidly in one place while constantly being drawn toward the magnetic pull of market demands.
Specialize and define yourself by market needs, not by what you have done in the past. You can adjust your consulting firm to market changes, you can’t adjust the market.
Always listen to the market. Prospects, contacts and industry publications will clue you in to what how their needs are changing, if you ask the right questions then carefully attend to their responses.
Gradually follow shifts in market needs, without allowing your consulting firm’s focus to become diluted and diffused.
Annually, conduct a Threats & Change analysis. Are client needs altering? What could make your consulting firm’s target market dramatically change? If the market shifts, how will you pivot your firm?
You don’t have to be prepared with fully-baked consulting offerings at the ready for every market change; however, you should at least know some escape routes in case today’s hot consulting offering no longer excites prospects tomorrow.
How do you balance the benefits of specialization with the need for flexibility in your consulting practice?
Text and images are © 2023 David A. Fields, all rights reserved.
Good article David. I’m a big fan of the Where to Play framework for this kind of prioritization exercise. It’s a 3 step process to assess market opportunities and prioritize.
Your piece reminded me of the 3rd step, the ‘Agile Focus Dartboard’: the top opportunity is likely the current specialization, but the ‘backup’ options get a fraction of the attention and bring the agility. The ‘storage’ opportunities are helpful to put to bed so they don’t keep popping up as ideas that won’t die 🙂
I use the framework with my clients to understand which markets they are going after and why, and occasionally to help them select different or new markets if we uncover an issue.
Using a tool to assist your thinking is virtually always a good idea, Ian. The approach you suggest sounds excellent, and the Focus Wheel could easily be adapted for that purpose by either eliminating the segments or using them to note either market directions, threats or conditions for change. (For example, one segment could be dedicated to an economic slowdown, another to regulatory change.)
Thanks for extending the idea of the article and making it better, Ian!
David, would it make sense for me to summarize this as:
1. Specialize when business is hot, until you find your specialty is cooling
2. Generalize when business is cool, until you find a hot specialty
That’s a nice summary, David. I wouldn’t ever recommend generalizing. So, I might slightly revise your summary as follows:
1. Specialize when business is hot, until you find your specialty is cooling;
2. Look for the next heating-up specialty when your specialty is cooling down.
Either way, I love that you’ve come up with a simple, two-step encapsulation of the idea. Great addition to the discussion, David!
Informative, interesting and thought-provoking. These articles are gold. You don’t talk over people’s heads. You communicate clearly and challenge conventional thinking.
I laughed at, “’We work in the chocolate and automotive industries’ doesn’t give the impression you have a cohesive focus as a firm.” Point taken!
I think it’s very difficult for many consultants, despite what successful ones and experts communicate to help, to narrow the offerings down to a niche and segment. The reasoning makes perfect sense yet when the income opportunities are sparse and you have the ability to serve in different capacities, you just don’t know where the vein of gold or river of plenty is at yet.
Michael, you’ve highlighted the crux of the challenge–particularly for very small practices and solo consultants that come out of a generalist background haven’t “found” their niche yet. Giving up anything feels like a bad idea. Keep in mind there’s a difference between how you go to market (focused) and what projects you might take on opportunistically (flexible).
Also remember that you can always change your focus if the current one isn’t working. The mistake is to not even try to pick a focus area. Pick one, drive it like crazy for 6-12 months and see whether you’re gaining traction. If not, shift elsewhere and try again. In consulting, dry wells are cheap to drill. You’re better off digging a deep well and seeing whether you hit oil, than wandering around on the surface wondering where the best place to dig is.
Thank you also for your very kind feedback about the articles, Michael. Your insights and feedback are both, much appreciated.
Michael and David, excellent exchange. One addition, coming from someone focused on sustainability strategy: In these times of climate crises, can you try to drill for water (while being considerate of regenerative practices), not fossil fuels, please?
An eco-friendly post?! Around these parts, the water table is so high that “drilling” for water consists of spooning out a bit of dirt.
You’re right to point out the expression is a holdover from a century of dependence on a non-renewable energy source. Thanks, Franziska.
David, Brilliant as usual. As a marketing consultant to consultants I find that this conundrum can be exacerbated or simplified depending on how it is approached. Often the shiny new interest is really a symptom rather than the real need. Example: “I need someone to fix my web site” versus “The firm’s communications need more focus.” I’ve also found that often the “industry shift” is not well established on a realistic timeline. Specializing too quickly, as you noted can be a mistake. Example: AI is now an accepted practice in major companies and is now being explored by developers for small companies. My approach is to build an in-depth library of information about the current offerings for the “little guy” and monitor, even beta test, some of the more complex products. By blogging on the state of the development as it fits into a complete communicatins strategy, I’ll become a thought leader without tying myself to a very small niche.
Jerry, you’ve called out an important question for many consultants: How long should I try hammering at a niche before I shift to something else? As you deftly point out, you can test your way into adjacent specialties by creating Thought Leadership pieces that stretch past your current area of focus and monitoring how the market reacts.
Thank you for your smart comment and for providing an insight into how you approach the subject, Jerry!
Here is a true anecdote with the names of prominent clients and CEO not revealed.
I was one of final-two shortlisted consultancies at client A. My competitor was a quite capable colleague. I lost because CEO preferred a firm that had only a single specialty (I had several related specialties).
Client B (a year or two later) put out an RFP for a similar assignment. The CEO had moved from client A to client B. I & the same competitor were final-two shortlisted firms, so I figured I was going to lose. Despite my competitor doing fine work at client A, the CEO chose me this time.
I should have asked why I was selected the second time, but didn’t. (I now seek to learn why I win & why I lose.)
1) the CEO wanted diversity in his consulting support?
2) the CEO realized there was a better choice — made a good, but not the best choice the first time.
3) the CEO decided there was high value in retaining someone who was both expert and had a full-scope perspective?
4) something else?
In any event, I agree with your thesis, while maintaining a few adjacent specialties.
Thanks for the case-study, Don. In all likelihood, the reason you won the second round was because the consultant who won the first round didn’t overly impress the client. If that consultant had delivered spectacularly, then the client wouldn’t have gone anywhere else.
I appreciate your illustration of the point, Don!