Bloomberg Government regularly publishes insights, opinion and best practices from our community of senior leaders and decision-makers. This column is written by consultant Robin Camarote, part of her series exploring changes to the management consulting business model.
Change is coming. Disruptive forces are at work altering expectations, competition and our own attitudes about the purpose and possibilities within federal consulting. Back in the 1990s and early 2000s, federal management consulting was a booming business.
If you worked in the field, you look back with fond memories of these growth years — when clients could still travel, everyone was armed with a copy of MS Project and frequent after-hours planning sessions were catered with big shrimp and Chardonnay.
Most of us worked in small, energetic teams headed by a leader with a voice and a vision. There was a sense of excitement about the possibilities and a generally positive outlook for future business and professional growth.
The problem is that the challenges remain, but there is growing uncertainty about how management consultants can help.
1. Dollars spent with few results.
While federal government spending on management consulting has been cut, billions of dollars are still being spent. ( in fiscal 2015 was valued at $30 billion, according to Bloomberg Government.) And yet, despite the dollars spent, federal staff and program managers have been banging their heads against some intractable problems for a long time. They’ve spent enormous amounts of time and a lot of money trying to fix them, often with little improvement. To be fair, there are many reasons for the slow progress and poor results, and a contracted consultant can’t be expected to effect change within an organization to which they can only recommend action — not actually direct work.
2. A sea of sameness.
There are thousands of federal management consulting firms operating today, all competing for a piece of the same shrinking pie. Aside from size standards, they are basically indistinguishable. The competition has fueled a boom in creative marketing campaigns to help those firms gain attention, according to a 2014 Washington Post story.
3. New competition coming from unusual places.
The Obama administration has been on a roll, recruiting Silicon Valley talent from Google, LinkedIn and Twitter for what Fast Company is calling a stealth startup, creating a digital team whose goal is changing how government works. And, according to a San Francisco Chronicle article, finding Silicon Valley partners for a cybersecurity and innovation effort is a priority for Defense Secretary Ashton Carter. The moves took many by surprise. And it’s amazing that not one of the big consulting firms beat either of them to the punch. Not one.
4. Promotion and advancement model unable to keep up.
If all of the consulting employees gathered in a big field and each level stood on the shoulders of the ones immediately below, you’d have a massive pyramid (and a pretty wobbly one at that — consultants aren’t generally built for acrobatics). Before they toppled into a huge heap, you’d want to notice that the bottom two-thirds or so weren’t very happy. It’s not uncommon for individuals to feel like they should already be at least one level higher in the stack.
The career advancement model attracts ambitious, entrepreneurial people, but in a stagnant or declining business, there is nowhere for these people to go. So, they’re feeling stuck — frustrated, disillusioned and increasing skeptical of the value delivered by their own management. Firms have yet to adapt the promotion model to reflect the work and accomplishments of staff; get them the advancement they want in a way that all can agree on. Right now, they’re stuck being evaluated largely by a group of senior leaders who grew their own businesses in a very different market climate. This disconnect creates a lot of pent-up frustration.
The changes in federal management consulting began with budget cuts. According to , federal spending on management support services dropped 28 percent from fiscal 2010 through? 2012 alone. And the Obama administration has pushed to not only cut budgets and deficits but also to streamline organizations and improve government efficiency, effectiveness and accountability.
At the same time, the private consulting industry was facing its own changes. In 2013, Harvard Business Review published an article citing a shift away from classic strategy services toward providing niche technical services to business clients.
Further, private-sector firms noticed increased price sensitivity as a result of the recession. More than ever, clients with less to spend needed to demonstrate the return on the investment in order to justify contracts.
Federal management consultants have heard the warning bells; the future is uncertain. And how have we responded to uncertainty? By gathering data, trying to figure out what it all means and then, despite good intentions, making sudden (and sometimes awkward) decisions.
Some have dramatically slimmed senior ranks. Some have cut benefits. Some have sold off business units that don’t seem to fit anymore. Some have bought businesses to gain market share. Some have resorted to protesting more contract losses. And some have done all of these things and more.
If early response efforts like these are any indication, we’re looking at it the wrong way by worrying about the wrong risks and treating the symptoms rather than the cause. So here we are, with a shrinking (although still large) pile of money to spend, an overwhelming number of choices that are virtually impossible to differentiate, and little insight into how to get things done. But here’s the bigger reason we’re on the cusp of disruption. The federal consulting business model is fragile. More on that in our next post…
What to read next:
Part 1 – Management consultants, prepare yourself for disruption