The Next Evolution of Strategy Consulting?

09 May 2010|Darrel Rhea

Last week I wrote about the new juxtaposition of Design and Business Strategy, and they are converging rapidly. Now let’s focus on Business Strategy and a recently published book that is an important read for anyone aspiring to be a Strategy Consultant, or for that matter, anyone hiring one.

The Lords of Strategy by Walter Kiechel outlines a detailed history of evolution of the field, chronicling the emergence of the powerhouse firms McKinsey, BCG and Bain, and tracking the progression of their intellectual frameworks. The contributions of many other players are also woven into the narrative (Porter, Hamel, Peters, Waterman, Drucker, Pascale, Prahalad, Foster, Collins, etc.). He manages to tie together how ideas on strategy have advanced, connecting almost every significant business book you might have read over the last thirty years.

This book makes clear that the practice of strategy consulting has…

…made contributions to the world of business primarily by developing and applying analytic models to create financial efficiencies. These skilled consultants have grown corporate profits and share prices successfully, and generated wealth for a few – but they haven’t actually made businesses (or the world they operate in) better. Their clients have not been made more sustainable, better places to work, nor more capable of serving customers or their communities.

While there is much to remark about on the juicy story of the consulting industry, what interested me most were the four themes Kiechel outlined impacting the future of strategy. My interpretation of them follows.

Dealing with risk. Strategy work has been focusing on building contingency into calculations about the future. The formulas and prescriptions offered by the strategy firms have become less effective in our increasingly interconnected global economy. Missing are the elements of critical judgment and intuition, and clear ways of making grounded choices in a complex world. (Clearly the global financial crisis revealed how little these elements exist within the world of high-level strategy. Just because an Enron can make money doing something with moderate risk, doesn’t mean they should do it.)

How can the practices of Strategy make management wiser about navigating the risks associated with finding their future?

Boundaries. Boundaries between companies, their competitors, supply chains, and customers are now blurring with global networks, open innovation, and participatory design. Strategy has been centered on economic models of competition based in more stable market conditions.

How can Strategy provide tools to deal with co-creation in rapidly evolving financial ecosystems?

Corporate purpose. The primacy of shareholder value has been somewhat discredited as something to measure success on a daily or quarterly basis. We shouldn’t rely on market mechanisms to produce the larger good – because they clearly don’t. Long term growth and sustainability is the emerging goal, but strategy has not been able to deliver tools to help organizations find their purpose and ways or making decisions that create that.

How can Strategy help organizations harness their sense of agency and reveal a purpose that can sustain it over time?

People. “Human capital management systems” are making highly efficient but inhumane companies. Strategy practices have not found a way to harness the human spirit, the entrepreneurial energy and passion of employees. For strategy to work, it needs to be driven by motivated people. Strategy consultants have focused on the CEO and decision-making, and in their drive for financial efficiencies have often alienated middle management.

How can Strategy serve the people within the whole enterprise (management, employees, customers, shareholders, communities, suppliers…)?

These questions posited after each of Kiechel’s themes are questions that we need to ponder as we evolve our strategy and Design consulting offers.

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