The traditional consulting business model is based on two principal ideas: (1) hiring people (top talent if possible) and (2) charging clients a fee per hour or day for gaining access to this talent, its expertise, and/or manpower. Depending on the type of consulting or the brand, the pendulum swings more towards focusing on providing and buying on the customer side, the more sophisticated expertise, or the simpler manpower.
While the bulk of the consulting industry functions according to these basic principles, new business models have been successfully launched in recent years, often creating superior value for customers, the firms themselves and the ecosystem they are embedded in (for more on these 3 types of value propositions, see Take your Business Model to the Next Level).
From hiring a team to offering flexible access to top talent
The traditional consulting model is based on utilizing existing assets, i.e. the consultants, as much as possible. There is a strong motivation to sell as many consultants and days as possible. Hence, consulting teams tend to be staffed with a variety of people and the incentive is high to put as many consultants on the team as possible. As a client, you seldom have a choice as to which consultants you will get.
Eden McCallum, a European based management consultancy, changed this fundamental principle. Eden McCallum does not hire any consultants but instead has built an extensive network of senior, highly experienced, independent consultants, it can draw upon to staff projects. Clients have a say in which consultants they would like to work with and Eden McCallum goes to great length trying to find the best match between client and consultant. As clients became more sophisticated in buying consulting services (many managers have been consultants) they know best what they need and can make better buying decisions. Partners are Eden McCallum do not manage the client projects, but instead leave this to the consultants. Consultants are not pressured to sell new projects, as this is the job of the partners, and hence can focus on delivering successful projects. The lower overhead cost translates into lower fees for the customers, while consultants can still earn a considerable salary from their freelance work, plus they enjoy the flexibility to decide how much they would like to work. Nobody pressures them into accepting the next consulting project.
How can your business take advantage of key trends, while at the same time combining the best of existing models in your industry?
Eden McCallum has succeeded in creating a new business model while taking advantage of a trend towards freelancing as well as the desire of many professionals to work independently and to have more control of their careers, e.g. by defining their own terms of engagement.
Another major trend observed was the maturing of the consulting market in which clients desired to have more control and value in the consulting process.
