5 Challenges Confronting Most Consultancies - Part II

Part I of the article highlights two common challenges consultancies face, and this part will continue to address the remaining challenges.

5 Challenges Confronting Most Consultancies

3. Hitting the Project Wall

"Hitting the project wall" is a frequent challenge for consultancies that rely on projects. Unfortunately, many consultancies do not move beyond this "wall." They aspire for strategic success but get stuck on low-value projects that generate minimal engagement. Most consultancies aspire to elevate their standing. However, transitioning from years of executing small projects can be difficult.

The team has experience in project execution (and has been hired for that purpose), but it is challenging to change the external perception of this consultancy as a small project firm. Transitioning to higher-level strategic work (at premium pricing) after years of (lower) project pricing can confuse clients.

However, consultancies that aspire to operate at a higher level must actively work to overcome the wall and reshape their market identity as specialists in a particular field. Once they cross the wall, they can reach the next level of business growth—engaging exclusively with ideal clients and confidently declining irrelevant opportunities. The firm can charge premium fees at this level because of the high demand for its deep expertise and transformative impact. It’s when a client invites the firm to collaborate rather than submitting low bids for projects and sending endless follow-up messages.

How to Address the Project Wall Challenge?

Luk has observed over the past decade that many consultancies are inevitably drawn into a cycle of small, low-revenue projects. This results in:

• High pressure to generate leads to maintain workflow.
• Annual gross revenue per full-time employee that falls below market standards.

This downstream pull is another side effect of suboptimal positioning. For consultancies aiming to elevate their strategic capabilities and charge premium prices, Luk suggests developing a business plan to overcome the wall permanently through the following steps:

• Develop a Discovery Audit. A discovery audit helps firms understand improvement opportunities in a specific strategic area, such as supply chain inventory improvements, cybersecurity risk analysis, data analytics feasibility studies, and similar areas.

This results in a roadmap summarizing improvement areas and recommendations. Based on the consultancy's internal capabilities (the team), it can determine how much of this roadmap it can implement. It serves as an organization entry point and an elevation in consulting work.

• Develop a "Build the Function" Value Proposition. Most consultancies lack a distinct value proposition focused on helping organizations "build" or enhance their functions (which can be included in the discovery audit. For example, during Luk's time in People Analytics (PA), the HR analytics function was still developing in most companies between 2010 and 2018. They helped several organizations establish their HR analytics function (PA), addressing all questions regarding function structure, business case for development, required expertise, role/job specifications, and more.

It took Luk some time to recognize the potential of this work to advance up the ladder and overcome the project wall. He suggests considering it as an ideal proposal to "overcome the wall."

• Guide the Team Toward Advancement, likely hiring different profiles in the future (prioritizing strategic experience over project experience), and increase team awareness regarding the implications of current lead generation pressures stemming from smaller revenue projects.

4. Content That Fails to Generate Demand

Luk strongly advocates educating the audience to grow consulting businesses. This approach is not just a theoretical strategy; it has proven effective for business development and marketing, especially in today's digital landscape, where its relevance continues to grow. However, companies that prioritize audience education in their marketing activities must not fail to do so based on a demand generation strategy.

Luk has seen several companies produce expertise-based content, yet they achieve no meaningful results because they fail to succinctly explain their transformative approach that helps clients overcome their problems. The key is creating a bold vision for how clients can transform their approaches. The consultancy's vision should be contagious. What the consultancy "sells" is not what it promotes but what it does for the client (this is a crucial point to remember).

For example, stating, "This is the trend for next year," is insufficient for consultancies seeking to create business opportunities.

How will this trend impact the target audience? What needs to be done to prepare for this trend? Why is there an urgent need to take action now before the trend stabilizes? What opportunities is the target audience missing out on due to inaction? In addition to being educational, content must be action-oriented.

How to Address the Challenge of Content That Fails to Generate Demand?

These three interrelated perspectives must be covered with the company's value proposition to generate demand for the consultancy's expertise:

• Transforming the Potential Client's Perspective: Uncover hidden challenges and patterns that encourage the audience to rethink their approach to fundamental innovation issues.
• Highlighting Transformational Potential: Create a bold vision regarding the transformational potential of shifting to a new and different approach (such as future readiness).
• Clarifying Inaction’s Cost: Explain the consequences of missed opportunities or maintaining the status quo. The target audience does not want to hear what they already know about their problems.

It is essential to motivate the target audience to take action. Education should go beyond simply explaining current events; it must encompass understanding their implications and future outcomes. Only true experts can provide this level of insightful educational content.

5. The Absence of Consultant Leaders' Voices

Luk remains genuinely surprised by this. Consulting leaders and partners often hesitate to publicly share their bold opinions and experiences. Why is that? Does openness threaten their authority? Are they afraid of criticism? Have these leaders "reached the top" and no longer feel the need to express their opinions? Or are they deliberately silent to keep all options open, avoiding being confined to a specific area of expertise, industry, or managerial role?

Sometimes this is the case. At other times, leaders refuse to take the time to create regular content for thought leadership and audience education. This is a grave mistake for consulting leaders and an extremely shortsighted view. It is no wonder that small specialized consultancies with "new school" leaders (who publicly educate their audience) can outperform larger firms when pitching.

How to Address the Challenge of the Absence of Consultant Leaders' Voices?

The best consultants Luk meets are outstanding educators as well. They educate their clients, share best practices, inform them about trends to watch, continuously provide valuable success tips, and illustrate how they have helped others in similar situations. Top consulting leaders have a unique opportunity to share their pioneering ideas and attract distinguished new clients widely.

People prefer to engage with a leading voice that fosters trust and reshapes their perspectives on daily challenges.

Consulting leader, your story matters more than you may realize. Your unique core story as a consultant—your clients, knowledge, and projects completed—is all part of your comprehensive and distinctive value proposition.

Here are Luk's recommendations for sharing thought leadership content that effectively drives business development:

• Avoid Self-Promotion: Focus on this: rather than promoting yourself, connect your personal story to a client-centric value proposition.

In other words, everything you have learned over the years about your ideal clients' specific challenges can significantly enhance their future problem-solving journeys.

• Prioritize Problem-Solving: Reflect on what insights you have gained over the years that could help clients resolve their issues. Your consulting experience may not be truly exceptional, but you certainly are. Therefore, you are a key element in the consultancy’s comprehensive value proposition.

In Conclusion

The 5 challenges discussed in this article are foundational. They typically lead to many issues throughout the consulting business. To achieve sustainable and predictable business growth, consultancies must look beyond symptoms and seek to understand the underlying reasons for their current circumstances.

Consultancies can adjust every development process and effort to deliver consistent results only by building a strong foundation. Furthermore, consultancies can only optimize the return on each message, proposal, and campaign by bringing all teams together around a solid core.