How relationships and specialisation interact

The following forms part three of a series of articles that we have published based on our on-going research into how clients see consulting firms. To view the first article in this series, please click here, and to view the second article, click here.

In consulting who you know and what you’re famous for have a massive influence on your success.  No one, surely, could disagree with that?  Well, it turns out that the interaction between relationships and specialisation is a lot more complex than we’d imagined.

As always, it helps to take a concrete example to illustrate this.

EY’s clients think the firm is very good at financial management and risk: in fact, 64% would describe the quality of the firm’s work in this area as ‘high’ or ‘very high’ (the average across all firms is 56%).  As we’ve noted in articles on this blog before, being recognised as a leader in one field tends to come at the price of clients’ ratings in other areas – and EY is no exception to this rule.  Clients are less positive than average about the firm’s capabilities around digital transformation, for example.  But that’s only part of the story – and the more familiar part at that.  We might expect finance and risk executives to be most positive about the firm’s services overall, but the reverse is true: in fact, on average, they’re 22 percentage points less likely to be so than the average.  Yes, they’re most positive about financial management and risk work, but that’s not enough to offset their relatively negative views about other service lines (CFOs are particularly negative about the firm’s operational improvement and change management work, for instance).  Moreover – and just to make this picture seem thoroughly confusing – strategy executives are more likely to be more positive about EY’s financial management and risk services than finance executives are.

What appears to be happening here is that clients with whom a firm has the strongest relationships (the CFO for EY, the chief strategy officer for a strategy firm, etc.) are far more positive about the work a firm does for them, than for the work it does in other areas.  These clients see the firm as a specialist, and effectively penalise it where has the temerity to provide other services by assuming the latter won’t be of such a high quality.  People in functions that don’t have such strong relationships with a given firm (so chief strategy officers where EY is concerned) also see the firm as a specialist (their ratings for EY’s financial management and risk work are also higher than those for other types of work), but they’re more likely to be positive about the firm’s work in other areas.  So people we surveyed in the strategy function are 12 percentage points more likely to rate EY’s financial management and risk work as ‘high’ or ‘very high’, but are also 10 percentage points more likely to think this about the firm’s operational improvement work.

The closer the relationship you have with a client, the more likely the client is to be positive about the work you’ve done for them – but more negative about the work you’ve done for others.  Ironically, clients who know you less well will give you the benefit of the doubt where it comes to your area of specialist expertise, but are more likely to think that because you’ve done good work done there, you’ll do good work elsewhere.

What this suggests is that, if you’re a specialist firm, focusing on building up deep relationships with your most immediate set of clients is overwhelmingly important.  The fact that you don’t know others so well, doesn’t matter as much because they’ll pick up the fact that you’re good at what you do almost by osmosis.  However, if you’re a generalist, or a specialist seeking to diversify, then ensuring you have a broad range of equally deep relationships will be fundamental to success.

This is the third in a series of articles, all of which are based on our on-going research into how clients see consulting firms. If you’d like more information about this research programme, please click here or contact me here – sarah.burgess@sourceglobalresearch.com.