- Management consulting news
- 14 September 2015
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The major strategy consulting firms forged tools that left their mark on the evolution of management throughout the 20th century: the “Five Porter Forces” (Monitor Group), the “growth-share matrix” (BCG), the “supply chain” (Booz Allen Hamilton) or the “7S framework” (McKinsey).
In point of fact, these tools also played a significant part in the firms’ auras. But has this burst of creativity run its course? As in other areas of the old economy, the debate is now focused on innovative fertility… and on how its flame can be kept burning.
Was innovation better before?
Is the rhythm of innovation decelerating? This seemingly – but deceptively – simple question has kept the economic milieu busy for some time. Peter Thiel, the American high-tech entrepreneur and investor, has summarized the “pessimistic” point of view: “We wanted flying cars, instead we got 140 characters.” A terse formula to bemoan the current lack of “radical” innovations in contrast to “incremental” ones.
Indeed, innovation specialists distinguish between truly revolutionary inventions, such as electricity and antibiotics, and minor improvements, such as the “staggering” and “prodigious” new xPhone13, whose screen is six millimeters bigger than the xPhone 12’s.
The pessimists, then, consider that radical innovations are becoming increasingly rarified, notably because companies facing short-term profitability imperatives are reluctant to invest in long, costly and inherently random research projects. The “optimists” quote the number of patents filed each year or the heretofore-unprecedented amounts invested in venture capital. And the bravest of souls go so far as to foresee the coming advent of the “singularity”, a new era in which artificial intelligence will support human genius and lead to an exponential rate of innovation.
Behind the academic controversy (1) lie some major stakes: without innovation there can be no gains in productivity, and therefore no unlimited growth. Capitalism’s theoretical framework hangs precariously in the balance.
Strategy consulting firms: has the well run dry?
Strategy consulting firms have of course positioned themselves as fervent defenders, and actors, of perpetual innovation. “Creative destruction”, near and dear to innovation economist Joseph Schumpeter’s heart, is their mantra and, so to speak, their business.
René Abate, a senior advisor with BCG, stated last month in an interview with Consultor: “The marketplace won’t fade so long as consultants keep bringing new ideas to the table.” But what was strategy consulting’s last new idea? There have been thousands, some will say. Certainly, yes. If each firm was asked, no doubt it would pull out a long list of recent concepts, more or less skillfully packaged.
But are these numbers themselves not a confession? An admission that no single idea is sufficiently revolutionary to gain a foothold comparable to those of competitive advantage (Monitor), the experience curve (BCG) or core competencies (Bain)? But the consequences of consulting firms losing their inventiveness would be substantial in this era of unbridled competition, in which audit firms, computer engineering companies, investment banks, communication agencies and equity funds all claim to now “offer consulting (2)”.
No innovation without soul-searching
Innovation therefore remains, and undoubtedly will remain, the mother of all battles for numerous strategy consulting firms. Just one problem: innovation cannot be decreed and cannot be bought, as proven by Kodak and Yahoo. It can, however, be encouraged by setting up auspicious conditions. Here are a few leads.
Openness, for starters. Innovation in isolation simply does not work. At this time, the most innovative companies deliberately organize their porosity: “innovation labs” open to clients, partners, students and even competitors; “hackathons”; foreign recruitment… all means are good to break down barriers. Some consulting firms are attempting it.
Francis Rousseau thus implemented artistic residencies within Eurogroup, with the stated goal of shaking up conservative attitudes. But many stumble on a jingoistic internal culture. Yes, the pride of belonging serves consultants well in times of turmoil. But when taken too far, that same pride can lead to the fearsome NIHS, “not invented here syndrome”, the organizational gangrene of innovation. Next up is risk-taking.
François Reichelt, one of the inventors of the parachute, jumped off the Eiffel tower to test his creation. Sadly, it was not quite ready. But that is the way of things: innovation demands that chances be taken. Conversely, taking a walk on the “up or out” trails cleared by most major consulting firms requires that risks be carefully avoided.
Be they associates choosing their clients, team leaders assembling their teams, or consultants selecting their missions, all will focus on security, within systems that encourage them to do so. Failure must therefore be less punishable, at least when it comes as a consequence of audacity, if risk-taking and innovation are to be encouraged.
Finally, diversity. Leonardo da Vinci’s Florence, Freud’s Vienna or Steve Jobs’ Silicon Valley have one thing in common: they drained talents from all horizons – “misfits, rebels, troublemakers”, as the last of the three justly hailed them. A true diversity of gender, culture, origin and experience is the primordial soup of new ideas.
The Benetton picture from many firms’ recruiting process is merely a simulacrum. These questions are at the heart of the major firms’ discussions about their internal organization and HR model. Economic Darwinism, the very banner they proudly raise, will determine whether they were able to address them with sufficient speed.
Charles René for Consultor.fr
1."The great innovation debate", The Economist, January 12 2013 and "What is wrong with the West's economies?”, Edmond S. Phelps, August 13 2015, The New York Review of Books
2. Le conseil est -il un accident de l'histoire ?, Nicolas Colin