This first is that middle managers are right to complain that their advice is ignored.  It often is: their bosses, confident in the beliefs that have so successfully taken them up the corporate ladder, aren’t prepared to listen to others, certainly not those beneath them.

The second is that this throws light on one of the most important roles a consultant has – helping organisations and individuals take better decisions by bringing outside information and an independent perspective.  The more powerful executives think they are, the tougher, but more important, this role is.  Consultants are helped by being outsiders: if clients don’t listen where they feel powerful, it follows that they will be more likely to listen to consultants because they have no hold over them.  That leaves the issues of selective hearing: irrespective of whether you’re a colleague or a consultant, the person you’re talking to is only likely to take on board the points they already agree with.  If you’re going to change someone’s views you need to be both demonstrably right and persistent.

Both of these qualities – objectivity and the willingness to challenge – are only sustainable if you’re also disinterested: the advantage consultants have disappears if they become economically dependent on a client and the client knows it.

We’re currently in the midst of reviewing the thought leadership published by consulting firms in the last six months (we rate its quality on a regular basis) and I was struck by the honesty of this exchange in contrast to the relentless optimism we encounter in our review.

In the parallel thought leadership universe, every project is implemented, every new market is successfully entered, every threat countered.  Managers are all freshly-laundered and alert; meetings buzz with productivity; offices are gleaming.  Challenges exist, but only to be overcome.  Business is a tidy, rational activity where the unpredictable only happens in order to demonstrate how good we are at coping with uncertainty.  Unfairnesses?  Those aren’t things we meet in the real world, are they?

One of the many things this pristine world lacks is learning because, as Dame Jocelyn points out, that’s what we get from adversity.  The thought leadership universe has no friction, so nothing ever sticks.

So what might the alternative look like?  Business leaders talk candidly about what frustrates them and why!  Strategy directors admit they have no clue about what’s going to happen next!  The possibilities are endless – and never going to happen.  Why?  Because no one will want to go first.  Talking about problems is fine if everyone is doing it (look at the growth of misery memoirs).  It’s a classic case of the individual incentive trumping the collective good: the person who goes first will stand to look stupid if no one else follows suit, even if everyone would gain from collective change.

Back to the parallel universe, I suppose…

In “Managing the global enterprise in today’s bipolar word”, Booz & Company argues that “globalization 2.0 also raises a host of thorny questions about what it means to be a global company today. The sheer pace of change, the asymmetries of market dynamics across a company’s portfolio, the need to localize products and services to different cultural appetites but leverage scale and synergies globally, and the demands of an increasingly diverse workforce all require multinationals to rethink how they run themselves.” It’s hard to find a better summary of one of the key organisational challenges facing consulting firms, as Booz concludes: “while companies vigorously prosecute a globalization strategy externally, their internal organisations struggle to keep pace. They are frequently unprepared to deliver on the full promise of globalisation.”  Few firms are genuinely global; many still struggle to overcome their own internal geographic boundaries in order to offer an integrated service.  As multinational projects absorb an increasing proportion of expenditure on consultants, finding a new model should be a top priority.

Social media poses threats and promises opportunities for consulting firms just as much as their clients, but how best to respond?  In “Which retailers are winning in social media, and why they win”, LEK has found that brands which are thought to have the best social media presence share three characteristics: they offer exclusive deals to keep their consumers engaged and respond quickly to the latter’s needs, but “first and most important, [they] amass large amounts of user content.”  Clearly, offering discounts to people who buy consulting services online is still some way off, but LEK’s points about user content and prompt response are directly relevant.  Even the most cursory scan of consulting firms’ websites shows that they’re dominated by firms broadcasting their view.  2012 should be the year in which consulting firms let their clients speak for themselves.

“How strategic is our technology agenda?” asks McKinsey, concluding that: “The swift and radical changes taking place today in the technology landscape create opportunities that extend far beyond IT’s traditional ambit.”  It’s a point consulting firms would do well to bear in mind as they look for new markets and services.  While technology consulting is an attractive proposition, especially in such harsh economic times, the type of help clients are looking for is changing rapidly.  Cloud computing projects won’t require anything like the consulting resources needed to implement conventional enterprising resource planning systems – to name just one example.

Looking further ahead, Roland Berger has produced a raft of trend data, creating a picture of what the world in 2030 may look like.  Among a host of slightly scary statistics is 46 million – that’s the projected shortfall in qualified employees in Europe and something that rams home the extent to which consulting firms need to think again about where the raw material for their businesses will come in the future.

Consulting advice – like charity, it would seem – starts at home.

The 2009 recession in consulting was, while shocking, not unexpected.  It took a while for the full fallout from Lehman’s demise to be felt by the industry, so there was time to wind down recruitment activity in order to bring supply in synch with lower demand.  Moreover, consultants are reasonably familiar with boom-bust cycles: having seen demand grow quickly in 2004-07, most recognised that some level of correction was on the cards.  That sense of cyclicality determined firms’ reaction: hatches were battened down; key relationships were maintained; playing safe was the order of the day.

It’s a reasonable response, but one that’s predicated on recovery – the equivalent of holding your breath while a big wave washes over you.  Adopting the same approach a second time around may not be possible and is certainly not desirable.  There’s a limit to how long you can hold your breath: at some point you have to start swimming.

Those are the stark choices facing consulting firms in 2012.  If you assume – and it would be sensible to do so – that this year will see declining demand in some Western markets and low growth at best in others, then one option is to repeat 2009’s strategy of hunkering down.  But the other option will be to fight back.  This requires a more aggressive approach, eschewing further rounds of generic cost-cutting in favour of honest conversations about what works and what doesn’t in business, genuine innovation and a relentless focus on helping organisations grow.  But above all else consulting firms need to shed the unwritten assumption that they’re helpless spectators, pulled, like their clients, to and fro by economic tides outside their control.  The industry should be making waves not waiting to be submerged.

The medium has become the message. Marketing managers are desperately scrabbling around trying to work out what on earth to do about social media and they’re being egged on by anyone they talk to until it sits head and shoulders above everything else at the top of their agenda. But let’s strip this thing back to basics shall we? Social media is just that. Media. Not message. Channel, not content. Sure, it’s allowing more people to create, share and respond to content than they could do previously, but it’s just a faciliator for something else. As a marketing manager should I be bothered about it? Certainly I should be aware of it. Certainly I should make use of it where I understand it. Certainly it should play a part in what I do. But if I was looking for growth where none existed and had limted funds to find it (sound familiar?) it’s not where I’d be putting my attention.

Social media platforms faciliate communication between people in a way which means that billions more ‘conversations’ are happening today than used to happen the day before they were invented. Billions. The question I have, at least where business is concerned,  is this: are there billions more things to talk about? If there aren’t people are just talking. Should I spend my time getting involved in their conversations, trying to make sure that I’m learning from everything they’re saying about me, that my company is being represented fairly by all of them and that they know everything about what I have to offer them? Or would I be better creating things for them to talk about? I  know my answer to that.

The point is this: if your business isn’t growing as fast as you want it to then social media is unlikely to hold the answers. Sure, it might be a useful way to hear what other people think you should be doing, but where are your own ideas? What do you, and all the clever people you’ve assembled around you (who know your industry, your company and your customers better than anyone else) think you should do? I’ve become a bit irritated by the reverence with which people have been talking about Steve Jobs in recent months but there’s no denying that the former head of Apple was supremely good at one thing: making people want stuff. And social media platforms were full to bursting with praise for him, his company and his products. Why? I’ll tell one thing for nothing: it wasn’t to do with his social media strategy.

With that in mind, we’d like to start 2012 with some programming suggestions of our own:

• Downton Consultants: A tear-jerking drama from the early days of consulting in which rational decision-making is replaced by meaningful looks and labradors.
• Consulting Trek: Boldly going where no management thinkers have gone before, a plucky band of consultants, armed only with sixties-inspired technology, seek out alien ideas and stun them.
• I’m a Consultant, Get Me Out of Here: Share the tears and joys as otherwise decent consultants fight their way through the organisational jungle.
• Consultant Who: Rogue interim manager uses time-travel tricks to take change management to a whole new level.
• Great Expectations: Classic Victorian story is given a new twist when Pip and Miss Havisham’s interior design business has to be rescued by charming but enigmatic consultant, Estrella.
• Frozen Consultant: Stunning documentary footage of consultants enduring the toughest client conditions on the planet, complete with details on how this unique programme was made by cameramen who spent months disguised as laptops.

Funny? We hope so, but there’s a serious point here, too. Most marketing by consulting firms tends to play it safe by promoting intellectual capability to existing clients. If creative media types are finding sufficient material in the consulting stereotype to make a TV series out of it then perhaps its about time the industry responded in a similarly creative way. And found a way to talk to the heart as well as the head.

But there are two important areas where procurement has had less success.  The first is where specialist expertise is concerned.  The increasing prevalence and length of ‘second tier’ preferred supplier lists implicitly acknowledges the fact that ‘first tier’ consulting firms aren’t always perceived to have the depth of skills required.  Procurement has a role to play here, helping establish standard contracts and vetting firms’ ability to meet certain qualification criteria, but it’s more of an administrative one.  The drivers behind ‘second tier’ lists are end-users, experts in their own right who know precisely what additional expertise they need and where to find it.  The second is where a consulting firm is been brought in because its brand and therefore recommendations will be accepted and respected by quarrelsome internal and external stakeholders.  This is a fait accompli from the procurement point of view as the choice of firm continues to depend on top-level relationships.

Is it realistic or even desirable for procurement to make a more meaningful contribution to these two latter areas?  Where subject matter expertise is concerned, the answer is probably a qualified yes, but this will require a change in behaviour and focus, with procurement people seen less as gatekeepers and more as market experts and business partners.  But it’s hard at the moment to believe that procurement will ever play a significant role in the last category because of the non-standard nature of the work, the (distressed) circumstances in which such purchase decisions are typically made and the relatively short list of firms likely to be invited to do the work.

The distribution of expenditure across these four areas of consulting obviously varies from organisation to organisation.  For some, the first two categories – large-scale projects and freelance consultants – may account for 90% of money spent putting the procurement team in a strong position.  But in others, the majority of consulting work may involve specialist expertise, making it harder for procurement people to add value.

The key to procurement success – and achievable ambitions – therefore lies in this segmentation, in injecting rigour to the first two areas, market knowledge in the third and staying clear of the fourth.

First off, many consulting firms wouldn’t agree.  For them, producing thought leadership continues to be a struggle to get agreement around which subjects to focus on, to find people prepared to be brave and opinionated enough to write material that stands out from the crowd, and to ensure that the best of their thought leadership is effectively leveraged across their firm as a whole.  But go beyond these long-standing and still serious issues, and things are changing.  As if to compensate for problems elsewhere, firms have honed their ability to do commission surveys, wordsmith material and produce eye-catching design.  Thinking and engagement may still be difficult, but production has, indeed, become much easier.

We’ve entered the age of mass production where thought leadership mass is concerned.  Sourcing the raw material remains a challenge (good ideas are the consulting equivalent of rare earths), as does getting the output to the right people at the right time, but producing it?  No problem.  In fact, it’s so much not a problem that we produce too much of it.

That brings me to my second point.  Anyone who watched British children’s television in the 1970s will remember the Clangers – endearing little pink creatures which lived under dustbin-lids in craters on the moon.  The Clangers were ecologists ahead of their time, constantly finding creative ways to use space junk.  In one searing episode, a machine dropped out of the sky which, when a lever was pushed, made plastic pots and pans.  Initially intrigued, the Clangers were then terrified to discover they couldn’t stop it, almost drowning in the stuff produced.  Disaster was averted but, even so, the story remains an allegory of craft work (hand-knitted pink Clangers) exposed to the dangers of mass-production – and it’s hard to find a better parallel with thought leadership.

Thought leadership is a craft: its mass production is an attempt to conceal the difficulties inherently involved in its creation.

And that takes me to the third and final point I want to make.  Mass-produced thought leadership is as easy to read as it is easy to produce.  And, like anything that can be skim-read and quickly digested (think bullet points on slides), it’s instantly forgettable.  Because we’re dealing with a time-poor audience, we don’t want to take too much of their time.  If an article can be read in a couple of minutes, we reason, it’s more likely to be read.  But the purpose of reading is not to get through as much material as possible; it’s to be entertained and to learn.  I’m not arguing for obscurity for its own sake and I accept that you have to make it clear why someone should invest their time reading your article, but I don’t believe clients think, “I won’t read that longer article, even though it looks really relevant, because I can read ten less interesting articles in half the time”.

Thought leadership – either its production of consumption – shouldn’t be easy.

Deciding what to do with the brand of a consulting firm you’ve acquired isn’t easy. Keeping the brand means customers failing to associate your new acquisition, and all its capabilities, with you. A separate identity also creates a barrier to the sort of cultural integration that is the hallmark of successful acquisitions. And, of course, it means managing another brand. On the other hand, absorbing the aquired firm under your brand means losing, at a stroke, one of the most valuable parts of the asset you’re buying: the brand that customers know, trust and have come to associate with precisely the sort of capability or presence for which you’re not known. On balance the latter seems the greater sin, and yet it’s the path most large consulting firms take, at least when aquiring a firm much smaller than theirs.

Pride probably gets in the way, and I don’t doubt that machismo has a part to play, but I wonder if firms are creating a rod for their own backs from the moment they sit down with their marketing agencies and forget to talk about how to deal with aquisitions. The fact is that if the main – and especially the only – part of your firm’s logo is your name then you leave yourself with no room for manouevre. Your decision about what to do with an aquired brand is forced down one of the routes described above: you either keep the brand in its entirety, or you drop it altogether. Most drop it.

It’s a conundrum I was pondering whilst watching a programme about what was – until it monumentally screwed up - one of the most prolific aquirers in recent corporate history: RBS. Whether unwittingly or not, one of the things RBS had working in its favour was a strong visual identity (its logo) that didn’t contain its name. That meant that when it acquired Charter One, customers in America’s midwest – for whom The Royal Bank of Scotland might well have been a hill in Edinburgh – continued to do business with the same brand they’d always known, whilst RBS stuck its logo (in Charter One’s colour) at the front of the brand and made it a very obvious part of the group. Problem solved.

Following this train of thought I’ve been looking at the logos of 12 or 13 of the world’s biggest consulting firms and have concluded that just three – Capgemini, Bain and PwC - are acquisition-ready. Accenture narrowly misses the cut here (its greater-than sign might just do it, but I’m not convinced) and I’m afraid I simply can’t give the nod to Deloitte’s green dot (blink and you’ll miss it). The rest are nowhere near ready. There’s only one thing I haven’t mentioned here, which is the font in which a firm displays its name, but while for firms who have a separate logo these can be used to further reinforce a sense of belonging in an acquired brand, for those who don’t, just writing the name of your acquisition in your font is likely to be tenuous at best, and downright confusing at worst (imagine Pepsi written in Coca-Cola font).

So there you have it: the key to successful acqusitions is just to create a nice splodge of some sort to go above, below or next to your name. Who’s going to try it first?

Unquestionably, 2012 is going to be a challenging year, much more so than consulting firms – and we – expected back in January.  Then, the recovery seemed sluggish but there were signs that private sector clients outside the financial services sector were finally increasing their expenditure on consulting.  Since then, even this sluggish growth has stalled, as companies worry about the unfolding Euro-zone crisis.  Moreover, the financial services sector – the undoubted engine of growth in the consulting industry in 2010 – has started to rein back its expenditure on consultants to more normal levels.

If you were to add up the collective ambitions of consulting firms going into the New Year, they would far exceed the levels of growth likely in the market.  So where will growth come from?

For all but the biggest brands, success will depend on specialisation and innovation.  This is a bitter pill for many to swallow.  Mid-sized firms have to admit that they will probably never have the scale and status of their larger rivals; smaller firms have to relinquish new markets.  Yet the opportunity here remains enormous: even the most cash-strapped clients want genuinely world-class expertise.  Tier One consulting firms have been able to grow through diversification: strategy firms have stepped into operational work, operational firms have moved into strategy and technology – the list goes on.  This remains a viable strategy but consulting firms will over time find themselves over-stretching their price points as much as their brands.

The volume of work done by standalone consulting firms is shrinking as niche firms are absorbed by larger ones, so cross-selling between consulting and non-consulting practices in a single business may be an important source of growth.  Yet a long list of failed acquisitions is testimony to how difficult this is in practice.  Equally challenging from an internal perspective is being able to respond to the consulting opportunities in globalisation and, in particular, to tap into client demand for integrated international teams.  Astute firms won’t simply reconfigure their organisations to make knowledge-sharing and multinational teams easier, but will look at how they can change their business model, redefining consulting.

Five options for growth: which will you choose?