Charles Schwab used the Internet to take the trading industry to the next level. Now Collaborative and Social Technologies are doing the same for parts of the consulting industry.

The trouble with Strategic Change: it is very hard work. Effectuating real strategic change – i.e. changing peoples’ mindsets, beliefs, behavior, and ways of working – relies heavily on interaction between people. Change can’t be “told”, it requires people to discover, to be convinced, enthused, shown, guided, led, and then all over again. This equates to a lot of effort. Not because people don’t necessarily want to change, but because it just requires considerable time and effort to really convince people and turn them into enlightened individuals embracing the new desired state.

In today’s demanding business environment and in lean and mean “flat” organizations, this can lead to a situation in which real change can’t be achieved because of a simple lack of capacity for interaction.

To the rescue

The last few years have seen a widespread adoption of collaborative and social technologies (also sometimes referred to as Web 2.0). These technologies are in essence radically more effective and efficient ways for people to interact.

This means that collaborative and social technologies have the potential to contribute to overcoming the interaction challenge of change initiatives. Not only can it take existing interaction (between management and the organization for example), but also it adds the ability to let the organization interact with itself. This allows the organization to draw on those individuals who are in the best position to help resolve specific issues – and not because they happen to work in department x or y. In fact, collaborative and social technologies reduce the dependence on organizational structures in general, opening up the way to new forms of resource deployment – but this is a discussion in itself.

Strategy Consulting Revisited

Strategy Consulting is of course also heavily dependent on interaction. First to create the necessary hypotheses and potential avenues for strategic relief, then to create the relevant fact base to support decision making, the generation of tailored solutions, and last but certainly not least the handover (implementation) to the organization of the solutions, plans and actions. Collaborative and Social Technologies can make a significant contribution to typical consulting assignments that are focused on making a real difference and where this difference is made at least partly by the people in the organization. In such situations, collaborative and social technologies allow a much larger part of the organization to be involved in a constructive and controlled way much earlier in the process.

This achieves several things. By drawing much more broadly on the organization, better insight in the real issues and opportunities is obtained. Secondly, if properly challenged, the same set up can also yield better and more relevant solutions. The real bonanza however is that by involving more people much earlier in the process, a much better foundation is put in place for the actual implementation – through its involvement the organization already owns the solution after all.

First hand experience during various client assignments has convinced me that this is the way forward for a substantial part of high impact strategy consulting. I also believe that this represents a unique opportunity to be part of what will surely be a pivotal moment in strategic change management. Strategy Consulting is Dead, Long Live Strategy Consulting.

When Charles Schwab, the Investment Services Firm, introduced the world to online stock trading in the second half of the nineties, it redefined its industry. The Cost of the average trade fell from over $70 dollars to around $30 and now this has even come down to less than $10. This cost improvement has not come at the expense of service or quality – on the contrary in fact. The online trading environment provides investors with a swath of tools and information helping them define and execute their investment strategies – many of them real time.

There are a few interesting lessons to take away from this: first of all, technology created the potential to innovate the investment services business, but it took a company such as Charles Schwab to pioneer the delivery of the benefits to the world. Secondly, the innovation did not just make things much more cost effective, it also allowed for a much richer and value adding proposition towards clients. Charles Schwab also had the courage to set up an online trading services firm right next to its “analogue” traditional business. In doing so, it exposed its market leading volume to the much lower price point of online trading – eventually forcing it to offer all trading services for the same price, whether online or offline. By doing so pro-actively however, it managed to turn its leading position into a large market share of the much higher volumes of online trading, thus compensating the loss of margin on the traditional services.

Something similar appears to be happening at this moment in the (High Impact) consulting industry. What the Internet did to the investment services industry, the latest guise of Collaborative and Social Technologies is (will soon be) doing to the consulting industry. The consulting industry is of course much less transactional compared to the investment services industry. This makes that the paradigm shift will manifest itself over a much longer timeframe. Effectuating change in organizations is also considerably less discrete than trading transactions. This also allows for a much more gradual transition towards the use of Collaborative and Social Technologies in Strategic Change initiatives.

This doesn’t make it less of an opportunity (or threat) however. And just like Charles Schwab, it will force consultancies to rethink their consulting models. New Consulting Business Models: 3x impact – 1/3rd of the consultants.

When consultants are involved or required for capacity reasons in bringing about strategic change in organizations, there is generally a direct relation between the number of consultants involved and the amount of strategic change targeted. More change requires more interaction after all. Using Collaborative and Social Technologies to create a step change in the ability of people to interact with each other creates the opportunity to redefine this relationship.

• First of all, one could do with fewer consultants for the same amount of strategic change as the interaction becomes more effective by drawing in more and more relevant people in the organization.
• Secondly, as these technologies are especially well suited to enable interaction between any configuration of people, part of the interaction between consultants and the organization can be replaced by interaction within the organization itself. This obviously further reduces the number of consultants required to bring about change.
• Last but not least, if the organization is drawn into the change design at a much earlier stage (which has now become a distinct reality), the organization will become more receptive to strategic change. This further reduces the amount of consultant support required for the roll out.

All this is great news of course – much more strategic change within reach at substantially lower external support costs! Good news for organizations that is, and something to think about for consultancies with traditional business models and active in Strategic Change Design. Despite being a strategy consultant, I am very positive about this prospect. I believe this will not end as a way to reduce the use of consultants. Instead, I see it as an opportunity to effectively use external support for resolving more issues and capitalizing on more opportunities than ever before. Online trading after all did not shrink the trading services industry, but instead exploded the number of transactions!