When Clayton Christensen (ironically, a BCG alumna) introduced the definition of Disruptive Innovation, he predicted that management consulting disruption is still “early in the story”. However, one can see the waves have changed.
Management consulting is a prestigious industry. The whole industry is valued nearly $250B in 2018, with incumbents, like BCG, Bain or McKinsey, delivering their solutions to almost every other existing industry.
Fancy as it sounds, one may forget that management consulting is extremely human-centric, a fact that has not changed much ever since James O. McKinsey founded the firm back in 1926. Company assets are valued by the skillful, knowledgeable workforce, clients are billed by consulting hours, and human consultants are involved in the whole project. The empire of a man-run industry now faces the real challenge: will their existence be washed out by technologies, as many other industries were?
The Status Quo
In a report published by CB Insights, the traditional consulting business model revolves around four pillars Information, Expertise, Insight, and Execution. While some of these pillars are disrupted by other business models and/or shift in customer references, one outstanding trend present: Machine Learning tools and data automation systems will eventually dominate, if not wash out, the need for consulting firms in the Information and Expertise pillars.
This emerging trend is slowly invading the industry. Recently, clients of the Swiss bank UBS can now consult Alexa on their wealth-management tactics, according to an article by Harvard Business Review. In 2017, Harley-Davidson adopted Albert, an AI-driven marketing bot, to analyze and execute online marketing campaigns. Not only Amazon but other AI solution providers, such as Microsoft, Apple or AI start-ups, are ramping up to compete and challenge traditional consulting incumbents.
When one objectively judges the situation, the answer is pretty clear: AI can (potentially) perform expertise consulting better than human beings. AI tools can work relentlessly, while even the toughest, will-of-steel consultants would wear down after long work hours. AI can automatically gather and reach out to the essential data, a task which takes traditional consultant hours, or days, to finalize. Most important of all, AI tools are less likely to be biased. In fact, they are just as biased as their data input.
The future of management consulting
After all, does that mean that MBB firms are dying, and that we as BIM students should not apply for these firms? The answer is unlikely. Just as how consulting firms help change the operations of various businesses, its own business model is likely to undergo structural changes. A report by LexisNexis showed that management consulting firms are responding to the market by more automation in their solutions. The landscape of human resources demand is also changing, as management consulting firms are hunting for data-driven and IT gurus that can adapt and thrive with the new systems.
In conclusion, management consulting will remain powerful and impactful, just not in the exact same ways as it is now.
References
CB Insights Research. (2018). Killing Strategy: The Disruption Of Management Consulting. [online] Available at: https://www.cbinsights.com/research/disrupting-management-consulting/?utm_source=CB+Insights+Newsletter&utm_campaign=3ef8d25153-ThursNL_09_27_2018&utm_medium=email&utm_term=0_9dc0513989-3ef8d25153-90345441 [Accessed 6 Oct. 2018].
Libert, B. and Beck, M. (2017). AI May Soon Replace Even the Most Elite Consultants. [online] Harvard Business Review. Available at: https://hbr.org/2017/07/ai-may-soon-replace-even-the-most-elite-consultants [Accessed 6 Oct. 2018].
Power, B. (2017). How Harley-Davidson Used Artificial Intelligence to Increase New York Sales Leads by 2,930%. [online] Harvard Business Review. Available at: https://hbr.org/2017/05/how-harley-davidson-used-predictive-analytics-to-increase-new-york-sales-leads-by-2930?utm_campaign=hbr&utm_source=facebook&utm_medium=social [Accessed 6 Oct. 2018].
Interesting thoughts, surely. I agree with the statement, that AI powered systems will increasingly offset current structures in the sense that they will undertake tasks that have been performed by consultants previously. However, I believe that is not necessarily a bad thing. That means that consultants are freed from tedious tasks such as research and analysis for example, which account for a lot of time. Instead the consultant can focus on overarching strategic issues or problems that have to be solved – and the more complex and technological our environment becomes, the more complex the problems to be solved will be. Hence, with AI solving current issues, new issues will arise that require – among others – the social capability of a consultant. Finally, I believe that particularly in consulting, the social aspect of human interaction, negotiation and communication is especially critical and won’t be replaced by some Alexa or Watson anytime soon – and as soon as it does, it will complement the processes positively. Nevertheless, I agree that organisations of any kind have to anticipate that development and invest into their employees and their capabilities.
Dear Khiet,
I find your post on AI’s impact on the consulting industry very interesting and intriguing. Having worked in a consulting firm myself I have witnessed the processes and definitely believe that AI will have a great impact on the way consulting firms operate. I agree with you that AI will provide entirely new ways of analytics to virtually any company and that these will to some extend be able to prevent or solve (sub-)problems that are currently addressed by consulting firms.
However, I disagree on the absolutist idea that AI can generally perform consulting better than a human, at least not until we have AGI which outperforms our brains on any dimension. While, AI is able to provide management tools that allow deep analytics of e.g. a companies customers, the general consulting project entails more than just the analysis of one pool of data and an according adoption of business processes. The projects oftentimes encompass multiple business units, with dozens of processes that are not easily quantifiable. Oftentimes, there is also not one correct answer to the broad questions that consultancies aim to solve. An example could be for instance, how to leverage AI in your business? This question requires analyses of various AI solutions and their specific application potential in multiple processes of the business. I believe that we will not see AI taking on such broad questions in the near future.
On the contrary, I think that the vast amount of AI solutions that will flood the market in the coming years will have to be channeled. In this respect I believe that tech savvy consultants can play a key role in leveraging the full potential of AI tools.