2018: The Year Design Firms Will Surpass ‘McKinsey & Co’.
2018 is looking like the year when our fast advancing technologies (AI, Crypto, IoT, BIoT, mobile supercomputers etc) will push the convergence of built space, utilities and resources over the tipping point. It’s been going on for the last 10 years when data started becoming the real gold. And incumbent companies in these old industries (real estate, power, and water utilities, transportation) are scrambling to figure-it-all-out. What these incumbent companies would normally do is hire consultants from the top consulting firms, they’d show up with their fancy tried-and-trusted (aka stale) frameworks and offer the incumbents palatable answers. But that game is over. The Fourth Industrial Revolution requires system and design thinkers, something the traditional consulting firms aren’t and we all know there is no consulting spreadsheet for successfully converting your $20Bn monopoly into a customer-centric company.
Flaws In The Consulting Model.
The standing belief is that clients hire consulting firms to confirm what the decision makers at the client company already know or have already decided on. This behavior-shaping constraint leads the consulting firm to i) find bodies to deliver on a project, ii) complete the project from knowledge, frameworks and information asymmetries built up over time and iii) bill the client company for hours worked at a high margin. A typical deliverable is a ~200-page powerpoint “deck” that, coincidentally, recommends some variation of a contract expansion. Unsurprisingly, it is also often said that no one likes consultants.
Clients, especially incumbents in the more traditional industries, are now realizing that adopting a customer-centric approach is the only way to come up with innovative products and services. These same clients are finding that the traditional consulting firms they relied on until now do not have the innovation and customer-centric DNA required to develop system shifting solutions.
Designing Solutions (Not Just Giving Answers).
Two things pointing to the ascendancy of design + systems thinking firms
- Consulting Firms Buying Design Firms: Deloitte and Accenture have, between them, acquired close to fifteen agencies in the last couple of years. These consulting firms recognized the need to add creative teams but I would suggest they’ve focused on the wrong end of the work agencies do; they’ve focused on bringing teams in that would improve and implement marketing campaigns for the current products and services of their incumbent clients. They haven’t brought in teams that understand the ambiguity being wrought on clients due to transformative technologies. What clients now need are partner design firms that can help with plan, design and build customer-centric digital devices that serve the layered needs of customers. Not an extra layer of marketing.
- New Tools and Knowledge/Information Everywhere: One advantage that consulting firms had over design firms, this I found out (right before the holidays) over four different conversations with design firm leads, was the information asymmetry and sector knowledge/expertise. That advantage has been eroded. There is less information asymmetry than at any other time in history. Both industry information and strategic management expertise. With Artificial Intelligence augmenting designer capability (computational design), who needs a bunch of suits to tell them where the next big opportunity is? When an ethnographer can, with the aid of AI, take all of a company’s unstructured and structured internal data and combine that with data from the internet to develop models that predict how customers will respond to new products (for example: a gauge of consumer sentiments towards muslim sportswear or customer interest in whole system energy efficiency initiatives) fewer experts will be required to provide industry subject matter expertise.
Sidenote: Technology companies came to this realization about the need for design and went on a flurry of acquisitions between 2014–2016. For some reason the consulting firms chose not to watch John Maeda’s annual design-in-tech presentations.
When Times Change, Will You?
Next thing you know, the world is a different place. Will you see it in time?
That line above is from the book ‘The Million Dollar Parrot,’ in the chapter discussing how the simple horse stirrup led to feudalism. Quoting Harvard Business School Professor Richard Tedlow
Before the stirrup, the horse was basically a mechanism to get a javelin thrower around, but with the stirrup, you could brace yourself on the horse and thrust forward. So all of a sudden the horse becomes the atomic weapon of the eight century and now the troops need horses, the horses need fodder, fodder requires lan, and requires someone to work it, and the result is feudalism. Nobody said, “Now, what I need is feudalism. What I think I’ll invent is a Stirrup.” Tedlow added, “Nothing came down from the sky and said ’Hey, you idiots, this is a whole new paradigm.”
For the traditional consulting firms, their client's competitive paradigm is changing at a scary pace. The easy client problems are solved or solvable, the harder problems will be addressed with advanced technology applied by smart technologists/system thinkers and the incumbents will require partners who can help them implement systemic change. One thing I’m sure the traditional consultants know is that ‘holding on to your tools in the wrong circumstances can have tragic results’ and this might be the year to seek out new tools. Or design firms, with the right systems + design thinking tools, might be eating every major consulting firm's lunch in 2018.
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