Viewpoint: The Big 8 Reasons You Shouldn't Use a Large Consulting Firm

June 14, 2012
And four circumstances when size matters.

Recently, a global pharmaceutical firm asked me to review a proposal from one of the world's leading consulting firms. The consultant's document reflected the high levels of professionalism and quality you would expect on a $3 million project. As always happens, a quick review revealed numerous opportunities to increase the risk-adjusted value of the engagement. However, my recommendation was to forego the famous consultant in favor of a small, independent practitioner who could potentially double or triple the pharmaceutical giant's expected return.

Over the past 15 years, I have grown increasingly convinced that large consulting companies are no longer the best solution to most clients' problems. Now, when clients ask me to find a best-in-class consultant for them I steer them to a small consultancy over 90% of the time.

The large consulting companies generally provide sound work. They feature excellent processes and extremely smart, conscientious professionals. Nevertheless, in most cases you will achieve better results by turning to a small consulting firm. Below are eight reasons to eschew large consulting firms on your future projects:

  1. Larger staff does not equate to more efficacy. Five hundred mediocre strategists do not deliver better solutions than a solo strategic genius. They just reach more people with their mediocre ideas. A multi-national company turned to a tiny, Colorado firm led by a physicist to spearhead their annual planning session. The result was a new offering which is transforming their market -- a stark contrast from the tried and true plans developed in prior years by a famous, global consultant.
  2. Big ideas emanate from small consultancies. My review of a pre-eminent business magazine's contributors revealed that over 70% of the consultants authoring the articles oversee small consulting firms. Only 18% hailed from "brand name" firms. Scan down the list of the top 50 business thinkers and you'll see that the majority of the consultants on the list run small firms.
  3. Increased personnel drives decreased efficiency. In the knowledge economy, bigger does not translate to lower costs. Collecting a wide range of capabilities may generate economies of scale for a manufacturing firm; to wit, vertical integration and the assembly line. In consulting, the opposite is true. You don't want your project handled by a company stamping out identical solutions with efficient precision. As a result, extra capabilities only mean additional overhead and expenses that must be covered by you, whether or not those capabilities are needed for your initiative.
  4. "We're right where you need us" holds little sway. Thanks to technological advances, one person can now conduct presentations, interviews, virtual workshops and most other activities with hundreds or even thousands of participants around the globe. When a U.S.-based, multinational outsourcing company was looking for advice on their account management program, the best consultant happened to be in Greece. They didn't settle for second best because nearby tele-meeting facilities allowed their executive team to meet with the consultant as if they were in the same room.
  5. Entrepreneurial thinking is found in small companies. Large consulting firms resemble any other large corporation, with the requisite politics, ladder climbing and adherence to policies. If you are looking for out-of-the box, nimble, disruptive thinking, you're less likely to find it dwelling amidst the cogs of a bureaucracy. Instead, you should look to small firms, where non-conformist thinkers flee.
  6. The big thinker won't be working on your project. Unless you represent a marquis company with an 8-figure budget, chances are that a large consulting firm's signature talent won't be plying their skills directly on your issue. Instead, your lead consultant most likely will have learned the core ideas from someone who was trained by a disciple of the genius. In other words, you are many steps removed from the source. In contrast, when you engage a breakthrough thinker from a small consultancy, the guru is on your case and he or she will work with you directly.
  7. Large consultancies are slow to adopt new ideas. How long would it take for you to change your product line? If you clock your hours at a large company, months or years may be required to roll out even a minor shift in your offerings across all of your customers. At consulting firms, ideas and processes are the products, and altering these throughout the entire consulting staff takes time. Hundreds or thousands of consultants must be trained on new ideas and processes, which is time consuming and expensive. However, if you look for a small consulting firm, you can choose one that is on the leading edge of new ideas.
  8. The consultant's success is not aligned fully with your outcome. When you work with the owner of a boutique consulting group, there is little doubt what customer he wants to please: you. However, when the project leader on your team is a member of a big firm, he has two customers: you and his boss. In fact, there may be many layers of internal bosses, all of whom must be satisfied for the consultant to succeed professionally. Is your project important? Yes. However, so are factors mostly irrelevant to you, such as development of the people underneath him, leadership qualities, resource coordination, and the team's utilization.

Are there times when it does make sense to turn to a large consulting firm? Yes. Here are four circumstances in which I direct clients to a brand-name consultancy:

  1. When cachet is critical. Some executives just need or want a brand name to support their decisions. Whether it is to shore up their confidence when presenting to the board or to make their recommendations unassailable, for these executives the name on the label is important.
  2. When you need broad, simultaneous geographic reach. A small consultancy can help you virtually anywhere; however, not everywhere at once. For a client rolling out a new accounting system simultaneously in seven countries, the small consultancy will not work. The instances when simultaneous reach is needed are surprisingly few.
  3. When you need a lot of bodies for implementation (vs. a lot of brains for diagnosis and prescription). Some projects require arms and legs to get tasks done; this is most common for commoditized implementation projects such as implementing a new IP system or focus group sessions with 2,500 people around the globe.
  4. When the best-in-class independent consultants do not have capacity to accommodate you. One problem with tapping into the best talent available is they have limited capacity. Sometimes you simply have to settle for second (or third) best, which means a large consulting firm.

If you have an important project coming up and are wondering whether you can afford a top-notch, big-name consulting firm, set that consideration aside. You will get better results (though not necessarily lower costs) by partnering with a best-in-class, small consulting group.

David A. Fields is managing director of Ascendant Consulting LLC. His book, "The Executive's Guide to Consultants," will be released by McGraw Hill in fall 2012.It can be preordered at Amazon and Barnes & Noble. Contact him by e-mail at [email protected].

See also:

Why Your Consultant Secretly Hates You

10 Questions You Should Always Ask Before Hiring a Consultant

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