Why boutique consultancies have more at stake in your company’s transformation success

Research across Tier 1 consulting firms aligns on one key point: over 70% of transformations fail to achieve their stated objectives.

What they fail to mention is that these very same firms have been engaged in those programmes that failed 70% of the time. The way they talk about it, you would believe that they are only ever engaged in the 30% of programmes that land transformational success.

As we are well aware, the reality is that their track record is usually no better than yours. You understand this because more often than not it is your company’s transformation that lands in the 70% zone, despite the Tier 1 assurances you were continually given.

As we emerge from Covid-19 it is time to consider what small boutique consulting firms can offer as a true alternative. Small boutique firms are more vested in your success and more driven to achieve your required outcomes as your success represents a bigger piece of our reputation.

With boutique firms, the service you get at the beginning is the same as the service you get at the middle and the service you get at the end.

But the Tier 1 firms, propelled by a combination of need and size, tend to provide a steadily declining level of service.

You should be very alarmed when a partner in a Tier 1 consulting firm says something like, “We want to make an investment in our relationship and provide you with £250,000 in free resource”.

That is a real example from a recent engagement with a tier 1 firm when I was CIO for an FT100 company. On first glance and with limited budgets and lots of demand it’s a really tempting offer. But it’s one you need to stand back from and carefully consider the implications.

The why is very simple. First, let’s look at utilization: every firm has benched resource that they need to find assignments for. Secondly, their pipeline of new business has been weakened by the global pandemic.

What’s misleading is the word free, in fact, I would argue it simply does not exist in the consulting lexicon, it is simply an abbreviation. An abbreviation that in my opinion stands for Fees Recoverable Early in Engagement, which means the investment phase of free resource is simply amortised into the rates for the next phase of the engagement. The investment phase is, in fact, a positional move that makes them the prime choice for the paid phase of the engagement.

Once you have engaged a team on a transformational challenge, you will want to roll forward with that team when it delivers initial success. The risk is that after they swamp you with talent in the investment phase (as it’s critical that this phase over-delivers) then when you move into the second phase the resources will be swapped out for lesser-skilled resource to enable fee recovery, which then places you at risk of transformational failure.

Hiring a Tier 1 firm is like eating a stack of pancakes – at the beginning they’re wonderful, but by the end you’re sick of them.

Shaun Taylor

shaun.taylor@impirics.com

Executive Interim – Chief Transformation Officer & Chief Information Officer