Whose lunches are the big management consultancies eating?
As management consultancies continue to make inroads into the media and marketing budgets of Australian brands, Bilyana Smith argues it's time for the industry to fight back.
It is no longer news that the big global management consultancies (Deloitte, Accenture, IBM, McKinsey, PwC, KPMG….) are buying digital agencies and design companies and competing with the advertising industry, but that is only the tip of the iceberg and they may not be after the adman’s lunch at all.
While the industry is watching in disbelief and arguing about the ability of management consultancies to attract and retain creative talent critical to success, the bigger issue is escaping attention.
In their pursuit of growth and a move to expand the frontier of their professional services, they are disrupting the marketing function in large companies, taking out the CMO’s seat at the business decision-making table and pushing it down the value chain into the territory of mere execution and, crucially, removed from the board level.
And that is bad news for the ad industry because it means getting even further removed from decision making at a board level and downgraded to the level of supplier versus strategic partner, competing at commodity level and suffering downward spiralling fees.
The good news is that it may not be too late to gain new ground – before the game change is complete, new rules established and the musical chairs taken.
First, why did it actually happen? New technology, media fragmentation, big data and fragmented marketing budgets coupled with constant change, have created unprecedented challenges for CMOs, for which they had not been prepared.
Expected to define strategy for delivering on business objectives, drive and direct execution across ever increasing numbers of channels and customer touch-points, draw customer insights and respond in real time, all with decreasing budget and constant pressures to deliver more with less – they face an enormous task.
This requires strong, multi-faceted super teams wearing multiple hats and covering a seemingly endless range of talents, capabilities and experiences – well beyond their means and capability. And the agencies are missing the opportunity this opened up.
The one-stop-shop model (creative agency as the lead) that worked in the past is no longer able to deliver the expected end-to-end service. The remaining alternative is to bring strategy in-house and manage the execution through a roster of specialist agencies to service variety of channels and functional needs.
It may sound like a logical solution, but instead of the expected collaboration, agencies fight amongst themselves for a larger share of the budget, making the job of coordination and creation of seamless customer experience very difficult and ineffective, with poor outcomes.
As a result, marketing function is left open and vulnerable, clients’ needs unmet, customer experience, business imperatives and objectives compromised. Ironically, at the same time, the CMOs are becoming more responsible for the overall customer experience. As an opportunity this was too important to go unnoticed.
Management consultancies have already been working with chief executive officers and chief information officers on tasks ranging from developing high-end business strategies to implementing new technology.
They have been in the right place to see the opportunity and quick to move in. They bring strategic thinking, holistic view and understanding of client’s business and established relationships with the C suite, and stronger influence at the decision making table. In addition, they have been acquiring capabilities to complement their consultancies with the ability to provide seamless, end-to-end digital marketing services – from high-level strategy needs via experience design to marketing, content and commerce to traditional creative and campaign analytics.
The game is changing and once the process is complete and the game rules established, it will be too late to catch up. One thing is certain – the ad industry must disrupt itself.
Reinventing is what this industry is good at. It is time now to take its own medicine and innovate its way out of obsolescence. The innovation that is required is not about technology; digital transformation is already taking place everywhere.
Instead, it is about reinvention of the agency business models. Less about navel-gazing and much more about looking deep into our clients’ world, living in their shoes, identifying their problems, their pains and gains, pain relievers and gain creators.
Asking ourselves: What can we do to help them succeed and deliver on their business objectives, grow revenue and market share, help them defend the territory they are about to lose, and redefine it? In short, answer the strategic questions: How do we create value for them and how do we capture some of that value?
What are the products and services that we can develop to deliver on these? And what do we need to do, what resources do we need to have, what changes to make, new skills to learn and new partners to find, in order to accomplish that?
We can only win by playing on our strengths. Trying to grow by patching up weaknesses is the equivalent of fighting on competitors’ terms.
As business theory tells us – marketing is a discipline on the crossover of art and science –qualitative and quantitative, emotional and rational, right and left side of the bran. It requires both sides to work its magic, to the industry’s advantage, perhaps.
As one single core capability that defines the ad industry and differentiates it from management consulting, is the creativity in many different forms: creative thinking and problem solving, creative mindset and a vast pool of creative talent? Bringing together emotional and rational. Can all this creativity be harnessed to deliver new value in new areas and in different ways?
It will be important to find the way to close the gap in business strategic advice – by moving up the value chain beyond creative execution. How? By reinventing the concept of strategy within the agencies, as fundamentally different from currently devalued planning service? Or by spinning off independent strategic outlets, to be run by people not usually hired by this industry – management consultants, MBA graduates…to advise clients and develop business strategies that underpin and drive marketing effort and implementation? Or creating a different approach altogether?
Who is most likely to lead the change? Large global ad agencies, as hotbeds and ultimate source of creative energy, reinventing the ecosystem?
Or smaller, fresh-faced and bootstrapped but innovative, hungrier, tenacious and nimbler independents?
Perhaps new entrants that are not ad agencies at all in the conventional sense, but perhaps collectives of start-ups, freeform teams, individuals, covering a broad and flexible spectrum from business, brand and creative strategy via range of execution capabilities, media, content…?
Or by the holding companies (WPP, Interpublic, Omnicom, Publicis, Dentsu..) striving to adapt and grow, which may be tempted into investing in start-ups and incubators for the future – in addition to acquisition of already proven and established businesses albeit behind the disruption curve.
In either case change doesn’t happen easily. It requires inspired leadership and courage to face inconvenient truths and the stomach for failure. To embrace speed and agility, test ideas and never lose the sight of the customer.
To rock the boat and change comfortable habits and mindsets, the way adland thinks of itself and about its clients.
Bilyana Smith is a business leader, advisor and Angel Investor. She has a special interest in creative leadership and business model innovation. She holds BA (Architecture) and MBA from University of Sydney Business School
Technology ushered in the commodification of creative. It’s no longer just about typeface choice and garnering laughs, and yet never has the ‘creative’ communication had as much penetration into all our lives as it does right now. Unless you can tie productivity directly into your creative solution then you’re going to disappear up your own rabbit hole, which is something these number crunching firms have started to realise and acted towards. And it’s also something smaller arrangements such as Stepchange have started to leverage in competition with their ‘C-suite-legitimate’ counterparts such as the BCGs of this world. Very nice piece, Bilyana.
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The secret to robust vibrancy, in my opinion, is rather quite simple. Innovative modularity via open APIs is essential in preventing ludonarrative dissonance in a hyper-connected zeitgeist for which the paradigm of big data is ever shifting to server-side cloud processing where authentic indie neobehemoths crowd-source solutioneering for a near-infinitesimal plethora of frictionless digitainment with AAA cinematic experiences that have streamlined the proprietary snackability of freemium commerce providing the cutting-edge widgetized criterion quintessential core-consumers emolument through high-fidelity microtransactions. By collaboratively cultivating supra-industry-standard cross-media end-user action-items, few other next-gen virtual services manage to synergize the microblogosphere with dynamically aggregated cyber-omnichannels in REAL TIME. Thus recontextualizing the granular front-end extensibility mission-critical infomediaries facilitate from plug & play functionalities, so long as the benchmarks of targeted web platforms are proactively engaged to avoid the disintermediate scaling that disempower supply chain facilitators.
What do others think..?
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@Mark – you nailed it with the jargon that often hypnotises clients from the big consultants. It sounds amazing but agencies often concisely say the same thing in simple terms. Sure it doesn’t sound as impressive but I bet clients walk out of the room knowing what the strategy is.
Don Watson writes about this corporate fluff and jargon in his books, Weasel Words, Death Sentences, Worst Words among others. Great reads and scary how widely used certain phrases and words appear to mean something and in fact mean nothing.
I think there’s the perception of some client C suites that agencies just present the “fluff” whilst management consultants present the “substance” just because of their heritage. It’s this heritage and their brand that clients want to really rub shoulders with, as it makes them look good in front of their board and senior colleague if they can regurgitate the corporate speak making themselves sound more intelligent – the truth is they say a lot but it doesn’t mean a lot, however if your audience think you sound intelligent with corporate jargon then the job is done. Ya gotta love ‘smoke and mirrors’.
I can remember a very similar piece written in AdNews 12 years or so ago how agency’s strategic thinking was under threat by the big corporate management consultants. Have big agencies adapted? Some have but the smaller newer digital agencies have seen the value this can bring.
In saying that I still seem them as a strong and real competitive threat so bring it on.
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