In May 2012, Clayton Christensen, the Harvard Business School Professor (HBS) who created the business concept of ‘disruptive innovation’, authored one of his final books, ‘How Will You Measure Your Life?’ More than a year later, in October 2013, he published a seminal article, ‘Consulting on the Cusp of Disruption’. In hindsight, a decade later, that period represented the start of an almost-perfect storm of disruption for the global management consultancy industry, the tailwinds of which have only intensified since – but for the art of strategic counsel, does that really matter?
For what can seem like time immemorial, the art of strategic counsel has existed from the courtiers and viziers of yesteryear to the trusted strategic advisers and management consultants of today. But the management consulting industry itself, as recognised today, did not really start till 1886 when Arthur D. Little at MIT conducted his first technical research in chemistry, later incorporating in 1909 what was to become the first management consulting firm with an aim to improve corporate processes, products and services.
The most prestigious core of management consultants were established soon after: first with Booz Allen in 1914, McKinsey in 1926, Boston Consulting Group in 1963 and Bain in 1973. The latter of these three, usually referred to by the acronym MBB, had a total combined revenue in 2019/2020 of USD $23.6 billion with an average of USD $397,000 in revenue per employee.
Several months after Professor Christensen published his 2012 article, the reality of that disruption hit far closer to his home – that is, his tenured home of Harvard. In 1983, six entrepreneurs with close ties to Harvard Business School had set up the Monitor consulting firm. One of these was Michael Porter, the famed Harvard Business School Professor who is credited in 1979 for creating Porter’s Five Forces analysis, a framework which historically became instrumental in business strategy development, particularly with its emphasis on a sustainable competitive advantage.
Monitor grew, till in November 2012, a few months after Professor Christensen’s article was published, it filed for bankruptcy, blaming the ravages of the 2008 global financial crisis. It was sold to one of the Big 4 accounting giants, Deloitte, in January 2013, and relaunched as Deloitte Monitor.
In examining why Monitor went bankrupt, one thesis stated that it could actually be explained by Professor Christensen’s disruptive innovation concept. Simply explained, disruption innovation is where a new entrant, such as Whats App, enters a market, such as instant messaging, and using innovation displaces market leaders, such as the once-ubiquitous Blackberry Messenger (BBM), demonstrating that any competitive advantage is not really sustainable if it is not creating value for the customer.
But the implications of this were clear, that, as a whole, the management consultancy and strategic advisory industryitself was being subject to disruption, and Monitor’s bankruptcy was just the most visible example of that. Disruption is really crisis in slow-motion, and if for people, a crisis does not build character but reveals it, then for corporates and institutions, it does not build culture, but exposes it. Therefore, the disruption which the management consultancy industry has faced, for the past decade and more, is not one which is ultimately a reputational issue, or a strategic one, but rather a governance one, with the period ripe for providing lessons which the industry as a whole can benefit from.
The first lesson relates to the underlying reasons behind external perceptions of the industry. By rights, strategic counsel constitutes influence behind closed doors, as clients sharing confidential details about their institutions, their problems and ambitions in order to help the trusted adviser help them solve them or achieve them. It is more about what happens when that counsel, and its application, is exposed to the disinfectant of sunlight; can it bear the intense glare? In instances when this counsel is publicised, and the media, public and key stakeholders react, the only real reason for any consulting firm to be on the defensive would be if their counsel was not intellectually-rigorous, based on sound facts, and provided with genuine integrity.
The second relates to corporate governance. At a time when global issues like the UN SDGs, Global Goals, Net Zero and ESG are becoming more institutionalised at both a national and corporate level, many consulting firms still have an almost-exclusionary mission on just helping their clients. This laser-like precise focus today, at the near-complete expense of other stakeholders of society, not only looks highly anachronistic, but actually by definition is potentially dangerous, as some firms not only choose to put the client’s interests ahead of their own.
If the client has a malevolent intent, and the management consulting firm has agreed to be of counsel, that intent can manifest as being dangerous to the society, economy and potentially, the planet. From a governance perspective, a true upheaval is then required at the very core mission of the consulting industry itself.
The third lesson relates to management consultants themselves. The combined global total of MBB staff globally is over 55,000. One of the key criteria for a typical firm historically had been recruiting the best and brightest, usually headhunting from top-tier universities; so, with their significant growth rates, if that it is taken as a benchmark, how much has the talent base of these firms broadened today, and therefore been potentially diluted?
Moreover, the key services of many firms has not only expanded to include the realm of delivery, execution and implementation, but digital analytics and digital design as well. The end result, by necessity through expanding and broadening both the talent and service base, has resulted in, not as per the title of McKinsey’s 1997 book, ‘The War for Talent’, but rather a war on talent.
The dilution of the talent base in the industry has never had more dangerous consequences than when a management consultant, as per his ex-officio rank, provides strategic counsel which is not only counter- productive, but then implemented and moreover publicised. A Middle Eastern proverb states, ‘A foolish friend is more dangerous than an intelligent enemy’. In the art of strategic counsel, a stupid colleague, or worse yet, adviser, is more dangerous than an intelligent competitor.
Here then is the encapsulation of the art of strategic counsel from a classic perspective. Firstly, strategic counsel is designed to enhance performance and add value, solve a problem or resolve a crisis, or help launch something new and innovative, with initiative.
Secondly, in an institutional capacity, there is no good governance without strategy; there is no strategy without strategic intelligence; and there is no strategic communications without a communicable strategy.
Thirdly, for a client to be successful, one has to be perceived to be successful, which does not happen unless it is based on sound facts and achievements, usually as a result of a combination of international best practice and national and local relevance. Therefore, if one were to ask what strategic counsel should look like today and in the future, it would be moving beyond management to governance; beyond strategy to strategic intelligence; and beyond communications to influence.
In this regard, Professor Christensen’s disruptive innovation comes to the fore. While some of the analogue era are hastening towards digitalisation, they neglect to realise that the true winners in the art of strategic counsel in this era will actually be those who are ambidextrous between the digital and the real.
What does this entail? Being ambidextrous between the digital and the real is the ability to seamlessly oscillate from being online, plugged-in and digitally-connected to being present in the real world, humanly-and-naturally connected. Recognising the pre-eminence of governance with foresight, famed management consultant Peter Drucker once famously said, ‘culture eats strategy for breakfast’, and so in the art of strategic counsel today, as yesterday, knowledge, wisdom and sound judgment based on first principles trump technology.
As a result, those able to navigate between these two poles of well-being should be better positioned to have an asymmetric leveraged advantage, which can help them, their clients, and society as a whole, achieve a quantum leap.
Talal Malik is a strategic adviser, and founder of Alpha1Strategy, and has worked with some of the world’s most influential people, companies and institutions.