Over the long term, is your consulting firm better off contracting with clients to deliver advice or digging into nuts-and-bolts implementation assignments? The answer may surprise you.
As a consulting firm leader, important strategic decisions rely on your wisdom. You’re familiar with many of these important, sometimes confusing crossroads, such as…
Should your firm focus on advisory engagements or implementation projects? Bill by the hour, charge value-based fees or sing karaoke for tips? Serve pinot noir at the holiday party or small bites of Roquefort?
There are pros and cons to each choice.
For instance, clients allocate far more budget to implementation than to strategy. That’s why the largest professional service firms in the world are all implementation-focused and those firms are at least ten times the size of even the most prestigious, well-known strategy firms.
In addition, implementation projects are often longer—occasionally years in duration, and implementation is more easily scaled than is advisory work.
Advice-focused consulting firms, in contrast, can typically command much higher margins and are less susceptible to commoditization. Also, because strategy consulting is often viewed as sexier than implementation, advisory firms may attract the “best and brightest” employees away from implementation consultancies.
Given the benefits and drawbacks to each side of consulting, is it better to focus your consulting firm on winning advisory engagements or on implementation projects?
Your consulting firm will fare best if you choose one of those avenues (or, the oft-forgotten middle road: developing implementation plans).
It doesn’t really matter which one you choose.
There is so much consulting work available and so many ways to build a profitable, successful consulting firm, that you don’t need to introduce false choices and unnecessary stress.
If you’re like most readers of these articles, your firm is under $100M and you’re swimming in a sea of opportunity. Whether or not your firm is currently struggling to land projects, there is a lot of consulting business being signed right now.
You’re in a huge, stocked wine cellar with rack upon rack of pinot noir and, as it turns out, a massive spread of Roquefort in the middle. Just choose one and enjoy!
Combining the two, though… not a good idea.
You may have been thinking, “C’mon, David. My firm can—and does—advisory work and implementation. Can’t we enjoy the best of both worlds?”
No. At least, mostly no.
Your consulting firm undoubtedly mixes at least a thimbleful of advice and implementation into every engagement. In a “strictly advisory” relationship, you may sneak in a bit of implementation by drafting a document for your client or managing governance of an initiative.
Conversely, if your consulting firm has been hired for a purely implementation role such as running a training session, developing a communication campaign or project-managing a major initiative, you’ll contribute off-the-cuff advice and possibly develop a plan.
A little bit of overlap—say 20%, works well.
However, building your consulting firm into a practice that delivers “end-to-end” services is a bad idea.
Advisory-focused consulting firms and implementation-focused consulting firms require very different delivery skill sets, organization designs, pricing structures, compensation plans, and management philosophies, just to name a few areas where the two types of firms differ from each other.
Therefore, rather than fretting over whether your consulting firm should operate on the advice or implementation side of consulting, focus your (or your leadership team’s) attention on the following two questions at least twice every year:
Two Questions to Answer Semi-Annually
Are We Right-Side Up?
Are my firm’s offerings totally focused on what our client base most wants to buy, or have we drifted into offering what we think clients need, what we think is intriguing, or perhaps, what one client asked for?
Are We Focused?
Are my consulting firm’s offerings and engagements at least 80% focused toward one side of the consulting value chain (advice/strategy → plan → implementation), or have we slipped toward trying to provide end-to-end services?
When your consulting firm stays Right-Side Up in your approach and offerings and you constrain the types of services you provide, you’ll find your path to success has few limits.
Take a moment to advocate for offering advice, developing plans or implementing: What do you enjoy most about the type of consulting that your firm offers?
Text and images are © 2023 David A. Fields, all rights reserved.