Obese Businesses In A Healthy World

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If you hire a personal fitness trainer or financial adviser, you would reasonably expect that they visibly are the embodiment of the healthy lifestyle and prudent risk taking that they promote. If you hire a large consulting firm you would reasonably expect that they are the embodiment of  the reinvention and innovation they promote. Specifically,

  • How does our brand stand out in a crowded market when our buyers don’t see the differences?
  • How do we bridge the gap between our existing buyers’ perception about the quality of our work (high) and their propensity to recommend and refer us to new prospects (low)?
  • Which area of the market should we stake out and leverage digital technology to transform our clients’ future?

That thought crossed my mind at the recent launch event of Source Global Research’s UK and global consulting market findings. The hard evidence suggests that many of these large firms don’t have the answers in respect of their own market. Buyers report close to zero differentiation across their service offering and a low propensity to recommend or refer these firms. The consulting firms themselves are directing marketing resources to the entirety of the market without regard to their ideal buyers, largely reliant on foot soldiers knocking on client doors and service offerings driven by production capability rather than client need.

Indeed, I walked away thinking that many boutique and solo consulting firms including my own are actually way ahead of many large global consultants. Forced by necessity, small entrepreneurial firms have created strong and clear value propositions, identified and directed limited marketing resources to their ideal buyers not every buyer, prioritised building a strong marketing gravity to their brand and created a range of offerings at increasing price points that are tightly customised to their target client’s needs. For once, the grass is indeed greener on the small guy’s side of the fence.

This isn’t an isolated phenomena. Clients of large advisory firms in global equities and fixed income research, investment banking, re(insurance) broking, private equity, private banking and so forth are coming to a conclusion that the large firms and traditional value chain is not working for their benefit. While small firms are creating new value propositions, new ways to attract clients, new ways to integrate high tech into the client experience and so forth, the larger players are largely falling back on trying to sell more of the same in more ingenious manners (leverage) and defending their turf. The trouble is that they don’t have watertight doors. Technology is rapidly providing faster and more impressive ways to apply knowledge to capital and human resources. Size alone is not a guarantee of future survival.

Everyone talks about “disruption” today as if it demands a new or unique response before, during or after an event. I don’t look at it that way. I see it that many large and mid-sized advisory firms in different sectors have got away from the marketing focus, discipline and resolve to compete effectively. They have layered complexity (bureaucracy) over what started out as a simple business with a simple marketing structure and process. The world has and will always change (new regulation, new technology, new capital sources, new competition will arise).

If they prioritise, hire and develop the requisite marketing skills, have their people do the right things, hold them accountable and reward them appropriately, they will have control and relevance. If they sail away from that imperative, they will have increasing insecurity and fear, which ultimately will lead to increasing mergers or worse, extinction.

© James Berkeley 2016. All Rights Reserved.

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