London: Consultants are advised to trust their innovative instincts in a report published by the Institute of Consulting, IC, in the UK.
The report, "Management innovation in the UK consulting industry", based on research by the Advanced Institute of Management, argues that consultants should look to their heritage as innovators in response to shrinking margins and fees.
And whilst the IC finds evidence of increased innovative practice, only a fifth of consultants have a "formal innovation process" and over 80% think procurement processes inhibit the sale of innovative services.
The IC says that, "Despite a lack of detailed studies on the subject, many commentators have suggested that innovation in the consultancy sector is under pressure. In the words of The Economist, "the consulting industry desperately needs a 'New Big Idea'". At its most basic, this report refutes that argument."
Huw Hilditch-Roberts, Director in charge of theIC says, "This report is a timely wake up call for consultants. The value a consultant brings to a business is new ideas, innovation and smarter and better ways of doing things. Firms must not lose sight of this. Yes, consultancies like all businesses are under financial pressure right now, but this is no excuse to neglect innovation. It is as important as billing clients. If a consultant loses their ability to innovate, their role is effectively redundant and the industry fundamentally at risk. Management consultants also need to demonstrate the value of innovation to their clients as a way of gaining much needed competitive advantage."
Judy Craske, council chair of the IC comments in her forward to the report, "Whether lone practitioners or multi-disciplinary practices, consultants need to become more innovative and adaptive in their proposals, methods and solutions, while traditional client/consultant boundaries need to be challenged, stretched and even broken.
"Consultancies may also need to be more open to partnership working with other agencies, such as academia or even competitors, if they are to respond effectively to the pressures of the current high-cost, low-resource business environment.
"This has implications for our clients too. It suggests both parties become more fluid in their approach to procurement in order to develop greater collaboration and move away from the more traditional client/provider approach." Key findings:
- Innovation is primarily driven by the need to 'differentiate from the competition', a factor identified as important by 64% of respondents
- Only 21% of respondents have a 'formal innovation process'
- Innovations are most commonly initiated through 'working with clients', a practice highlighted by 26% of respondents
- 69% of all respondents believe innovation has increased in the last five years
- Since 2005, there has been a 36% increase in respondents reporting the introduction of new or improved services in their consultancy
- Access to external research, high levels of autonomy and strong upward communication were rated as the most important enablers of innovation
- The main constraints on innovation are seen as being lack of time due to high utilisation rates, and low levels of risk taking by clients
- 50% of consultancies report working with clients on innovation, a figure up from 22% in 2005
- 83% of respondents believe that procurement hampers the sale of innovative consulting services. This is felt equally by those specialising in the private and the public sectors
The full report is available from the IC here.