Change is coming. Disruptive forces are at work changing expectations, competition and our own attitudes about the purpose and possibilities within federal consulting.
Back in the ’90s and early 2000s, federal management consulting was a booming business. It wasn’t new per se but it sure was growing. The economy was strong, unemployment low, and we shared a common belief that our biggest enemies were beyond our borders.
Those of us working in federal management consulting at the time look back with memories on these growth years when clients could still travel, everyone was armed with a copy of MS Project, and we had frequent afterhours planning meetings catered with “the big shrimp.” Most of us worked in small, energetic teams headed by a lead with a voice and a vision. There was a sense of excitement about the possibilities and a generally positive outlook for future business and professional growth.
The problem is that we’re the same but the business isn’t.
The change began with budget cuts. According to a Bloomberg article, federal spending on management support services dropped 28 percent from 2010 to 2012 alone. And it continued with an Obama administration push to not only cut budgets and deficits but to streamline organizations and improve government efficiency, effectiveness and accountability.
At the same time, the private consulting industry was facing changes. In 2013, HBR published an article on Consulting on the Cusp of Disruption. According to the authors, “disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.” Knowing that the federal government lags behind industry, we’re right on the cusp now, ourselves.
The authors go on to say: “The pattern of industry disruption is familiar: New competitors with new business models arrive; incumbents choose to ignore the new players or to flee to higher-margin activities; a disrupter whose product was once barely good enough achieves a level of quality acceptable to the broad middle of the market, undermining the position of longtime leaders and often causing the ‘flip’ to a new basis of competition.”
Everyone knows it but what’s one to do? No highly competitive gaggle of Type A’s could sit idle while the business morphs in front of them. Of course, not. Alas, we must study it, then manage it!
So it shouldn’t surprise anyone that federal management consultants hear the warning bells going off on the future of their business. In response, they are busy gathering data, trying to figure what it all means, then making sudden and awkward decisions. Some have dramatically slimmed senior ranks. Some have cut benefits. Some have sold off business units that don’t seem to fit anymore. Some have bought other business units to diversify their services. Some have developed new lower priced staffing options. And some have done all of these things and more.
If early response efforts like these are any indication — we’re looking at it the wrong way, worried about the wrong risks, and busy treating the symptoms rather than the cause.
Federal management consulting is less than three years away from being upended and we’re not ready.
Superficial talk among federal program managers and their management consultants centers on the headlines. What big issues are you facing? On cue, they’ll sigh in unison and start in on decreased budgets, leadership uncertainty, retirements, and the evergreen challenge of making change happen—getting people onboard to actually accomplish something. Anything.
What do these climate conditions have to do with disruption? A lot.
- Dollars spent with little change. While federal government spending on management consulting has seen budget cuts, there are still billions of dollars being spent. (The top federal contract in fiscal year 2015 alone was $30 billion, according to Bloomberg Government.) And yet, despite the dollars spent, federal staff and program managers have been banging their heads against some intractable problems for a long time. They’ve spent a ton of time and a lot of money trying to fix them, often with little result. In the words of one senior federal executive, “Consultants may add value by asking probing, open ended questions at certain times but in my experience progress, and sustainment over time only works when the plans of action are created from within an organization.” To be fair, the slow progress and dim results happen for a lot of reasons and a contracted consultant can’t be expected to affect change within an organization to which they can only recommend action—not actually direct work.
- A sea of sameness. There are more than 5000 federal management consulting firms operating today, all competing for a piece of shrinking pie. Aside from size standards, it is virtually impossible to tell the difference between them. The competition has fueled a boom in creative marketing campaigns to help those firms gain attention, according to a 2014 Washington Post story.
- New competition coming from unusual places. The Obama administration was been on a roll recruiting Silicon Valley talent from Google, LinkedIn and Twitter for what Fast Company is calling his stealth startup, with a purpose of changing how government works. And, according to a Washington Post article, finding Silicon Valley partners is a priority for Defense Secretary Ashton Carter. The moves took many by surprise. And, it’s amazing that not one of the big consulting firms beat him to the punch. Not one. It's too early to tell how the Trump administration's meetings with technology leaders will be woven into new policy directives.
- Promotion and advancement model unable to keep up. If all of the consulting employees gathered in a big field and each level stood on the shoulders of the ones immediately below, you’d have a massive pyramid (and pretty wobbly one at that because consultants aren’t generally built for acrobatics). Before they toppled into a huge heap, you’d want to notice that the bottom 2/3s or so weren’t very happy. Most feel like they should already be at least one level higher in the stack. The career advancement model is one that attracts ambitious, entrepreneurial people and yet in a stagnant or declining business, there is nowhere for these people to go. So, they’re feeling stuck, frustrated, disillusioned and increasing skeptical of the value delivered by their own management. Firms have yet to adapt the promotion model to reflect the work and accomplishments of staff, get them the advancement they want in a way that all can agree. They’re stuck being evaluated largely by a group of senior leaders who grew their own businesses in a very different market climate. This disconnect creates a rub and a lot of pent up frustration.
So, here we are… a shrinking (although still large) pile of money to spend, an overwhelming number of choices that are virtually impossible to differentiate between, and little insights into how to really get things done. But even with all of that, there is a bigger reason why we’re on the cusp of disruption. The federal consulting business model is fragile. More on that in our next post…