The next decade will represent the decade of management consulting innovation, as it's reached its local peak. Consulting service provider strategists are being forced to not only innovate their clients' businesses but their own businesses, too. Four trends are pushing service provider strategists to ignite innovation in 2010:

  • Convergence — of business and IT services markets. Service providers are looking for new routes to value for growing their business in their rapidly commoditizing markets. Because the business is becoming more and more intertwined with technology, and related decisions are moving up within client organizations, providers of all types are expanding their corresponding portfolios — either up or down the value chain — but with mixed success. However, this makes traditional provider labeling meaningless. Classical management consulting firms are eager to evolve their IT capabilities, accounting firms strive to be more than just another Big Four company, business and IT services players focus on new integrated services, and IT outsourcers are overhauling their business consulting units. At the same time, new entrants such as product vendors and cloud-native providers are entering the services market.

  • Institutionalization — of key client issues/processes. Client requirements can be summarized in a trend that Forrester calls institutionalization, which basically embraces the key issues or processes that any organization has — such as strategy, change, globalization, innovation, mergers and acquisitions (M&A), transparency, and sustainability — on their corporate agenda. Therefore, the shift from a functional to a process-based organization is a fundamental element of institutionalization. The emergence of new cross-functional executive roles — issue-centric role emergence — such as chief change officer, chief globalization officer, chief innovation officer, and chief responsibility officer also reflects this trend. This wave of new roles forces service providers to offer new holistic services and management tools to enable them to persistently manage their responsibility across company layers.

  • Constraints — of innovation in management consulting. Providers of consulting services are primarily competing on management paradigms and models. The portfolio of paradigms and models innovated by consulting providers has grown significantly over the past few years, with a prevailing focus on models. Model centricity in consulting is the problem. However, the two key determinants that constrain providers in innovating their services are 1) the culture (the legacy issue), and 2) the approach (reactive versus proactive) — which in most cases are highly correlated. While paradigms and models are the integral components of consulting in general and service innovation in particular, service providers have ignored — while simultaneously preaching to their clients — innovation of both their business and engagement models.

  • Differentiation — in an eclectic market with no clear demarcations. Ultimately, consulting firms want to innovate paradigms that profoundly drive change as well as awareness in business and industries — selecting a path of high differentiation. Thought leadership and marketing are the key ingredients required to develop the brand and therefore its perception at clients. When considering a provider, the brand is much more significant to the executive level than it is to the line-of-business (LOB) or IT level. However, thought leadership alone won't enable providers to drive differentiation. It must be embedded in the provider's service innovation value chain, not treated as a disconnected monolith within the organization.