The standard consulting mannequin is dealing with once-in-a-generation turbulence, in line with Nick Pye. The Mangrove Consulting managing companion argues that the previous pyramid of some companions on high, supported by juniors, may be made out of date by AI.
In the previous yr, the world’s greatest international consulting corporations have quietly diminished graduate intakes. Some research recommend that greater than half of graduate roles now require AI expertise, whereas McKinsey & Firm checks new recruits on their AI capabilities. Whether or not junior consultants ought to discover ways to use these instruments is a given – what’s extra pertinent is what a guide function will appear to be subsequent decade.
The business has long-operated on a easy financial precept: a small variety of highly-paid companions at the high, supported by an unlimited base of graduates doing the analytical heavy lifting. However as synthetic intelligence reshapes what shoppers really need from consultants, this ‘pyramid’ is changing into more and more tough to justify.
The economics that constructed the pyramid
Understanding why requires what made the pyramid work in the first place. Companions promote work and preserve relationships. Mid-level consultants handle tasks. Underpinning that, a broad base of graduates conduct analysis, construct monetary fashions, and create the evaluation that’s leveraged by senior staff. The issue is that this construction more and more fits consulting corporations reasonably than the wants of their shoppers.
Huge consultancies achieved wholesome margins by billing premium charges for hours principally carried out by the least skilled crew members. That’s to not say that this was not a premium service: this analytical work was each time-intensive and useful. Shoppers wanted folks to collect knowledge, run situations, and synthesise findings, and the solely means to do that at scale was to make use of consultants with large cohorts of shiny graduates able to managing the legwork.
AI can deal with these wants for a fraction of the time and value. It due to this fact turns into significantly more durable to justify rooms of staff spending months on spreadsheets and decks when expertise can ship a comparable output in the time it takes to make a cup of tea. And the economics will solely deteriorate additional as the expertise turns into extra refined and shoppers, dealing with tighter budgets, more and more look to AI options.
What shoppers really need
This technological shift coincides with a quieter change: shoppers more and more personal and perceive their very own knowledge. What was as soon as held by a number of trusted exterior advisers is now being democratised inside organisations. Multinationals now have the technological methods to in-source capabilities, gaining better management and saving tens of millions in the course of.
Because of this consumer expectations have developed from decks and processes as key deliverables, to choices and outcomes. The analytical elements that after justified massive groups and commanding charges are exactly the place AI excels. What stays useful, and what justifies premium charges, is the strategic perception that comes from expertise making complicated choices and driving efficiency – shoppers need senior judgement, not junior evaluation. Hiring extra junior members is counterproductive on this respect.
The form of issues to come back
So if the pyramid’s days are numbered, what replaces it? Amongst mid- to large-sized organisations, the most mentioned mannequin is the “diamond” – wider in the center and high, thinner at the base, with fewer entry-level analysts, however plenty of manager-level orchestration. It’s the least radical future, the one many companions think about as a result of it’s least disruptive to the multi-level mannequin.
However there’s an alternate: genuinely flipping the pyramid. Groups of extra senior and mid-level consultants with minimal junior help, tackling particular challenges and supported by central methods. Much less hierarchy, smaller groups, extra deal with outcomes and efficiency.
AI can course of knowledge quicker than any graduate, but it surely can not replicate the judgement developed from years of navigating transformations or understanding of a fancy organisation’s cultural panorama. This locations a premium on real expertise and sector experience.
Boutique consultancies have operated variations of this mannequin for years, competing on high quality of pondering and pace of supply, reasonably than breadth of sources. What’s modified is that AI now makes this method economically viable at scales beforehand unimaginable. When senior consultants can leverage expertise for meaty analytical elements that after required groups, they will serve shoppers extra successfully with far fewer folks.
The longer term possible sits someplace between the two. Completely different consulting wants would require totally different constructions; some junior expertise will stay needed in sure areas, while AI predominates in others. However the route of journey is obvious.
The graduate query
This creates a problem: if junior roles contract while demand for senior experience will increase, the place do future professional consultants come from?
The standard pyramid functioned as a coaching system the place graduates constructed fundamentals earlier than creating into senior practitioners. That pathway may be closing. The choice is that consulting more and more recruits individuals who’ve already developed sector experience elsewhere. As a substitute of coaching generalists who later specialise, corporations may rent mid-career professionals who’ve spent years in particular industries. The profession path inverts: specialise first, then transfer into consulting.
If main corporations cease functioning as early-career coaching grounds, future executives may develop inside industries for longer earlier than shifting into management roles. The place they reduce their enamel issues, and consulting may not be that place.
For shoppers, this transition represents a extra trustworthy alternate. Premium charges buy real experience centered on efficiency reasonably than subsidising the coaching of junior workers. It’s uncomfortable for an business constructed on a unique mannequin, but it surely lastly aligns the economics with what shoppers have really wanted all alongside: skilled judgement, not analytical manufacturing.
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