Gone are the days of consulting firms having the market cornered on solving a client’s issues.

After almost 20 years in consulting and having worked across almost every industry I’ve come to realise that the consulting industry is about to undergo it’s most significant change. Or at least it needs to. It’s not dead by any means, but it is about to be tested. I first thought this was 10 plus years away but like most things today it’s all moving a bit quicker.

In the early 2000’s most consulting companies shed staff at a great rate of knots. The firm I worked for went from almost 700 to 180 pretty much overnight. Most of those people went in to industry. They became the worst buyers of consulting services because they knew what we did and how we did it. And to be honest they didn’t need us to answer their tough questions. They could do that themselves.

Luckily the complexity of business is ever increasing. Or at least that’s what we tell ourselves – that’s a topic for another post on another day. And as a result consultants were back again. Whether it was cost reduction, innovation, digital strategy, globalisation, or more recently the “enormous” challenge of social media, they needed us again.

But there is a new generation of buyer and a new generation of problems. And as a result a new generation of thinking required to solve those problems. Very few of today’s traditional consulting firms have the capability or the business model to help clients deal with today’s business problems. They are slow. They overcharge. They think about their clients’ issues the same way they always have. Clients use them for their brand but at the same time resent having to use them. The traditional firms will live. But they will be marginalised to the work that needs to get done but really doesn’t challenge a client’s business. The interesting work will go elsewhere. That mean that the smart kids will go elsewhere. So the interesting work will go elsewhere. So the smart kids will go elsewhere…..you get the idea.

Their challenge is to stay relevant. And to do that they need to challenge their own model. Daily rates have to go. Firms need to start pricing for value. But that’s not news. The real change is how they harness capability. Consulting firms will no longer be able to house all the capability required to meet their clients’ demands. Business is moving too quickly. Technology is changing too quickly.

The real value will come from playing a major role in a network of capability. The way to stay responsive to the changing landscape is not to go through the long drawn out task of building or buying new capability. Rather firms need to foster and engage with networks where they can tap in to capability when they need it. From specific technical skills to more abstract areas like design and creative skills. Sometimes it will be with a smaller firm. Sometimes with one or more individuals. Some relationships in the network will be formalised while others will be form and disband as required. Some of today’s freelancer e-markets may provide a start.

Tapping in to these networks and fostering them will allow the traditional firms to respond quickly to changing markets, while meeting the specific needs of their clients. It will give them the ability to offer more interesting and varied work to their staff and the opportunity to quickly develop new skills. Which in the long run might just help them corner the market once more.