Management consulting firms want to move into design, and creative agencies want to move into management consulting. It seems that everyone wants to swim upstream to the boardroom and consult on innovation, customer experience and design thinking. The widely held theory is that there are good margins in this type of work (and let’s be honest, it’s sexy as hell). But what no one talks about is that the high-end strategy work is actually important because it leads onto the multi-million dollar implementation projects that secretly feed the biggest global agencies
Over the years, I’ve worked in several of the grey areas between management consulting and design thinking so I’ve seen some of these macro industry changes first hand. The toughest part of my career has always been finding the chink in a client’s armour that lets us get close enough to the boardroom to ask the really tough questions. It almost doesn’t matter what the starting point is for a project if your goal is to get to the deeper issues inside a business. With all these shifting agency services, it’s hard for clients to know who to turn to these days for advice on big problems.
Great consulting always been about getting to the really gritty questions beneath the surface. Personally, I want to know why a company exists in the first place, who they care about, where they want to be in five years time and how they plan on putting a dent in the universe. Therefore, when it comes to agencies, I’m interested in the question of:
Who will be the McKinsey of the next generation?
There are lots of interesting arguments about whether the best core skill-set for this type of work is technology, business or design. But the bigger issue is that from a client’s perspective these skill-sets are looking more and more similar. I usually refer to this type of work as digital innovation because it reflects the modern mindset of lean startup, business model innovation, agile development and user centred design.
The global management consulting firms like McKinsey, Bain and BCG have the scale to partner with giant clients to do big global “change” programmes and see them through for the three to five years that they take to implement. Likewise, the giant advertising agencies (tucked inside WPP and Omnicom/Publicis) such as Grey, Ogilvy and BBDO are all big enough to throw their weight behind big multi-country, multi-year projects. These giant titans have their eyes on each other.
The giant management consultancies and global networked advertising agencies are having to fight hard to manoeuvre for the new revenue streams in design thinking and innovation consulting. Below are several ways that they are competing to win in this new battlefield.
1. Growth Model: Acqui-hire
The latest way of getting into innovation consulting is to acquire a small agency doing the opposite of whatever the acquirer does and bolting them onto the mothership. This called an “acqui-hire because it’s an acquisition for the purpose of hiring new staff.
If it’s handled well, an aquihire can be awesome way of hitting the ground running with a strong team and good momentum. But more often than not, the skunkworks is soon gobbled up and lost.
- On the management consulting side: Deloitte purchased and then absorbed a web design firm into Deloitte Digital (along with a more recent acquisition of Michael Porter’s Monitor Group) and Accenture have bought service design firm Fjord. Here in New Zealand, PWC acquired design thinking firm Optimal Usability to create PWC Digital.
- On the advertising agency side: (from what I’ve heard), The Social Partners was a productive part of (WPP owned) Grey Advertising from day one. Both WPP and Publicis/Omnicom have been on social media and digital agency buying sprees in the last five years or so with even big fish like AKQA being gobbled up by WPP.
2. Growth Model: Lone Wolf
Another approach is to hire a new leader from outside and let them build an internal team themselves. This takes longer than an acquihire. The advantage is that the lone captain can gradually build a motley crew of rogues and pirates from inside and outside the mothership who are just tough enough to keep the flame alive.
Hiring a lone wolf looks good in BusinessWeek, PR Week or Marketing Week because the agency can post a photo of their new Chief Innovation Officer standing in front of a brick wall with a shallow depth of field photo. Appointing a heavy hitter looks cool in front of clients and the press. By contrast, acquiring a small consultancy is messier to explain to clients and industry commentators.
- On the management consulting side: BCG, McKinsey and Bain have all been appointing senior partners to manage digital innovation and design thinking capabilities but none have yet emerged as real heavy hitters with genuine thought leadership and client impact.
- Inside the advertising agency networks: LBI have appointed an Organisational Design leader, Ogilvy have established a stealth consulting division, Wolff Olins have been getting into Lean Branding, BBH have the new Black Sheep Fund and Deutsch LA have been building out Inventioni.st.
1. Growth Issue: Innovation is a team sport
The downside to acquiring a small firm or hiring a lone genius from outside is that one person doesn’t magically create an innovation capability. So suddenly the mothership’s HR team has to learn how to hire people with new skills and professional backgrounds:
- The management consultancies are now trying to hire pure-play creative people. But they are finding it surprisingly hard to evaluate the creative skill set and to make use of them once they’re part of the team. It turns out that great creativity requires a supportive eco-system.
- Meanwhile, the advertising agencies are now hiring pure-play business analysts. But they’re finding it hard to evaluate the analytical skill set and to make use of them once they’re hired. It turns out that great analytical thinking also requires a supportive eco-system.
It turns out that creativity really is a team sport, especially the art of solving client problems and helping encourage a client to become more creative. When a project gets tough, you need a mix of skills to get things done.
2. Growth Issue: Building an innovation consulting team
Building an innovation consulting capability inside an agency requires a daunting mix of specialist skills. It also requires a reasonable quota of generalists to play the role of the diplomat. Acting like a designer when the client is being too analytical and acting like a business person when the client is being too vague. They bring balance. A good team needs a mix of specialists and generalists.
Specialists: Hacker, Hustler & Designer
The best way to understand how to build a team to advise clients on innovation is to look at how startups build an agile team with constrained resources. To bring a product to life in the startup world you need a hacker, a hustler and a designer. Because every product needs a mix of technology, business and design.
There is a ying and yang balance to innovation. A great design concept needs feasibility testing through a rigorous business model. A great business strategy needs emotional resonance from user-centred design. Both business and design also need the technology to bring the idea to life.
Generalists: Polymath Strategists
It’s rare, but there are individuals from within the fields of design, business and technology that also understand just enough of the other disciplines to be genuinely useful across every field. A polymath is someone who’s speciality is learning other people’s specialities quickly. Polymaths pride themselves on accelerating the time to minimum viable knowledge on a given topic.
The navy seals have a very special style of cross disciplinary collaboration. Seal teams learn just enough of each other’s roles to be able to do the job in an emergency. Not because you want your engineer acting as a medic all time, but because being forced to learn a craft makes you appreciate it.
At the first design firm I worked in, I learned just enough Photoshop and InDesign to appreciate how hard it is to design with good taste. Likewise, at the Innovation Warehouse I learned just enough PHP, CSS and HTML to appreciate how much time it was going to take to redo the website.
A true polymath’s job history is almost always a mess. I’ve met polymaths called everything from “Creative Technologists” to “Information Architects”. The job title “Strategist” is a common place for these people to hide in plain sight because it covers a multitude of sins.
These aren’t ‘jack of all trades’ generalists in the old tradition of mediocre MBAs. Instead, the modern polymath still needs a specialisation in one of the productive disciplines so that they can deliver immediate value when in front of the client. And they also need enough skills in the other disciplines to be a productive contributor. The best strategists that I’ve met are confident in their craft but use it as a starting point for the real work of digging into the root causes of a client problem.
As a fan of the old-school management theorists like Tom Peters and Peter Drucker, I’m bound to love the idea of building up a client’s own innovation capability. Best practise has always been to bring as much innovation expertise as possible inside the company. In 1996 Steelcase bought Ideo, BMW bought Designworks in 1997 and more recently Facebook gobbled up Hot Studio, while Google established their own design thinking practise inside Google Ventures.
Clients are becoming more astute about how they buy strategy, design, and innovation services. The smartest clients are allowing all of their advisors to range beyond narrow project briefs and come back with integrated, creative and multi-channel solutions.
Senior people inside a business need to be open to new ideas coming from anywhere (internal or external). Only allowing “suits” (such as law firms, accounting firms and investment bankers) access to the boardroom is fast becoming an obsolete model.
You can’t firewall your advertising agency behind a 22 year old Junior Brand Manager, they need access to the CEO to create great work. Likewise, you shouldn’t stop your graphics design firm from asking to talk to the call centre staff about warranty claims. Great new ideas can come from all sorts of unexpected places.
Some clients are experimenting with internal venture capital models, internal innovation incubators and internal customer experience swat teams. These are powerful and transformative. But sometimes they suffer from organisational capture and get too stymied in corporate politics.
Makers vs helpers
In-house capability is important to innovation but external advisors still have an important role to play. The ability to brush your teeth every day doesn’t mean that you can get rid of your dentist entirely. I think there will always be a role for the dreamers, the crazy ones, the agencies just bold enough to think that they can change the world.
Note 1: The incumbent innovation agencies and design firms are already doing this type of work but have been caught out by the speed of change in terms of social media, digital innovation and lean thinking. They don’t seem to have a new story to tell (that would galvanise new multi-million dollar revenue streams).
Note 2: I’ve lumped all of the subsidiaries of the creative networks in with “advertising agencies”. WPP owned Hill + Knowlton (who work in PR) are as much a part of this trend as Starcom Mediavest (who are notionally a media buying agency, not an advertising agency).