One firm, one price point

“One firm” has always been the Holy Grail of the consulting industry.

And small wonder. Consultants are a tricky lot. They don’t like being told what to do, or being made to march to a single tune. Everyone’s an expert in their field, however small and unprofitable. Those with the loudest voices get the biggest budgets. Like our ever-expanding universe, everything is flying apart, driven by some massive centrifugal, cultural force.

The role of the management team of any firm is to maintain the delicate balance between this explosive entrepreneurialism and the need for consistency and collective investment; it’s to impose an appropriate and acceptable level of order on inherent chaos. Indeed, it’s possible to see every initiative a firm takes–whether that’s around organisational design, account management, product development, marketing or performance appraisal–as part and parcel of that same imperative. Some firms put more emphasis on order, others allow a greater degree of chaos, but these are just different sides of the same equation.

But there are unintended consequences: price, for example. Most organisations use one firm to design strategies and solutions, and another to implement them, not because they want to, but because the “one firm” ideal means that clients think they have to choose between expensive implementation (they baulk at that) or cheap strategy (they worry they’ll get rubbish quality). Consulting firms would like to change that, but are constrained by the way in which fee rates are linked to salaries, and salaries to business models. The moment you switch price, you have to switch person; people are unhappy if there are obviously different salary structures within the same firm and clients get deeply confused about what they’re buying (prices equate to quality, in the absence of any other hard information). If one firm equals one price point, it follows that two price points equal two firms.

Manufacturers have known this for a long time: It’s why we have different marques for cars, electrical goods, even washing powder. But being able to answer the pricing question is now a key challenge and opportunity for the consulting industry. The firm that works out how to offer different prices within a single integrated delivery architecture (note that I’m deliberately not saying “firm” here) will reap the rewards of the multi-billion dollar strategy-to-implementation market.