New breed of fluid and agile consultancies challenging large consultants

06 August 2018 Authored by Consultancy.uk

“Large consultancy firms are fundamentally broken and they are ripe for reinvention.” Aaron Alburey, founder of boutique consultancy LACE Partners, pulls no punches with this bold opening statement, but it is one he firmly believes in, and is determined to change it.

Aaron Alburey has been working in the consulting industry for two and a half decades now. After first serving two of the largest firms in the market, Accenture and Deloitte, where he was a partner in the firm’s HR Transformation practice, in January 2015 he decided to go independent and founded LACE Partners. He remembers, “Spending 23 years in two of the most dynamic consulting businesses in the world and working on over 40 client engagements has been thrilling. And it’s been an eye opener.”

Since launching, LACE Partners – a specialist in human capital consultancy and HR technology – has grown to a team of over 10 consultants and around 25 associates. Alburey says that despite all the good things he has seen and still cherishes at the big consultancy firms, he has come to the conclusion that the large consultancies risk falling behind. “Some are fundamentally broken, the majority require reinvention.”

“The behemoths of consulting are tied into a spiral of increasing cost bases, unchecked (and even accepted) talent turnover and, most alarmingly of all, a cultural acceptance of the fact that increasing client rates every year is an acceptable solution,” he explained.

New breed of fluid and agile consultancies challenging large consultants

He points at one major force which stands at the heart of the challenge for big consultancies: the need to staff and use vast numbers of talented people who are already hired and on the payroll. “For clients, this means a push to put employees on projects at the expense of finding the best people for the work. People need to be readily available through extended networks of associates, alumni and partner organisations.”

According to data from Deltek, an provider of ERP solutions to consultants, at any given time, between 15% to 25% of fee-earning staff are on the bench. “Fruit rotting on the shelf comes to mind as an analogy… The logic says they must be utilised and sold. Only when there’s no internal fruit to draw on can the firm reach outside to find the strongest talent.”

It is this business and resourcing model which, in the eyes of Alburey, explains why clients are increasingly turning to independent networks (contractors) and/or boutique consultancies before approaching the large players. “It’s no wonder clients are getting restless. Rising rates, slow innovation and a lack of specialised talent is turning customers off. And who can blame them?”

According to recent analysis, around one out of ten projects in UK’s £9.75 billion consulting industry now goes to independent consultants. And another study, conducted by Economist Intelligence Unit, has found that cost-weary clients are increasingly eyeing specialised consultancies for best value, which includes consultancies that possess more specialist skills but also those that operate with lower fees.

The new breed

Alburey believes that a new breed of consultancy is popping up, those that are digital and virtual, able to tap into emerging technologies effectively through embracing open source technologies, but also flexible enough to keep costs at a lower level. “Fluid firms are emerging, consultancies that operate as fluctuating ecosystems of like-minded, nimble specialists. These ‘elastic’ consultancies have minimal operating costs, which means they can bring 5-10 more years’ experience to each role, for the equivalent mainstream consulting rate card. They’re also harnessing new technologies, for smarter, more efficient executions.”

“Large consultancy firms are fundamentally broken and they are ripe for reinvention.” 
– Aaron Alburey, founder of LACE Partners

He further stresses the importance of culture. For one example, in the case of the Big Four, there have been a number of high profile scandals which highlight that a company’s culture can sometimes be rotten. The mire of the Gupta scandal in South Africa, which has also had implications for McKinsey & Company is another example of how consulting’s culture is in trouble. Alburey is keen to differentiate companies in the mould of LACE, however. “The new consultancies have placed ethical working far higher in their agenda: value trust, mutual support, reciprocity, and a shared belief in and focus on doing the right thing for clients.”

“Freed from worrying about cost recovery and the staffing and utilisation of benched teams, these new consultancies are able to focus on making incredibly valuable connections through their networks, broadening and deepening their capabilities, and rapidly forming flexible teams of highly experienced top performers. That’s how they deliver exceptional crowd sourced solutions, while providing great value for money.”

Alburey added, “For buyers of consultancy services, these are exciting times. Never have the globe’s largest consulting firms been so big and powerful, but never before have they been challenges so much as today. We are part of the group of new age revolutionising the consultancy market. At LACE, we do things fundamentally differently from aging, large consultancies.”

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