Consulting Disrupted: Luxury Institute’s 7 Compelling Reasons Why Traditional Consulting Is Dead


NEW YORK, Feb. 26, 2019 (GLOBE NEWSWIRE) -- A recent report by consulting firm RGP, which conducted quantitative research with 450 business executives, indicates that the traditional consulting industry model is broken. According to the research, the top three reasons why corporate leaders are so dissatisfied with the performance of traditional consulting firms are: lack of relevant knowledge, lack of sustainable results, and extremely high fees. 

Any large industry that is so widely perceived by its clients as ineffective, and inefficient, has to be ripe for disruption. Too many consulting firms today are completely oblivious to the fact that their clients feel that their business model is a relic of the past. Today, far better alternatives are emerging quickly. Traditional management consultants rightfully keep warning their clients that the platform revolution will disrupt all business models. Sadly, top-tier management consulting leaders appear to be unaware of the fact that the platform revolution is radically, and irreversibly, disrupting their own business model. 

Sangeet Choudary, co-author of the landmark book “The Platform Revolution,” differentiates between pipe vs. platform business models. According to Choudary and his co-authors, pipeline firms organize their internal labor and resources to create value by optimizing an entire chain of production activities, and often own all of the resources. The management consulting business today is an end-to-end, high overhead labor pipeline model where, unfortunately, the value created flows primarily into the coffers of the consultants, not the clients.

Choudary, a consultant to the Luxury Institute, defines today’s rapidly emerging labor platforms as “businesses that connect external producers and consumers and enable value-creating interactions between them. A platform provides a participative infrastructure for these interactions and sets governance conditions for them.” In platform business models, the value flows and scales in both directions. The platform must satisfy the demands of the entire ecosystem or perish.

Labor platforms such as Fiverr, Upwork and TaskRabbit have created an efficient and effective marketplace for low and medium level skills such as web development, logos, basic coding, and other routine skills. Strong momentum is now building at the elite expert skill level, where problems and solutions are more complex, and far more valuable, across industries. Highly selective, curated project platforms such as Luxury Institute’s GLEN (Global Luxury Expert Network) now provide clients access to top-tier experts who deliver effective business solutions, in a fraction of the time, and at a fraction of the cost.

Many of the Luxury Institute’s GLEN platform members are employed full-time with top luxury goods and services companies, yet enjoy working briefly on non-competitive, zero-conflict projects that help them, and their employers, network and build lasting business relationships. Other experts are between jobs and desire the opportunity to contribute and add value. The third group is comprised of independent experts who have had relevant, successful corporate careers, and now want the flexibility to work when they want to, on projects they select. All expert members earn supplemental income for the projects in which they participate and refer.

In operation, the GLEN platform receives a project request from a client, determines the optimal process with the client, selects the ideal roster of elite expert team members with the client, invites GLEN experts to participate and confirms their availability, then the Luxury Institute and participating expert team members execute the project with the client seamlessly.

Here Luxury Institute defines seven compelling reasons why elite expert platforms are rendering the traditional top-tier consulting model obsolete:

1. Higher Levels of Expertise 

Traditional management consulting firms are command-and-control hierarchies led by a few career partners with no operating experience at the top, and an army of junior associates with even less relevant operating skills, at the bottom.

In contrast, for each client project, elite expert networks such as GLEN conduct a fully customized selection process of relevant top-tier experts. All members are required to have reached, at minimum, a director level position at a top firm, and to have a successful operating track record, plus an impeccable professional reputation to match. Each project is curated and staffed to fit each individual client’s exact needs.

2. Higher Levels of Performance 

In many cases, the final product deliverable of a traditional consulting firm is primarily a slick, aesthetically meticulous 80-page PowerPoint presentation based mostly on extracts from interviews with the client team. A partner, who has spent a very small part of his time on the project, delivers the final presentation.

In sharp contrast, elite expert teams focus diligently on delivering tight, clear, innovative, and proven solutions, often based on the combined creativity and expertise of the selected members, plus the internal client team. It’s an honest, seamless integration of expertise optimization between the elite experts and the client.

3. Shorter Length of Project Time 

Traditional consulting firms often conduct 12-24-month operational engagements that frequently get delayed, or extended, at the expense of the client. 

Elite expert teams don't require a long discovery process, precisely because they are operating experts. They can size up the problem, and determine a viable solution, through working with the client, in a matter of hours, days, or weeks.

4. Lower Costs and Higher Client Return on Investment 

Traditional consulting is a high-fixed and high-variable cost business model, especially for the client. The top-tier consulting firms bill a junior consultant, fresh out of college, at $250 per hour. When you add in the billable hours and travel expenses at four days per week, a client is paying upward of $500 per hour for first-year consultants to sit isolated in a conference room over many months. Partners make millions of dollars per annum, and their bonuses are incentivized on how many hours they manage to bill each client.

Instead, elite expert platforms have few employees, rely on technology for routine interactions, and optimize face-to-face and remote work for their clients’ projects. Thus, they have almost no overhead costs. They can pay their experts equitable fees while delivering business solutions for the client in a fraction of the time, and at dramatically lower costs. An actionable high-value solution delivered sooner, and at a fraction of the cost, delivers a much higher return on investment for the client. And platforms have no toxic incentives to overcharge their clients. They rely solely on equally highly satisfied clients and experts for referrals and repeat business.

5. Higher Ability to Integrate into the Client Team

Traditional consulting firms a have a policy of hiring primarily for analytical skills. Their interview process is based on esoteric problem solving, akin to taking the SATs all over again. The 16-hour workdays in front of a computer building excel spreadsheets, plus the burnout from arduous travel, all lived in a pressure cooker corporate environment, mean that consultants often experience unhealthy and unhappy lifestyles. Unfortunately, by living in a dehumanizing meat grinder, their emotional intelligence skills are under-developed, or suppressed, at best.

In complete contrast, elite experts who become GLEN members are selected for their expertise in their domain, developed over several years of front-line experience. More importantly, they are vetted for proven expertise in emotional intelligence skills and their professional reputation. They must consistently demonstrate deep empathy, trustworthiness, and kindness toward others at work. This translates into an ability to embrace teamwork, collaboration, and fun, while delivering high performance and building mutually beneficial, long-term client and peer relationships.

6. Higher Levels of Diversity that Drive Creativity and High Performance

Top-tier consulting firms such as McKinsey, BCG and Bain (known as MBB), stake a claim on being experts, and advise clients, on ethnic and racial diversity and inclusivity. However, the vast majority of top-tier consultants fail to publish their own internal metrics to prove how skilled and ethical they are at equal opportunity. One firm, Accenture, does publish their metrics, but the results over three years are telling. At Accenture, which employs close to half a million people, the executive levels are comprised of 68.3% men, and 31.7% women. Caucasians account for 60.5% of the executives, and 28.4 % are Asian, mostly men, for a combined 89% of all executives. Sadly, African-Americans are 4.7% of the executives, while Hispanics are a scant 4.3%.

Because they are looking for the absolute best talent across international boundaries, expert platforms such as Luxury Institute’s growing Global Luxury Expert Network has an equal distribution of men and women. A large percentage of the elite experts are from nationalities, races, religions and life preferences that represent the real world from North and South America, Europe, Asia, the Middle East, and Africa. McKinsey and Google research demonstrate that team diversity is highly correlated with better outcomes and high performance. The platforms have no choice but to seek expertise and emotional intelligence, whatever its demographics, and be equal opportunity providers, or become irrelevant. Luxury Institute and GLEN were founded by an immigrant Latino entrepreneur, raised by women, who knows better than most, that equal opportunity is not just good for business; it’s good for society. 

7. Higher Network Effects and Virtuous Cycles

Traditional pipeline consulting business models keep churning employees and clients at a fast clip in order to make a profit at all costs. This is a mercenary, rather than missionary, business model that will not continue to thrive for long in the new age of the transparent platform revolution.

Unlike the traditional consulting model, platforms such as GLEN are intermediaries who must deliver high and consistent value to both suppliers and consumers of the services whose interactions they are granted the privilege to facilitate by their constituents. This is especially true of boutique elite expert networks, where the standards and discernment levels of both elite experts and elite clients to receive the highest value in their interactions are non-negotiable. Platforms not only facilitate; since they don't own any of the participants, or their interactions, platforms must have in place high ethics, performance standards and metrics that guarantee measurable results equally for the demand and supply side of the equation. To provide more incentives to do right by all, platforms have the unique characteristic that today’s elite expert is tomorrow’s client, and today’s client is tomorrow’s elite expert. The roles are interchangeable. This virtuous cycle of ever-exchanging roles is what creates the network effects that allow platforms to scale, at rapid rates, creating value for all.

The era of Big Consulting, created in the early 20th century, is over. Platform business models are not only for Uber and Airbnb. Traditional consulting will have to adapt or perish. Labor platforms are taking over the world of work. The boutique elite expert labor platforms, such as Luxury Institute’s Global Luxury Expert Network, have a moral, ethical, and economic obligation to guarantee that all of its constituents receive high value from their interactions.

About Luxury Institute and the Global Luxury Expert Network (GLEN)

Today, we are the world's most trusted luxury and premium research, training, and elite business solutions firm with the largest global network of luxury experts. Uniquely, Luxury Institute’s network of hundreds of elite experts includes current luxury brand C-Level, VP and Director executives, former executives, and independent experts. We have conducted more quantitative and qualitative research on affluent consumers than any other entity. This knowledge has led to the development of our scientifically proven high-performance, emotional intelligence-based education system that dramatically improves brand culture and financial performance. Over the last 16 years, we have served over 1,000 luxury and premium goods and services brands.

The Global Luxury Expert Network (GLEN) is comprised of hundreds of global luxury experts. Luxury Institute’s elite experts have a minimum of 12-years of operating experience with top-tier brands, most with over 20-years of experience, and are current and/or former C-level, VP or Director executives with proven track records of high-performance. The Global Luxury Expert Network offers members the ability to participate in remote or live on-demand, short-term, high-value projects and earn supplemental income, be the requesting client and have other GLEN members participate in their project or refer projects to the network. All members receive supplemental income for the projects in which they participate or refer. To become a member or learn more about the Global Luxury Expert Network (GLEN), please visit Luxury Institute.

Contact:
Milton Pedraza
mpedraza@luxuryinstitute.com