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Whatever the problem, it can be managed if not resolved. That is the pitch of businesses that increasingly tout themselves as one-stop shops for advice to major corporations. Welcome to the world of the everything adviser.
These consultancies, some of which started in public relations, have seen their remit balloon over the past decade as reputation risk became just as big a boardroom priority as financial risk. For firms such as Brunswick, FGS Global and FTI Consulting, work consists of everything from crisis and financial communications to advising on sustainable business, corporate culture reviews and geopolitical risk analysis. Teneo is also involved in executive succession and has a restructuring business.
It follows a broader trend in professional services. Just as the Big Four accountancy firms expanded their roles, and consulting firms such as McKinsey went from strategy to implementation and beyond, others have followed a similar path. Headhunters Egon Zehnder and Russell Reynolds don’t just put people into executive posts; they advise on how to engage with shareholders and boardroom governance structures. Financial advisory firms Lazard and Rothschild have added geopolitical risk units, while corporate intelligence firm Hakluyt is now a venture capital investor. Even the law firm Schillings has a public relations arm.
What’s behind the endless creep?
In our polycrisis world, businesses keep getting caught on the back foot and chief executives are exiting companies abruptly: see Bernard Looney at BP, or Dame Alison Rose at NatWest, and Daniel Le Vesconte at retailer Mothercare. Economic, geopolitical, environmental and corporate upheavals are coinciding and exacerbating already tricky situations. There are more stakeholders to placate but there are fewer people you can trust to resolve problems.
It is why many business leaders are beholden to a dozen or so go-to individuals — a brand of superadviser — who underpin these consultancies, such as Brunswick’s Sir Alan Parker, FGS Global’s Roland Rudd, Consello’s Declan Kelly or Joele Frank at her eponymous firm.
These CEO-whisperers are known for their powerful networks and shrewd advice. Previously they may have referred projects outside their wheelhouse to other outfits. But under greater financial pressure, many consultancies now seek to leverage their relationships to generate new income streams. Private equity money flooding into the consulting world has put them under the cosh to increase top-line revenues.
Moving into more valuable strategic areas and influencing C-suite decision-making has been a priority. “If you can get into the boardroom you can treble your day rate with strategy and advisory work,” said Joe O’Mahoney, an expert on growth in the consulting industry. “There is also an increased likelihood of getting bread-and-butter projects further down the chain — from communications work to managing IT systems rollouts.”
Offering supplementary services, if done well, can boost profits and client loyalty. It is also a way to bring on fresh talent. But done poorly it erodes earnings and damages reputations. The banking industry learnt this the hard way. The broader you go and bigger you get, the greater the chance of losing focus, spending too much money and overstretching the relationships these very businesses were built on to breaking point. Clients don’t like conflicts of interest or paying for things twice.
“I’m not sold on this one-stop shop idea. I’m just not a believer,” said one FTSE 100 chair. “How many can say they’ve made a real success of the multidisciplinary approach? Fundamentally you as the client tend to have historic relationships with individuals who are good at their specialist offering, not all the other stuff they might be trying to do.”
A website, supposedly created by disgruntled former McKinsey employees, emerged recently criticising the consultancy’s leadership for expanding “aggressively into areas where it has neither an ironclad right to win nor a credible claim to be distinctive.” Within days the website was shut down, but the creators hit on a prickly subject.
The rise of bigger, cumbersome players, as ever, means opportunity for niche boutique advisory businesses with more personalised services. “Clients are looking for the best value for money. They are not looking for convenience necessarily”, said Laura Empson, a professor at Bayes Business School in London. “The client may be getting the reassurance of the brand but not the depth of expertise.”
Success does not come from being everything to everyone.
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