Why do management consultants need branding? Or do they? Over a series of dynamic decades, consultants have created an engine of sustainable, profitable growth that many of their clients should have envied. The centrepiece is not brand marketing, but a potent 'business model': few physical assets, good cash flow, sound margins, long-term faithful clients, and built-in business development as the customers demand and react to more and different services.
The many concepts (like 'business model') coined and propagated by clever consultants stimulate market recognition as efficiently as any brand. Take 'outsourcing' as an example. It has sped from nowhere (rising 46% in 2003) to capture a third of the entire near-£10 billion UK market. But consultancy is subject to the same pressures of business cycles and competition as its clientele. The key flaw in the business model is lack of differentiation, coupled with ease of entry. Anybody from a high-flying professor to one of a firm's own consultants can set up a new shop - and many do.
Their services can very easily rival or outflank the established leaders. Each new specialism provides an opening for new specialists who rapidly become niche experts, winning worthwhile chunks of the market's growth from the generalists. Any strategic consultant can recognize the right response. If market leaders can't create genuine differentiation in generic lines, the next best thing is to create differentiation in the eye of the customer. But can generalised consultancies hope to create and boost individual brands?
They have certainly tried to emulate marketing models like IBM and Sony, whose brand marketing has achieved the ultimate: top-of-the-market customers believe (in IBM's case, less slavishly today) that the brand guarantees a superior product. In trying the same tack, professional service companies can take heart from past achievements, like consultancy's original big-time British breakthrough.
It was led by McKinsey, which zapped the UK market in the 1960s with a three-fold branding platform. It was American (the US being the vaunted home of superior management). It identified itself with corporate strategy, which few British businessmen then understood, let alone implemented. And its star consultants (very media-friendly) pitched, as like calling to like, to the very top of the very biggest organizations - Shell, the BBC, Dunlop, ICI, etc.
Those four names hardly constitute a roll of honour today. But times move on, management guards change, and strategies that once seemed axiomatic crumble to dust. McKinsey remains one of consultancy's high churches, although challenged by powerful houses of different faiths. While the 'made in America' brand still has value, local competition has made a stirring comeback: strategy is no longer a US prerogative. Later transatlantic arrivals have sometimes found the going heavy - even with the benefit of brandishing proprietary management concepts seasoned back home.
The Boston Consulting Group, with its once-famous matrix, exemplified this branding ploy. It encouraged managements to rearrange their business portfolios; investing heavily in high-return, fast-growth stars, while milking cash cows, fostering potential new stars - and doing no-good 'dogs' to death. Then there was Bain, famed for uncommonly close relationships with the client - most spectacularly in its work with Guinness, where even the finance director was a Bainie, and the fees were mind-boggling.
But corporate reputations are hard to maintain in fast-changing markets, especially if tied to concepts that are more fashionable than fabulous. Thus 'business process re-engineering' took off at supersonic speed as consultancy after consultancy repackaged its work on streamlining processes - always a bread-and-butter line. BPR faded away, though, only to resurface as BPO, with the O standing for 'outsourcing'.
This re-branding is making its mark. Consultancies were quick to argue that merely handing over a few non-core activities to outside suppliers wasn't nearly enough; clients needed refitting from top to bottom to make the best of outsourcing expertise and develop economy-driven relationships into dynamic profit-drivers. The outsourcing boom has also provided needed nourishment for the IT skills whose markets (static last year) suffered as the over-hyped Millennium Bug receded into expensive memory and e-business lost the even more hyped fervour of the dot.com days.
IT still accounts for a quarter of total income. Its most conspicuous supplier has come sailing through after one of the narrowest escapes in all corporate history. After prolonged acrimony, Andersen Consulting detached itself from its accountancy origins and changed its brand (to Accenture) just in time to avoid fall-out from the devastation of its parent by the Enron disaster. Arthur Andersen's agony, though, doesn't prove that branding (its own was the strongest of the accountancy giants) is worthless for professional service companies. Scandalous collapses like Enron's are fortunately rare (though not rare enough), and even McKinsey was embarrassed by its Enron links.
Still, the Enron mess (like the Guinness scandal before it) makes the point that consultancies can get too close to clients for their own brand comfort. Mostly the discomforts are little noticed and pass - like those that attend writing about star clients which (a recent case is BaE) subsequently fall to earth. Adding to the management literature remains tempting as a brand-booster, and potentially valuable; look what In Search of Excellence did for McKinsey - not to mention for Tom Peters. Bonanza concepts like re-engineering, the balanced scorecard and change management (where spending doubled in the UK last year) have all been launched by consultant best-sellers.
Such branding usually wears off. Like drug companies, consultancies must recognize that proprietary products have a limited life, and that generic therapies eventually rule. The business is the brand. To build it, consultants need only follow well-proven lines. Hire the best available talent, and provide excellent training, indoctrination and job challenge. Control costs while boosting revenue by charging premium rates for premier services. Market intensively to the existing customer base. Add new customers (and retain old ones) by continually adding new products and services. Stay highly flexible and swiftly responsive to changes (real and merely faddish). Be scrupulously honest.
If all that is well-known to clients, present and potential, you can forget about chasing a powerful brand. You've got it.
