How the rise in boutiques are changing executive search’s role in management consultancy
Consultancy firms have come a long way since their early beginnings around the mid 20th Century. While many big companies are still familiar names and go-to choices for larger businesses, there is a growing number of smaller consultancies making a name for themselves compared to what’s known as ‘The Big Three’.
The Big Three are McKinsey & Company, Boston Consulting Group and Bain & Company, collectively sometimes referred to as MBB. Individually they are the three biggest management consultancy firms and are highly regarded for the companies they work with and the talent they manage.
Given their decade’s of building experience, resources and reputation, there’s little expectation that The Big Three will be joined by a Fourth, nor that they’ll drop to Two – but as consultancy jobs increasingly require shorter and speedier turn arounds, there’s an increase in companies looking to options other than the giants of management consultancy.
Meeting the demand for a faster turnaround
The increase in demand for higher speed projects and less in-depth results aren’t down to a lack of interest or a rise in impatience, but an increase in the number of companies looking to cut back on spending habits. In turn, this is reflected in the consultancy firms who receive fewer resources for their advice and the work they do. The main driving force behind this shift in spending is, like most things in 2020/1, the covid-19 pandemic, with consulting firms predicted to see a 10% reduction in revenue.
However, a reduction in spending doesn’t reflect a reduction in the need for innovative and creative ideas. In fact, it’s often when resources are scarce and belts are tightened that lateral or outside-of-the-box thinking is welcomed most.
One particular benefit of utilising smaller firms, is that a more adaptable and fluid way of working is second nature, often due to operating in a business space that is less forgiving of mistakes than more prominent companies. This flexible approach to day to day tasks allows for an malleable approach to creativity, something that is highly valued across all consulting firms, regardless of size.
Creative thinking and reshaping new firms
This creativity allows smaller firms to rethink how they approach problems. Discussing how smaller consultancies have been known to utilize technology in a way that bigger consultancies don’t, Professor Christian Stadler of Warwick Business School explains how, while unpredictable, backing the underdog can often benefit in the long run.
The example he gives is of the advent of hydraulics systems. At the time of their invention, they were rejected by the mining industry due to a lack of strength. Picked up by farmers in the US Midwest, where the loads’ hydraulics were required to lift were lighter, the technology was funded by an industry it wasn’t intended for. Gradually developed and improved to the point where it could be beneficial to aid the mining and construction industries, it was quickly adopted and put companies who had invested all their time into mechanical technology out of business.
This innovative approach, utilizing disruptive technology, is often used by smaller firms, and by its very nature, is hard to predict how effective it will be in the future. Often utilized as a cost-saving method, something larger firms generally don’t have to worry about, it’s a reminder that the “unsettled position” of a boutique consultancy can lead to a bigger payoff down the line.
The makeup of these boutique consultancies tends to be of former employees of The Big Three – bringing together their specialisms and years of knowledge, they can ensure the same quality of work and even similar practices but at a fraction of the price. Traditionally the smaller boutique would have lost out to the larger company in terms of sheer information availability, but in the digital age, smaller companies are finding they can hold their own as the sheer wealth of data moves into the public realm.
Boutique consultancy, boutique recruitment
For executive search, this shifting ground can mean a few changes moving forward. As smaller companies make names for themselves, offer better life/work balances and champion creativity and a positive atmosphere in ways the larger firms don’t, the appeal of working at one of The Big Three begins to dwindle. That’s not to say these reputable companies will suddenly find themselves with empty offices, but the trend is already showing that workers who would’ve stayed with a company for 50 years initially are now sticking around for less than half of that.
Executive search is expected to continue working with the big names, but the rotation of senior-level employees may be less focused on the same familiar companies in favour of boutique companies that include more niche, specialized positions.
If you’re interested in learning more about G&E Partners’ Talent Management adaptable approach to executive search, please contact one of our management consultancy experts.