Space between consulting firms and creative agencies is converging

16 June 2016 6 min. read
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The past years have seen a growing convergence between the worlds of consulting and creatives. At the one side of the table management consulting firms are rapidly bolstering their design and digital skills, pushing deeper in the advertising & marketing space, while, at the other side of the landscape, agencies are grappling to add business acumen and consulting rigour to their creative portfolios. The space is converging, and heating up, says Manfred Abraham, with the consultancy-brand agency collision sparking the rise of a new, blended business model.

One of the biggest trends in the marketing industry is the movement to replicate more traditional consultancy-like models. It is not a new business model by any means. Strategy&, the latest incarnation of Booz Allen Hamilton, has been around since 1914 and is, together with Arthur D. Little (1886), widely regarded as the oldest management consultancy and the first to use the nomenclature. Recent investments made by the likes of WPP and Publicis are pointing to the way consultancy practices, and the capabilities that accompany them, are starting to be circulated throughout their networks, particularly within their advertising, branding and digital agencies. Increasingly, clients want better coordination between their marketing activities and their business performance. By adding consultancy into the traditional agency mix it is hoped that the CMO will become increasingly empowered to align marketing spend with overarching business strategy, thus propelling the agency up the supplier pecking order. 

However, the boot is also on the other foot. Management consultancies are increasingly plundering people from the marketing world in order to add further value to their strategies. For instance EY recently appointed WPP heavyweight John Rudaizky. Each discipline is trying to steal land off the other, but claim they are not! For example when GroupM unveiled their new consultancy arm they stated they were not looking to compete with the likes of Accenture et al as the consulting giants are “not focused on the sales and marketing practice.” But at the time Accenture already had a digital media division, Deloitte had recently bought Heat, a San Francisco creative agency hailed as ‘breakthrough agency of the year’ and the work McKinsey & Company does with big brands encroaches onto media territory. 

Space between consulting firms and creative agencies is converging

It will remain to be seen if it is possible to merge the sparky creative culture of an agency with the more rational culture of a management consulting firm. Cultural synergy is not the obvious outcome in a world where merger failure within the same industries, as stated by McKinsey, is estimated at anywhere between 60 and 80 per cent. One plus one does not always equal three and both sides often end up with frustrated teams damaging the service and customer focus of both entities. I remember my time at a very creative brand consultancy. When it decided to introduce more strategy into the company there was incredible tension between the two sides and the numbers began to go in the wrong direction. To mitigate this the company returned to its creative-led practice with strategic input, regaining the success it had been accustomed to.

A key problem for branding agencies is that the majority of those in existence have evolved out of design companies or are the result of mergers between more strategic agencies and design agencies. The reality of this means that ‘strategic’ brand projects often result in a visual identity change despite the high cost because of the agencies’ past rather than translating the brand strategy into highly relevant customer and employee experiences that truly deliver positive business impact. 

Next generation business consultancy
Enter the perfect storm: what we have coined ‘next generation business consultancy.’ It occupies the sweet spot between consultancies and agencies. It is as rigorous as a traditional management consultancy and is driven by customer understanding, but without relying too heavily on the numbers alone. Moreover, it adds the creative thinking and a desire to execute the most impactful initiatives in close relationship with the client. Fundamentally, it is a new business so not hampered by legacy process, procedure, practice and mindset, employing a mix of people from all walks of life from accountants to zoologists. To qualify you need an entrepreneurial mindset and a passion for improving business performance sustainably. Brand thinking is at the core and customer and employee experience the focus. It has to be. Today, more than ever, as a result of digital media and consumer empowerment,  brand equity is crucial for business success. Name any company you admire and 99 times out of 100 the brand will be at the heart of the business: Apple, Tesla, John Lewis, Deliveroo to name but a few.

Next generation business consultancy

Brand cannot merely be a pillar propping up a company’s strategy. It is a well-known fact that brand is a driver of shareholder value and therefore its place is as a lens through which all other business decisions are made. This approach means that the identity of the organisation is woven through every single aspect of the business from logistics through to HR and financing decisions and of course marketing, too. This approach enables businesses to stay relevant and valuable to their audience unlike the monumental failures of BHS, HMV, Woolworths and Kodak who lost their brand focus somewhere along the way.

Furthermore, and this is the key, putting the brand front and centre of the business strategy clearly points to the most cost effective initiatives, the ones that will make the most difference to the business. Millions of dollars are wasted every year in implementing change programmes that fail to make that much of an impact or ones that hit the wall early on as they're just too hard to action. 

All this aside, what is clear, is  that the marketing and consultancy space will become increasingly crowded as brand becomes a more important part of the consultancy mix.

Manfred Abraham is Founder and Managing Partner of BrandCap, a London and New York based consultancy.