Member Blogs

I read with interest the recent series Why Management Consulting Will Be Disrupted by one of our collaborators, Jay Deragon. The thesis is that digitization brought on by technology, the internet and social media will challenge the business model of traditional management consulting practices.

Below are some thoughts on key trends affecting the industry and how our community and movement at Smarter-Companies is aiming to capitalize on them. I share them in the hope that you will critique them and/or consider joining us in imagining what consulting organizations of the future can and should be

1. New ways to access talent – oDesk was an example cited in the series of how companies don’t have to go through a management consulting firm to access specialized outside talent. This is a significant feature of the digital economy: people can find and connect with other people to an extent unprecedented in human history. At Smarter Companies we’re building a network of independent ICountants who specialize in identifying, measuring and visualizing intangible capital improvement opportunities.
2. New ways to access tools – Digitization has made it easier to create re-usable tools for synthesizing data and knowledge. We predicted in our book Intangible Capital that management consultants will increasingly use standardized assessment tools for diagnosis of companies. It just makes sense. If you find a successful way to do a task, you can and should digitize it, make it re-usable. We have digital tools at Smarter-Companies including our ICounts Graphs assessment platform. But we also believe that no business or consultant will use just one tool so we figure that we might as well help consultants and companies understand what’s out there so we also have the beginnings of a marketplace that features tools from other companies.
3. New ways to access information –One of the big changes brought about by the internet and social technologies is the increase in the amount and direction of the flow of information. Social technologies make it easier for everyone (employees, customers, partners, stakeholders and, yes, managers) to share ideas and opinions. That means that information doesn’t just flow from the top of an organization down. It also can and should flow from the bottom up and the outside in. This is really healthy. It can be the source of feedback and new ideas. Used correctly, this turns into new innovations, better performance and increased alignment across the full ecosystem of an organization. That’s why our measurement systems at Smarter-Companies are based on using stakeholder feedback as the ultimate leading indicator of sustainable success and profits.
4. New way of looking at organizations – One of the huge consequences of the digitization revolution is the rise in the importance of intangible versus tangible assets. Tangibles, including hardware and equipment, will always be part of our economy. But owning a tangible asset is rarely in itself a source of competitive advantage—that comes from access to (not necessarily ownership of) know-how, data, people, partners and knowledge. The creation and use of intangible assets like these is the focus of the digital economy. Smarter-Companies’ tools are focused on identifying, visualizing and measuring intangible capital.

Our tools are largely open source and freely available on our website. Our mission and business model are simple:

• train people who want a deeper expertise within the subject of intangible capital
• provide a platform that facilitates identification, measurement and visualization of intangible capital
• provide a marketplace for consultants to share additional value added products and services with each other and with businesses.
• provide a global community for participants (currently 530) to contribute ideas, post events, papers, news, organize on-line seminars or “hangouts” and contribute to a growing library of reference materials.
• share the intangible value of our community, marketplace, members and message with media outlets from around the world

We believe these are the next generation of management consulting practices. Do you agree? I hope you will  add to the current practices, and learn to create even more value for your clients by becoming a smarter company.

Be the Disruption!

I have an admission to make. I was at this enormous Sibos banking conference with 9,000 people and managed to basically never leave the stimulating environment created by Innotribe. Innotribe creates a world unto itself that you enter by heading through a portal and down a hall filled with ever changing music, video and displays. And the space itself was designed to make it clear that different thinking was going on.

The discussion tracks were Value, Innovation, Big Data and Practice. The Practice track included hands-on sessions for experiencing activities like scenario thinking and visual thinking. In our Value track, we had a discussion and then an exercise about intangible value and a discussion of alternatives to GDP, and a great game by Happathon. Innotribe also leads a Startup Challenge that featured all kinds of financial technology startups. The thing that really surprised me was the number of companies that are developing their products for/in less-developed countries. Of course, disruptive innovations often come from the bottom of the market and even though I have been hearing about innovation at the bottom of the pyramid for quite awhile, I was still surprised to hear so much about it, even in the general session. It seems that a billion people that already have cell phones don't have bank accounts. There's obviously an opportunity there.

However, in spite of the open discussion about the unbanked, there was a lot of discomfort in some of the discussions about potential disruptions to the industry, especially the part served by Swift members around payments and clearing. Swift is, after all, a network that predates the internet. Many of the products in the startup program were potentially really disruptive to this network and to the business models of the banks in the network. The most extreme example of this was Bitcoin, represented there by Patrick Murck. This degree of change is hard to deal with when you are the incumbent. But there’s no hiding from change.

We also heard this (natural) discomfort in the discussion about investment management and intangible capital. A lot of people took issue with my statement that Facebook and Twitter could/should go directly to their networks to raise money. One audience member explained that the investment management industry provides transparency and stability. Another explained that governments need to control the industry and would never allow big changes. Really? I pointed out that the crowdfunding movement is a sign of governments taking Christensen’s advice on disruptive innovation and how large organizations at risk need to create experimental programs to figure out new possibilities.

My advice to many delegates was to pull out The Innovator's Solution and face coming changes head on. What was clear to me is that we live at a moment where the entire financial system can and will be changed. It's all part of the trends we regularly talk about at Smarter-Companies. Power is shifting and the outcomes, we believe, will be better futures for organizations and their stakeholders. Be part of it!