Some further thoughts on professional service (de)commoditization

This is more than likely the last I will write about the challenge for consultants in differentiating their offerings from other offerings, but I wanted to share a couple more lines on the subject. This is again a revisit of an article I wrote a couple of years ago, with some ideas I developed further. Here goes.

When does a service or product appear to be a commodity?

When two companies are offering the same products or services, they will appear to be commodities. As Bill Caskey notes in ‘Same Game, New Rules’, commoditization occurs in the mind of the client, not necessarily at the product level. I referred to this in the prior post on the subject.

To be more precise, even if the products or solutions are exactly the same, diffentiation is possible in the way they are offered, presented, executed. Some companies manage to differentiate their products and ask for a higher price because of it. Think McKinsey. Think Apple.

Differentiation in services

In my earlier post I stated that even services which are commoditized can be differentiated by their delivery. And we all know examples where a commoditized solution is distinguished by its implementation.

Why consulting is like plumbing

That is not an intro to a joke, although it could well be. In the past, I have seen my share of plumbers: same tools, same products, but there is a monumental difference between a good and a great plumber. And while most consultants may contest this, professional services are really not that different from plumbing, at least in this area: even if the methodologies are the same, the differentiation will be in the use and the execution.

Consulting organizations continuously undermine their own effort

True differentiation becomes difficult if past achievements for a project are claimed by multiple parties. How do you believe we, as clients, would currently be able to distinguish between the achievement of a company and the achievements of the individuals working for that company at the time of the project? If you really want to know: we can’t. And that is to your detriment. And a bit to ours, when we select the wrong consultant.

When a consulting firm claims credentials which have been achieved by a person or a team of people no long working for that firm, because the project was executed under the flag of that firm, I would dare to state they are misleading me as a client.

To put it bluntly: we once had a good plumber in our team. He’s no longer there, but newbie over here is using his wrench, so that should be fine, no? No.

By continuing to claim credentials achieved by personnel no longer employed by your company, you are in effect commoditizing own services, because you are separating the achievement from the team. Remember in my first post I referred to the higher relevance of the individual in comparison with or in contrast to the relevance of your “methodology”? This is exactly where that starts to play a very, very big role.

Be truthful

The solution is very simple: as contractors we should require consulting firms to separate their credentials in three categories:

  • credentials for which the executing team is no longer present in the firm;
  • credentials for which the executing team is still present but will not be used on the project and finally,
  • credentials which relate to achievements of the proposed team.

This way, the individual resume will become significantly more important.

I think this is a first important step towards decommoditization of services.