Voxzen Consulting Group: Rethinking the consultancy business model!

Jan. 27, 2013 - PRLog -- Voxzen Consulting Group: In recent years, though, there has been a healthy crop of medium-sized firms, and a number of factors have fuelled this: partners going it alone after industry consolidation, a greater adventurousness among consultancy buyers, and the rich pickings available in the public sector. But in a stagnant and uncertain economic climate, these firms are once again finding out just how hard it can be in the middle.

“Larger firms are growing rapidly, at about four to six per cent a year, while medium-sized firms are experiencing zero or negative growth,” says Phil Walker, managing partner of consultancy Summerswood, which has recently formed a joint venture with corporate finance house Restoration Partners to target this troubled sector.

“All services businesses are at a crossroads,” says Walker. “They are under pressure, but they can’t just sit there doing nothing and wait for something to happen.”

Walker, whose background includes stints at PA Consulting and IBM as well as six years as COO at Capgemini, hopes that combining his sector experience with the “financial dexterity” of Restoration Partners will be able to help medium-sized firms to unfreeze themselves and start a process that will enable them to achieve their ambitions. This will often mean recognising that Plan A, whatever it was, is no longer an option.

“The world has changed—this could be the new normal,” says Walker. “You need to construct a different consultancy model rather than hope for another Y2K to come along.”

One way that Restoration Summerswood hopes to help is by exploiting its contacts with the big firms to develop opportunities for collaboration or possibly acquisition.

“There’s still a war for talent in the top firms—some have been stealing entire practices from other firms,” says Walker. “If you have a serious niche practice, it could be a very juicy morsel for a big firm to acquire. It makes financial sense for them to take 10 or 20 people in one go rather than spend a year recruiting.”

However, Walker stresses, this is not in any way a simple transaction: it will be important to assess the cultural as well as the economic fit of the two firms.

“If, say, IBM buy your firm, you will go from being an owner to a vice president reporting to a senior vice president,” he says. “We will help clients on that emotional journey—or it could be that selling to IBM is not for you.”

A firm that wants to continue as a stand-alone needs to carefully consider its options, particularly now that public sector work has more or less dried up and shows no sign of returning in the short term.

“You might look cross border,” says Walker. “The larger firms have used their global leverage to shunt people off to the Middle East and South Africa. There’s also a very large consultancy firm which has a huge project in the Middle East it can’t resource, and is looking at mid-sized firms to supply that. It’s not an acquisition but a more flexible type of model.”

Collaboration need not be restricted to the consultancy sector. Walker points out that many medium-sized accountancy and legal firms are suffering from the same kind of stresses:

“You need to ask, what is the nature of consultancy going forward,” he says. “Some of the large legal firms now have a consultancy firm: you need to look at the services dynamic, who is talking to clients, what relationships do you have. Somewhere along the line someone is going to join up the dots.”

For a sector that specialises in change, consultancy can be remarkably conservative sometimes. So it’s good to hear a fresh voice that is both broadcasting the need for firms to rethink what it is they are trying to achieve, and offer practical assistance to achieve it. There’s no reason why medium-sized firms can’t be successful but as Walker points out, the days when you could draw a Boston matrix and clients would think you were a miracle worker are long gone.

“The consultancy market has changed,” he says. “A third of the top 100 CEOs have been consultants, you need to be highly differentiated to gain attention.”

Walker clearly believes in the potential for the medium-sized consultancy sector to reinvent itself. I hope he’s right. Considering the amount of high quality consultancy talent that is concentrated there, we can ill-afford for it to languish or become demoralised.