A big miss
At this very moment, in every corner of the world, consultants of every stripe-- from fancy strategy types to frontline IT contractors--are working feverishly to pitch their mastery of AI. But in the vast majority of cases, these cobblers (let alone their kids) have no shoes: very few consultants are actually using AI to transform their own businesses.
This is a big miss. Services businesses have one (very) big constraint: they sell time. AI cannot replace the most important value-add from consultants (more on why below), but it can productize much of what they do.
Before I started building software companies, I spent ten years consulting. When I was seventeen, I got my first job in a family law office, where I did basically identical tasks for a different client every day: write intake notes, compile notes into a brief, format the brief into court documents and so on. After college I worked at a PR firm on K Street where we designed public awareness campaigns paired with targeted lobbying. That led to a job at a DC think tank where major foundations hired us to inform and assess their grant making strategies on health, climate, poverty and other big issues. Last year, my cofounder and I consulted on product and GTM before launching our new company to test out how we work together (highly recommend!) Across every one of these projects in a range of industries, the client was basically buying two things.
What do clients want from consultants?
Over the past few months I've been talking to the full gamut of consulting folks: McKinsey strategists, Ernst & Young technical implementation teams, Adobe platform implementation services, revenue ops consultants... I see the same basic pattern in these cases that I saw in my own consulting work:
The world is full of powerful products and useful information, but it remains inaccessible. Consultants fill the gap between what is possible given existing tech and knowledge and how to put those tools to use.
In other words, clients hire consultants to do two basic jobs:
Job #1: Judgment
What exists? What methods exist to get me from here to there? What framework / strategy / tool / objective / approach should I use? How will I know if it's working?
Job #2: Execution
Which we can break into two buckets:
- Pattern-matching: How do I get it done? What are the steps? What's the same or different about this situation?
- Capacity: The legwork of implementation itself, which is vastly reduced for someone who comes in with battle-tested judgment and pattern-matching / breaking awareness.
What parts of consulting can AI productize?
Here's the key takeaway from breaking out the "basic jobs" consultants do:
- The importance of judgment increases in lockstep with the price of the consulting engagement because clients will pay to outsource judgment.
- But the price that clients will pay for execution is capped at the opportunity cost of using another product or service to get the thing done.
- In other words, judgment is a scarce resource; execution is a commodity.
This has clear implications for AI strategy: consultants who use AI to productize execution, leaving more time to grow and differentiate their judgment, can charge more for their work. As the inputs on execution decrease, inputs on judgment can increase, and the consultant will become a scarcer resource who can charge higher rates.
(Wait, can't judgment be productized too?*)
How can AI productize consulting execution?
Internally, innovators will begin to productize their pattern-matching capacity by breaking every piece of work into a discrete module that can plug into a range of related playbooks. These modules specify in increasing detail the steps and strategies needed to execute a process successfully--including examples of how it that process played out in the past. Consultants will index these internal assets to make them accessible when they are needed. Over time they will continue to break each variation into more granular versions so that team members can see how variations on a standard process actually played out in practice.
These steps build a data set of fine-grained process that can be matched to each specific client situation. Not only will this decrease the capacity needed to execute each project, it will give these consultants a huge competitive advantage as each of their engagements is captured and used to refine their offering. In a conversation with Michael Gaudet of Eighty Twenty CMO, I saw how his instrumentation and learning loop allows them to deliver extraordinary value in a compressed amount of time.
Externally, innovators will create durable processes that make their analysis and execution digestible and evergreen for the client. The best consultants do not aim to work with their clients forever. They work to build capacity within the client, so it lives in-house. What does the client need to be able to understand, digest and eventually internalize the consultant's ability to execute? It's great if every process is well-documented, but how many 300 page consulting reports remain forever unread? Clients need processes that present the key elements to each stakeholder in a visual, structured format that can be easily communicated, shared and adapted.
Every process is a proxy for the real situation. Clients love consultants who distill the key pieces they need to remember and execute. I saw this in a conversation with Jacki Leahy, whose revops firm Activate the Magic starts every client with a map that gradually fills in over the course of the engagement. The client sees how all the pieces fit together and which pieces are missing.
How do consultants start turning their processes into products?
You can do a lot with off-the-shelf AI to turn consulting work into documentation. But automation and communication remains a challenge. My last company, Outbound (now part of the Zendesk stack), automated customer engagement. I believe the opportunity for Splotch is much bigger: we want to help consultants across industries automate the intensely manual work of documenting, evolving and communicating processes so they can turn their work into products.
Intrigued? Drop a note below: we're in full-on listening mode, talking to as many consulting folks as possible about how we can productize your work.
*Consultants only need to worry about being replaced when AI can offer judgment that rivals their own. This is more complicated than it first appears. Judgement requires trust, which is built on social dynamics, not information. This is why Fortune 500 companies hire McKinsey when they already know exactly what to do.