Consulting practices occasionally hit a wall with their businesses when they run up against serious new competitors or technologies or their talent peaks. Is there a general model of sustaining a consulting practice other than the same advice we give our clients (i.e., continuous improvement in people, processes, technology)?
The mechanics of managing a consulting practice are too complex for this forum. Better would be to talk about what to look for that tells you, well in advance of a revenue plateau, that your practice needs some work. Once you know where your practice is getting wobbly, then you will have a clearer idea of how to fix the mechanics.
We tell our clients that they are on an "S-Curve" in which slow and steady growth occurs at the start of the business or a new product, followed by gaining momentum and rapid growth, then tapering off as markets get saturated or competitors enter. This "S-Curve" applies to your business as well as theirs and really has several curves hiding inside. Watch these components for advance warning :
- Competition - any market or product attractive to you will also attract others, so monitor new entrants starting to chip away at your customers.
- Capabilities - you created or bought some new technology, skills or other assets to start your growth, but the distinctiveness of these eventually wears off and they are likely to be available to competitors once their value is clear.
- Talent - you had it when you started your growth, but people increasingly move between companies more frequently and you may lose a key asset (less of an issue for small consulting firms, but this makes the impact of a single departure all the more risky).
There may be other components unique to your practice and market. The point is that there is more than meets the eye in a simple growth curve. Figure out exactly what assets and activities are part of your particular growth and watch each one, as well as how each component affects the others (e.g., a departure of talent from your firm to a competitor, along with knowledge of a key technology is a triple blow).Tip:
Researchers at the Accenture High Performance Business Research describe this "Jumping the S-Curve"
phenomenon in a book and articles. © 2011 Institute of Management Consultants USA