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Whatever the problem, it can be managed if it is not resolved. This is what firms increasingly promote themselves as one-stop-shops for advising major corporations. Welcome to the world of Everything Advisor.
These consultancies, some of which started out in public relations, have seen their remit swell over the past decade, with reputational risks becoming as big a boardroom priority as financial risks. For companies like Brunswick, FGS Global and FTI Consulting, the work consists of everything from crisis and financial communications to sustainable business advice, corporate culture reviews and geopolitical risk analysis. Teneo is also involved in executive succession and has restructuring work.
It follows a broader trend in professional services. As the Big Four accounting firms expanded their roles, and consulting firms like McKinsey moved from strategy to implementation and beyond, other firms followed a similar path. Headhunters Egon Zehnder and Russell Reynolds don't just place people in executive positions; They provide advice on how to deal with shareholders and board governance structures. Financial advisory firms Lazard and Rothschild have added geopolitical risk units, while corporate intelligence firm Hakluyt is now a venture capital investor. Even the law firm Schillings has a public relations arm.
What's behind the endless crawl?
In our world of multiple crises, companies continue to get stuck, and CEOs suddenly exit: see Bernard Looney at BP, or Dame Alison Rose at NatWest, or Daniel Lo Visconti at retailer Mothercare. Economic, geopolitical, environmental and corporate disruptions coincide and exacerbate already difficult situations. There are more stakeholders to appease but fewer people you can trust to solve problems.
That's why many business leaders are beholden to the dozen or so individuals – a kind of super-consultants – who back these consulting firms, such as Sir Alan Parker of Brunswick, Roland Rudd of FGS Global, and Declan Kelly of Consilo , or Joel Frank in her eponymous company. .
These CEO whisperers are known for their powerful networks and savvy advice. Previously, they may have referred projects outside their wheelhouse to other groups. But under greater financial pressures, many consulting firms are now seeking to leverage their relationships to generate new revenue streams. The influx of private equity money into the consulting world has put it under pressure to increase overall revenues.
Moving into more valuable strategic areas and influencing senior management decision-making was a priority. “If you could get on the board, you could triple your average day doing strategy and consulting work,” said Joe O'Mahony, an expert on growth in the consulting industry. “There is also increased potential to undertake core projects further down the chain – from communications work to managing the deployment of IT systems.”
Offering complementary services, if done well, can boost profits and customer loyalty. It's also a way to bring in new talent. But if done poorly, it erodes profits and damages reputation. The banking industry has learned this the hard way. The more you scale and scale, the greater the chance of losing focus, spending too much money and straining the relationships these companies have built themselves upon to the point of collapse. Clients don't like conflicts of interest or paying for things twice.
“I don't buy into this one-stop-shop idea. I'm not a believer,” said one FTSE 100 chair. “How many people can say they have had real success with the multidisciplinary approach? Essentially, you as a customer tend to have historical relationships with individuals who are good at their niche offerings, not all the other things they might be trying to do.
A website, supposedly created by disgruntled former McKinsey employees, recently appeared criticizing the consulting firm's leadership for expanding “aggressively into areas where it has neither a firm right to win nor a credible claim to excellence.” Within days, the site was shut down, but the creators tackled a thorny topic.
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The emergence of larger and cumbersome players, as always, means an opportunity for specialist consulting firms with more customized services. “Customers are looking for the best value for money. They are not necessarily looking for convenience,” said Laura Empson, a professor at Bayes Business School in London. “The customer may get the reassurance of the brand but not the depth of the experience.”
Success does not come from being everything to everyone.
