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News, elucidation and outlooks
on strategy consulting

jeanbaptistehugot1Every two years, Jean-Baptiste Hugot – a journalist and observer of the French consultancy industry for two decades – puts together a new version of his guide to management consultancy firms. Ever since its creation in 1993, the publication has been an essential reference for everyone wishing to fully understand the sector.

Jean-Baptiste Hugot once again shared the backstage stories of his process and his vision of the marketplace with Consultor.

The guide to management consultancy firms covers all of the field’s players with at least 40 employees, providing, as of two years ago, contact details for each company. The most voluminous part of the guide is devoted to the detailed analysis of 86 of the most important firms.

What is new in this twelfth edition?

Firstly, it should be stated that I conduct the interviews for every edition. There can be evolutions at any of the firms. Next, the thing that has changed in the body of the guide is the appearance of new companies. Every two years, some firms appear and others disappear. This time, about twenty companies are making their first appearance in the guide, which is more than the usual average.

As an example, the big success in the strategy consultancy sector is the arrival of Emerton, which is entering through the front door. Two years ago it wasn’t even in the index and yet in this edition it is in the body of the guide.

Another notable change is more flexible and open communication. The trend started with the eleventh edition, and this time it has both continued and clearly accentuated. There are a number of reasons. One of these is the arrival at the helm of a new generation of directors, more comfortable with speaking freely. There is also a new imperative for medium size structures: buyers have taken on a bigger role in the decision-making process, which tends to disadvantage smaller structures.

The model of intuitu personae [individualized] consulting is slowly disappearing. Medium-sized firms are seeking greater visibility to counter this phenomenon. The days of “live hidden, live happy” are gone. Conversely, some firms like CSC no longer communicate. Since the change of management three years ago I no longer have any contact. There are also firms like Mars & Co, which have always been discreet. This is an intentional and calculated strategy, but it is an increasingly rare one.

You have been a privileged observer of the evolution of consulting in France since 1993. What are the main trends that you have been able to pick up on, particularly since the previous edition in 2013?

For strategy consulting, the Syntec has been a small revolution. Some major players such as McKinsey or Bain now sit down together, which is proof of a change in their relation to the marketplace. But the biggest change is the arrival of the Big Four in the consulting industry. They are buying many companies, and not only strategy consulting ones. Generally speaking I am withholding judgment, as there is a real integration issue.

For instance when PwC took over Booz, the latter lost half of its French clients. The reason was simple, they were audited by PwC and were therefore facing a conflict of interests. EY has in turn acquired Greenwich, which is very involved in telecom. Considering that EY is the auditor for the three biggest French operators, it is legitimate to wonder about the future of Greenwich’s activities.

It is necessary to wait and see how this will all evolve, which is actually the focus of my chapter on this topic. I note, for example, that if you look at the Big Four’s actual numbers, they do not grow any faster than those of the rest of the market. External growth provides a false impression of dynamism, which remains to be confirmed. Among the other notable evolutions is the hyper-dynamism of the firms from this millennium. I’m thinking of Sia Partners, of Weave or of Colombus.

Solucom as well, which has chosen a strategy of unbridled growth. Every year, Solucom incorporates a number of firms and it has already reached three times Sia’s size and six times Weave’s. This emergence of millennial players is nothing new, but this year the trend is being very much confirmed.

Regarding strategy consulting, the three big players’ growth rates are hovering around 15% when other historic firms are trending downwards. Is the world changing and are we headed for a marketplace with at most two to three main players?

I would look at it slightly differently. Two companies, BCG and McKinsey, are shattering all counters. Next, slightly to the side, there is Bain, which grew strongly in France for many years, slowed down for a while, and now seems to be growing again. Behind them are Roland Berger and A.T. Kearney, which seem to be staggering a bit.

These are firms that have encountered internal crises, which have necessarily had an impact on their activities. They now claim that their crises of governance are over, that they have stabilized, even though the rumors continue. To be determined…

As for market concentration, I believe that it is destined to continue. To me, looking past this issue, the real change is digital, which impacts every aspect of the economy. Even HR consulting must now take this change on board. Contrary to what is sometimes heard, I do not think that digital changes the very definition of consulting. It is simply a new brick to add to one’s skillset.

But this revolution does have the consequence of attracting players from very distant fields. SSIIs [a French category of digital service providers] have their role to play, of course, because they have legitimacy. But I’m thinking mostly of the pure players. These are highly technological companies who are steadily turning towards transformation accompaniment. This is how companies like OCTO Technology, who have a dual technical and consulting culture, emerge.

The traditional players in strategy consulting are now reacting to this. I was astonished to see that McKinsey is now recruiting hundreds of specialists and becoming an app developer. In fact, I now refer to McKinsey as “the new Accenture”. But in any case they do not have a choice. Their clients are jostled from all sides by the Ubers, Blablacars, Airbnbs… and consulting firms have to keep up with these changes. But careful, strategies still have their place.

Digital is not only about technology. As an example, private citizens can now lend money directly to companies. This is going to change the banking industry, and not only on the purely technological level. Having technical skills isn’t a requirement. You need to be aware of them, know that they exist, understand them, but not necessarily master them perfectly.

Take the Apple model. The clever thing isn’t the iPod, which remains an MP3 player. The difference maker is the economic environment, the Apple Store. And that is pure strategy.

Gillian Gobé for Consultor.fr

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