Spotlight On with Tim Nixon, CEO of Management Consulting, Teneo

Joining us on Spotlight On, Tim Nixon, CEO of Management Consulting at Teneo, sits down with Oliver Phoenix, CEO of The Barton Partnership, to discuss whether AI will supercharge the consulting industry or completely disrupt its business model.

 For those interested in the future of the consulting industry, what this means for the apprentiship model and Partners of the future, technology-driven automation of consulting IP, the future value of consultancy for clients and how the competitive landscape may change, this podcast is for you.

Transcript

Welcome And The AI Question

SPEAKER_00 0:00

Welcome to Spotlight on the Must Listen podcast series where visionary leaders, global executives, trollebazing entrepreneurs, and top tier experts come together to share their inspiring stories and tackle the hottest issues facing businesses today. Brought to you by the Barton Partnership, an award-winning global talent solution organisation, we specialise in executive search, independent consulting, and consulting solutions from stretching through to execution. Our mission is to help businesses accelerate their growth by connecting them with world-class strategy and transformation talent. Tune in and join us as we shine a spotlight on the game changers and thought leaders who are shaping the future of business.

SPEAKER_01 0:35

Welcome to Spotlight on Podcast. I'm Ollie Phoenix, the CEO of the Barton Partnership. I'm joined today and delighted to be joined by Tim Nixon, CEO of Management Consulting at Taneo. Welcome, Tim. Ollie. Thanks very much. Pleasure to be here. Tim and I have uh known each other for many years. Too many years. And uh it's delight to have him on today. Um we are going to be discussing a topic that uh resonates across uh all markets, but particularly within professional services. Um I've personally worked with Tim and Taneo for many years. Uh I've worked across management consulting uh on senior search uh mandates, border talent advisory topics. Um and over the last 20 years, there's been many things that have disrupted and changed the landscape, but uh maybe none more so than the topic we're gonna discuss today, which is AI. Uh so uh without further ado, um Tim, for the benefit of those listening, do you want to introduce yourself, say a little bit about yourself and Tane?

SPEAKER_02 1:34

Yeah, with absolute pleasure. Uh so I am I mean almost my entire career I've been a management consultant. Firstly, with a small boutique called Credo. Um, and then when we saw Credo to Toneo in 2017 uh with Toneo. Uh so uh Toneo is a 2,000-person professional services firm headquartered in New York. Uh and the business does a range of different things. Strategic communication, financial advisory, and then management consulting is um is the third major, major area. I run that division globally. So that's a team that spans from San Francisco through to Dubai. Um but my client work is all in tech. So all of my clients, software, IT services businesses. And that's how I fill my day, essentially. Um, dual hatting between figuring out problems for clients and uh handling the challenges of a fast-growing strategy consulting capability.

SPEAKER_01 2:28

And very to kick us off, AI, is this the single greatest opportunity the consulting industry has ever seen? Or is this the beginning of the end for the model that effectively built a number of these businesses, maybe including your own?

SPEAKER_02 2:47

So

Hype Cycles And Past Disruptions

SPEAKER_02 2:48

I mean this is a this is a hotly debated topic, right? Um I think my my first comment is AI is gonna have a tremendous impact on professional services and management consulting, not necessarily more than other professional services. I think some other professional services are probably more exposed, but it's gonna have a really meaningful impact. Uh but and I spend my whole life with tech executives, right? I I do think we need to keep some things in perspective. I I I constantly quote uh Amara's law, which was we frequently overestimate the impacts of technology in the short term and then underestimate it in the long term. We are, and I think we all know we are in a hype cycle. Um and anyone in tech understands the hype cycle, and they can draw it for you, but we're still there. Um so we need to be a bit more um uh we need to try and keep things in perspective. There have been a number of major changes in my industry uh over the last 20 some years that I've been in it. Um I I don't think we've ever I think the difference is we we're so aware that we think this is gonna have a major impact. There were lots of other changes that have actually had a really major impact that that either just happened so slowly we didn't notice, um or actually w we just weren't really paying enough attention. So give me a good example. Well, I mean the internet made a pretty big you know, so let's call it let's call it Google, right? I mean b there were there were I mean I'm old enough to remember search engines before Google, but um yeah prior to immediately prior to me starting my consulting career, you would research things by going to the library, right? I mean that that is not that long ago, right? You know, data was accessed by consulting firms having in-house libraries of stuff. Or, you know, we would send people to go and sit in the British Library for for days to research stuff, right? And then we just sat at our computers and and found the information and and found more information and better information. I mean that's absolutely amazing. Now at the time, clients were saying, oh, well, we won't need consultants anymore because uh we've got Google. Well, it's the consulting industry has grown by double digits every year since. So that didn't quite pan out the way that people thought. Um smaller things, practical things, PowerPoint. You don't have to go back more than 20, 25 years. Consultants didn't do their own PowerPoint. There were design teams that would do PowerPoint. PowerPoint got good enough that you know any idiot could could operate it. Boom, all of a sudden consultants start shining out PowerPoint slides. That made a big difference to the jobs to be done, the people that you needed, the size of a pyramid. I didn't really notice that. It didn't happen. You know, there wasn't a moment when everyone went, oh my gosh, PowerPoint's much more useful now. The shape of the consulting industry is going to change. Um and then another issue that I don't think people necessarily consider about, and we should come back to because it's really pertinent, is primary research. So there's been a really important part of strategy consulting for a long time, is you you have to go and originate the information, right? It doesn't exist. You know, often because you you're in a niche, right? Or uh the question is so specific. Maybe it's a bit of competitive intelligence you need or something. And so what did you do? You get on the phones. And when I started, that was cold calling. That was sat in a booth twelve hours a day, smashing the phones. It was a it was a ritual. Somewhere in the last 10 years, that all moved to expert networks. Fundamentally changed the jobs to be done, fundamentally changed the shape of the pyramid. So lots of things have had an impact. Right. Actually, I would say one of the hallmarks of the consulting industry is um just the nature of it. It's incredibly resilient to change. The only constant is the quality and depth of answers has just relentlessly improved. And so I'm I'm looking at this with uh hopefully an element of respect, realism, um, but incredible optimism. Because to me, this is just the next frontier of quality of answers we're gonna be able to get to.

Why Impact Depends On Your Model

SPEAKER_01 6:58

The FT published uh an article talking about McKinsey completely re-engineering their entire business. Yes. Um, you said there's been transformational events within some slower, some bigger over the last years. What's do you think is different this time?

SPEAKER_02 7:15

I think the perspective of the consultancy changes matters a great deal. And again, we should be careful of generalizing, right? Because it's very easy to kind of ascribe a certain way of working to each consulting firm. You know, if you're a management consultant, you know people make memes of this stuff, which you find very funny if you're in the industry and if you're outside the industry, you probably think it's desperately sad. Um the archetype of you know, a 15 to 20 person McKinsey transformation team or strategy team in a Fortune 50 business for two years that needs completely re-engineered. For a whole range of reasons. Some of the activity that's being undertaken can be done by a machine. CEOs are not interested in any project that lasts even more than three months because they just think it's a it's a it's a nonsense that anything would last so long. Um there's a whole range of reasons why that doesn't fit. And so, yeah, if you're McKinsey and if that has been a material part of your revenue model and your staffing model, yeah, things have got to change a lot. If you are working, as as I tend to do, in the mid-market with private equity investors, teams of three have been the norm for years and years, and projects are measured in weeks, rarely in months. And yes, there's still going to be an impact, but the amount of rewiring you've got to do is very different. And the expectation from a private equity investor about time to value uh has already been sky-high, very discerning biaset. Um and to generalise, probably you know, a greater push than you would get in a Fortune 50 or FTSE 100 setting. So I think the level of impact is going to vary quite materially firm by firm.

SPEAKER_01 9:08

So

Productivity Tools Reshape The Pyramid

SPEAKER_01 9:09

so on that, getting specific, what are the value moves for you within your business at the moment? So you know, classic with the size of the team, you know, slightly smaller for you, but you sold teams, IP, analytical horsepower. Yep. If the model now provides elements of that, you know, w where's the value move for you moving forward in order for you to differentiate yourself in your market for your clients?

SPEAKER_02 9:38

We're investing quite a lot. We're deploying a lot of tools. Um they're remarkable, right? And they can achieve incredible things. The easiest answer when we think about tooling in the internal sense of it, I'll come to the offering sense in a minute. In in the internal sense, the the big issue is it's it's it's changing the productivity equation at different points of the pyramid. As a as a partner, right? There are certain things that for years you have relied on a team to go and do, right? Folks, I I I need to get smart on X. You know, wait 24 hours, wait 48 hours, receive information. Nope, just do it right now. Right? Live. As making you as a as a partner and critically the individual with the IP, the individual with the subject matter knowledge who can um test, discard slop like without thought, right? Kind of take information. That doesn't make any sense. Take information. Oh, actually that does make sense in context. Okay, rebuild the prompt and go, right? It's it's incredible. The counterpoint, there is a body of activity that I had first year, second year individuals doing. It doesn't need doing anymore. Right? It is taking care of itself. And um there has been an impact on our hiring. There has been an impact on the shape of our pyramid. Um I I don't know if that's going to last forever and ever, right? Um but but certainly at the moment um we have considered it just sensible to uh reduce our entry-level hiring because we're just not finding we've got productive jobs to be done by those teams. Uh that raises a broader long-term question, which we'll probably touch on before the end of the session. Um but that's had a big impact. The the other impact is there are already project types. There's there's project types that are about AI, right? So there's questions to be answered that that weren't questions before because AI exists and that raises the question. But then there's types of work we can do or questions that we couldn't have answered before that we now can answer because speed and access to data has changed. And our ability to analyze vast quantities of poorly structured data has just gone through the roof. So I mean it i it it's having a sort of internal operating model change, but already having a meaningful impact on um cloudwork.

SPEAKER_01 12:18

Aaron Ross Powell And that change in terms of the operating model, slightly reducing maybe the intake at graduate level, as the profile of the people that you're gonna hire, do you think that will change, or do you think that will continue in terms of that apprenticeship model where possible to produce the next partners?

SPEAKER_02 12:38

So that's the bit that and as I speak to other consulting leaders as I do all the time, right? This is the bit that no one's really got an answer to. It would be very easy to say, yes, I'm gonna kind of hugely skew my hiring now away from just very high-caliber, smart, articulate, well-educated graduates. Put a whole skew on that with uh folks that have got a data engineering background specifically, or people who've done uh university degrees that are kind of lead them particularly well into prompt engineering and so on. I could say that. The issue is I still need to hire today for my partner class of 2040, of 2045. Um and um to being a consulting partner um uh will always require a certain set of skills. Um and you know, those skills are as much about analysis quant as they are about qual and human connection and the ability to render the complex simple and the ability to guide a client and and and genuinely counsel a client. Um and and that that that requires uh a actually I would say an uncommonly broad set of skills. Um what's the answer?

SPEAKER_01 14:08

It's a difficult one because counterintuitively on the AI topic, AI, you know, you could argue would make the the judgment, the relationships, the ability to impact within a boardroom, you know, even more important, even more valued, you know. But you need those quant skills, you need to have built up the work at the more junior level to have that impact and to build up that that ability. It's a it's a tough challenge. I haven't heard a great answer or a great you know, a great plan from any of my consultancy clients yet. That's part of it. Are you saying you're gonna continue to invest in in graduates, continue to commit to the apprenticeship model even if the requirement of those individuals isn't the same as what it would have been even 24 months ago?

SPEAKER_02 15:05

The easy answer, which I don't think works, by the way, is to say the apprenticeship model is over. Uh henceforth management consultants will have a career in industry and they'll move across with 10 to 15 years of industry experience under their belts. Um I don't think that works. There is absolutely a role for people moving laterally out of industry. They bring a huge amount of expertise, they bring very different perspectives on lots of different questions. Um But you know, certainly as someone who grew up very much in the apprenticeship model, I I I believe it's a it's a métier. I do believe it's an apprenticeship, and I believe you learn those skills, you learn those skills through repetition. Um I don't have a good answer. I I the only paradigm I can probably draw is you know we all know that the big four essentially subsidize the entire world of finance by training right, I don't know how many thousands of uh thousands of uh young men and women on audit, right? And they know full well that they're not gonna hang on to many of them, but they they do it because they they recognise that first of all, you know, that you have an alumni network which is helpful, right? Um but secondly, it's just the cost of doing business. And I and I I think that may be part of I think that may be part of um of what we need to do. We need to recognise that we've got to invest in entry-level talent because it it's an important part, you know, growing that capability. I interviewed someone yesterday and he had a brilliant little phrase. He said he in consulting, he believes subject matter expertise begins at ten years. Right? Ten years, you are just able to start to say, I've got some subject matter expertise. But you're you're kind of grade one subject matter expertise. So we've got to get people to ten years with a set of skills. I don't have a good answer to this. Yeah.

SPEAKER_01 16:54

Okay. That's an interesting. I don't think I'm gonna solve solve that answer in the next uh next few

New Client Work From Better Data

SPEAKER_01 16:59

minutes. Um so inside your your firm at the moment with regards to AI, how much of it is focused on productivity, efficiency versus innovation or new product services for your for your clients at the moment?

SPEAKER_02 17:16

If you'd asked me this question 12 months ago, it would have been probably 80-20 internal. I think we're probably now 60-40. Um and I think the right part of the balance is we tip over in the other direction. Um we can do things that are jet- I mean genuinely amazing. Right? I mean you you think about you know, fundamentally, the the core of the quality of any consulting projects is the the quality of inputs, right? The basis of decision making. Um yes, you can you can go and get external data, and that's a very important part of the business. Personally, some of the most powerful moments I've ever had as a consultant have been taking a client's own data, right? Information that they have sort of technically always had access to, right? And then through the combination of being good with data, having the time to look, right, um, having the permission to look to render that information into a picture that makes them go, oh my gosh. Right. Actually, there is there is something about my business that I didn't know. And uh amazingly, I it's only because I didn't look. But there's so much about the data in an organization that you the company still can't access, right? Um We do quite a lot of pricing work. And um one of the things you can do in pricing, particularly if you're pricing software, is um look back at your existing customer base and understand whether or not there's a pricing opportunity in what we call the back book. The number of my clients that have no contract management system, right? So you you you you don't actually know if the Barton partnership contract with you allows for a price increase. You don't know. So you sample, right? I don't need to sample anymore. Tens of thousands of PDFs can just get crunched overnight. Yeah. And I've got the answer. And so you you you you just get an entirely different body of information, and therefore you get you can answer a different question, or indeed do an entirely different project about something you couldn't do before. So that's it's one of my grounds for optimism, right? There's there's there's just more to be done. There's more that can be done.

SPEAKER_01 19:24

So is so is is that more or different types of work that you're now doing with similar clients because of what AI is allowing you to do within those projects, or is that you're doing projects that you've always done, but you're doing them differently and delivering them in a different way?

SPEAKER_02 19:39

So it it is the former, the the latter 100%, right? So there's no project we're doing today that doesn't have AI. Um we've inserted AI clauses in all of our contracts. Uh we we have in every single one of our pitch decks, we have to introduce the fact that we're going to use AI. It's just constant, right? There's no issue. It's just a question of how much AI we're using in a project. Um the third category is then the question we're answering is the question of how should I be using AI in my business? Right? And that's when we're kind of developing AI strategy into an organization, which is another whole realm of work that, you know, frankly, I was I was not doing three years ago. Um but now I are. Companies whose entire question on a diligence question is what will be the impact of AI on this asset? You know, I mean it's quite quite different.

SPEAKER_01 20:31

Aaron Ross Powell And you're having to learn that, you know, new like most other consultancy firms are doing that type of work, navigating their own internal AI questions as well as those of their clients.

SPEAKER_02 20:44

Yeah. Yes. And there's there's something a little bit humbling about that, because um when something is so new, right, and and critically changing so quickly, right? You've got to be on top of that, right, all the time. And what fundamentally allows us as a management consultancy or strategy consultancy to know better than our clients? Uh it's an interesting question, right? I mean, part of it is we've just got more time to figure it out, right? Because the kind of answering these questions is our business. We're not running a day job and trying to stay uh on top of trends. Uh but the other thing is um uh is just uh uh the N of examples, right? So I mentioned software pricing earlier on. Software pricing is going through the most exciting period of software pricing for for maybe ever. I mean I'm sure many people listening will think how exciting can software pricing possibly be, but you'd be surprised. It's very it's very interesting. That's a whole different podcast. A whole different podcast, and you you know you should subscribe to that. But um uh we've already answered this question for twenty five thirty businesses, right? So it's it's it's a cutting edge topic. I mean I private equity investor this week. Uh it's clear that they're just like we're aware something important is going on in software pricing. Can you tell us what it is? And we're like, well, yes, we can. And they said, have you seen it? And we're like, yes, 30 times. So a part of it. And that's why consulting works, right? You're answering the same question in different contexts. A consulting organization is fundamentally a learning organization. That's one of the reasons why it's valuable.

SPEAKER_01 22:17

And you as CEO of the Tanea Management Consulting Business, so take the client piece, the market-facing piece out. How are you using AI to lead your business and to run your business? As CEO of my business, you know, I'm learning. I'm seeing some efficiencies. I'm seeing some amazing things that I could do to lead the business better, to be the most prepared person at every meeting internally. And it's fantastic. But I'm learning. And I've got some people in my firm who are streets ahead of where I am. Do you find that? I'm in pretty much exactly the same place.

SPEAKER_02 23:00

I am much better at advising clients on the impact of AI to their business than I am about redesigning my personal workflow, shall we say? And same dynamic. I know it's a trope, but there is a real there is a real generational dynamic here. I spent my whole life in tech, so it's I feel embarrassed, right? But then on the flip side, right? I mean a huge amount about my life is talking to clients. And then another huge part of my job is leading my team and talking to my team. And that's that's not changed at all. So there's an extent to which it's you know it's not going to remove that element. But um preparedness, you're absolutely right. I mean, you know, anyone who walks into a client setting or a prospect not knowing who they are, what they do, where they fit. I mean, you you could maybe be excused five years ago by for doing that because you just hadn't quite got round. You know, oh my quick look at your do you know much about a business? Oh, I had a quick look at the website. I mean that doesn't cut it anymore. Yeah, right? It's there's no excuse.

SPEAKER_01 24:06

Yep, I agree.

The Next Wave Of Consulting Growth

SPEAKER_01 24:09

So the kind of future of consulting, give me an idea of where you think the industry is going to be in two years' time.

SPEAKER_02 24:18

So at a macro level, I think the consulting industry is gonna go through a period of hypergrowth. Right. Um I'm talking fifteen, twenty percent compound growth. Um I think the the dynamics of where that growth is gonna occur are gonna be quite fascinating and a bit difficult to predict, but uh it's not gonna be the same for everybody. So I mean and it and in part that's explained on the micro, because if you look at big players in the industry, right, there's the there's there's just broader disruptions that are occurring to the big four, right? Because there are other parts of their business models that are gonna be very impacted by AI and shared profit pools and and and so on mean the ability to invest and move and change is an issue. Um and MBB, they're big beasts, right? And they're partnerships, and I think um partnerships are slow tankers to change, right? Because you're you're inevitably you're playing with individuals' money, right? And making big bets over here requires people to take home less money. Um fortunately today is a in a corporatized structure where um we're private equity-owned. I think those consulting firms can be more agile, can pivot faster, so it's gonna make a big difference. Uh there's also gonna be an incredible boom in um the independent. I mean, if you think about the independent, right, that's either a partner who's decided they're just done with done with being in something and they just want to spend time with their clients and get rid of the noise and never do a timesheet again. Um and there's uh people who've been in industry, retired, want to start kind of consulting. They are empowered, right, in a way that they've they've never been empowered before. I mean, I I meet a lot of people who approach the end of their career and they're thinking, well, you know, am I gonna I'm not quite happy where I am, shall I join another platform? And in the main, they would used to always say, Oh, yeah, I thought about hanging my own shingle, but heavens, that feels like a lot of effort, and you know, then I've got to do everything myself, and before I know it, I'm writing my own slides and so on. Now they're thinking, I don't have to write my own slides. I don't need to hire anyone. Um so actually a meaningful, I think, element of growth in the market will be independence.

SPEAKER_01 26:29

Aaron Powell We're we're certainly seeing that. I mean as you know, we we have an independent consulting business complementing the search business. And I think we've we've never had as many established partners making the move out to become independent advisers. And I think you know the it sounds maybe slightly wrong, but the barrier to entry to actually do that yourself with a network, an established network, doing the the work you want to do, being able to deliver that, you know, particularly with the expert network and the independent consulting networks for resources as well, has never been better. However, I also think, with the direction of of of AI, that the bigger firms still hold a huge advantage in terms of deploying successfully for consultants. I don't know if you agree.

SPEAKER_02 27:21

So look, definitely. I I know I know how much we're investing in, it's a lot. Um I I think that might lend you to a that might lend you to a conclusion that it's the boutique that's challenged. I don't know. Um having grown up in a boutique, I've got a lot of um I've got a lot of admiration for um quality of answer and the quality of work that they can do, but they might just end up squeezed, you know, unable to invest in the best tooling. Still without the the cost advantage of an independent but uh so I I think the I think the way this is gonna shake out there's gonna be a lot of disruption at a macro level. This is terrific for the industry. Because people people have got more questions. The questions are faster to answer, not necessarily easier to answer, but faster to answer. Um and the quality of the answer is better than it ever was before. It's sort of what's not to does it change completely change pricing structure? So anyone which is quite rare in strategy consulting, right? But I mean anyone who's on TNM, I mean, forget that, right? Now I personally you know kind of amazed when I find anybody in our industry who's still TNM billing, it doesn't make any sense to me at all. Um and then even, well, when I say TNM billing, I mean TNM true TNM billing is rare in our line of work, um, but kind of weekly run rates, yeah, they're over. Right? Everything will move to fixed price. Um because things will speed up gain share models will proliferate. No question. Um and I think there will I think we'll go through a period of time where there probably will be pricing pressure, but then I think the proposition will evolve and take back the oxygen that's been left behind. So if I give you, you'll give you an example on commercial diligence, right? So that was probably the area that everyone thought would be oh, we'll have to press the button and the CDD will pop out. And I've seen some really interesting things, but I mean I don't know any credible investor that would take a push button CDD and um take it into the IC. And I've I've no doubt there's gonna be people listening going, that's rubbish, I do it all the time, I've got a brilliant business. I'm sure you do, and yeah, good luck to you. But certainly my clients are not gonna push a button, get a document, take it to IC. Um, can we accelerate the rate at which I build a market sizing model? Yes. Can I accelerate the rate in which I understand legislative trends? Yes. Can I get to uh can I get to market trends and calculate a growth rate faster? Yeah, undeniably so. But the quantity, I believe the quantity of data that's going to end up in data rooms, it's gonna explode. Right? Sampling's gone. We'll do with the whole thing. You know, we will, you know, uh well, you know, we're not providing a a revenue cube in this CDD process. Well, you you just you won't need to provide me with a cube, you'll just put all your contracts in here and I'll build a cube because I'll build a cube in a day. So then the question the the the it'll just be a question of, well, you can just do so much more in the three weeks of your commercial due diligence. So of course that's worth it. Might even be worth more than it was before because it's not a like-for-like product. The elements of that product that relied on commonly available secondary information that you're putting together in a smart way to draw an inference, yep, that shrinks right down. Umportance of primary research will go right up. Right? I mean, let's remember these LLMs they only understand what they've been trained on, right? And a huge amount of every answer we do is information that we've originated. We've gone and we've found an expert, we've got a data point. You know, it's a it's a it's a it's a question that the Internet has never had answered. So the LLM doesn't know what it is. You know, and you know, I really don't I mean I'm really not interested in what a Reddit stream says, you know, the the annualized growth rate of mid-market ERP software is in Germany. Like I'm I'm really not sure Reddit's the right source. So just because the LLM can spit it out at me doesn't mean it's right.

unknown 31:43

Yeah.

SPEAKER_01 31:43

Okay. Interesting. And

AI Native Rivals And Reality Checks

SPEAKER_01 31:47

in terms of challenges to you, to the position we talked about, you know, the the bigger players, we talked about the independence, maybe squeezing the boutiques. There are a number of AI native consultancies in the market that have been built, that have been well backed. What are your thoughts? Do they keep you up at night in terms of differentiating for their clients against you?

SPEAKER_02 32:15

There are many things to keep me up at night. They aren't one of them. So maybe I'm incredibly naive and I'm gonna watch this podcast back in, you know, maybe they'll play it at my leaving party in 12 months' time. Um uh No, is the short answer. Um There are some people doing some really smart stuff to automate some of those elements that I described, right? Um Well, and they'll provide a tool, right? And it'll either be a tool that's equivalent to one I built myself, or I will just buy their tool, right? And I will just get on with evolving my service. Um there are more interesting are probably the AI native consultancies that uh are really going into organizations, my clients, and they are leveraging AI to help transform operated models in real time. That's fascinating because um there's a practical application of that, there's a practical reality of that, um which uh currently that's that's not the business that we're in. Um we've got a very interesting JV partnership with Thoughtworks so that we we can do that in partnership with them. Um I don't know how that's gonna shake out. Um there's a lot of noise, a lot of there's a lot of noise, a lot of light, heat and light. Um but I have seen some really dumb stuff. Right? I've seen I've seen players generating league tables and lists and heat maps and then rocking into private equity portfolios and saying, do you know that of your 20 portfolio companies, you know, we think 12 of them are red for AI maturity. And um I've got operating partners just throwing them out the door. How on earth would you know? Oh, well, you know, we've got we've got proprietary tooling. Well, trained on what? Right? I mean, you know, this is a mid-market business doing whatever it's doing, right? I mean no LLM can tell you how digital maturities. You'll find out, you've got to go and speak to the employees that work there. You've got to do the hard yard, you've got to do the proprietary research. So that that then takes the shine off this model because you know, actually, I think almost some of the marketing and some of the uh some of the way that they project themselves, I think, sort of undermines them. Uh instead, you know, smart people can do incredible things in a business, automating in real time, transforming in real time. And that that's gonna be a that's gonna be a really powerful offer, I think. Whether or not that disrupts kind of typical target operating model redesign, I don't know.

SPEAKER_01 34:50

And and you mentioned the JV with Thoughtworks. That's interesting. There's obviously a lot in the market at the moment, whether it be Y, Microsoft, KPMG, Enthropic, that's you know, there's a lot of joint joint ventures. You know, do you think that's a a key next step for a lot of consultancies to form these?

SPEAKER_02 35:09

So I do think it's a key next step because I think if you see this, which I'm sure many people will say this is a really, really naive and prosaic way of looking at it, but if you if you see AI as sort of the next wave of digital transformation, right? And and I think it's more than that, but but in some ways, no, that is what it is, um, then the market has already got wise to the idea of a strategy divorced from execution. There's a big air gap, right? Lots of PowerPoint has been written that didn't turn into anything. So I think going into this already, there's a there is a real expectation from uh many clients that says, right, if you're going to come in and advise me on what my AI strategy should be, how should I be leveraging AI to transform my business model or optimize my workflows and so on? I I I don't just want the thinking, right? I need proof. Okay, now whether that is proof and end-to-end execution, I think there's still a question mark as to that. But that ability to take an idea, right, and in the engagement, right, prove it. And that's more than just throwing together some HTML wireframes and saying, oh, the front end would look a bit less. Make it happen. Right? Show me that you can make this workflow go end-to-end. And I think you need that. And that's and that's a core component of uh what our work with ThoughtWorks is about. So ThoughtWorks has traditionally interacted with the CIO. AI is really about every other member of the C-suite other than the CIO, well, and the CIO. Um, and that's where we play. So there's a there's an opportunity for us to drag them into a whole bunch of conversations. Uh drag them makes it sound unwilling, but you know, work with them into a whole series of conversations. But then we lack the we lack the technical heft, right? Someone like ThoughtWorks, who is you know incredible pedigree in in building custom dev. That's the logic behind it.

SPEAKER_01 37:07

Is there a danger with what do you think with with the JV? So you know if you're tied to a particular uh business, you know, we go back to the consulting industry, the the sort of whether it be system integrator, whether it be the consulting arms of the before, whether you know Salesforce, ServiceNow, whatever it might be, and actually then the strategy behind that was quite it's quite difficult to build. If you're then effectively an anthropic Claude Shop, or you're you know tied in with Microsoft and their suite, does that make the actual strategic projects and advisory elements quite difficult, or do you think that's you know that's just a necessary that you need to be partnered with a big player?

SPEAKER_02 37:53

I don't think anybody in this market is demanding exclusivity. And my the the the advice I give to clients is if nobody's demanding exclusivity, why on earth would you give it away? Um so someone like ThoughtWorks, right? They're they're agnostic. Yeah. Right? They're leveraging all the best technology and they'll they'll pick up and drop models depending on you know whatever is best. Um so I think the core is remaining flexible, um, being open to experimentation. I mean the other dynamic that that you know is looming very large is tokenics, right? I mean we are we are already at the stage of not just what's what's the best model, right, but what's the best ROI because things are getting pretty expensive. Um I think tokenomics will probably be the word of 2026. Uh my my boss has said uh said last week he was expecting his mum, uh who lives in uh relatively rural island to say the word tokenomics to him before the end of the year, which I I thought was probably a step too far. But um it's gonna become a big deal. So we're already I mean this whole thing is maturing at such a state. All of a sudden it's not just about novelty, it's not just about horsepower, it's about horsepower at what cost.

SPEAKER_01 39:04

Uh and so that that demands flexibility. And

Ten Year View And Closing

SPEAKER_01 39:08

if you were to think further into the future, ten years from now, what does the what does the consultancy industry look like? I've absolutely no idea.

SPEAKER_02 39:17

I mean I'd go back to Amira's law, right? Absolutely no idea. At the core, and I'm I'm sure there'll be many people well, there probably aren't many people listening at this point in the podcast because if they if they have an issue with management consultants, they they turn this one off long before now. But um yeah, m management consultants uh at the core are fulfilling a capability set that most organizations can't manage to maintain internally, right? For reasons of bandwidth, hierarchy, employee value proposition, um, access to repetition and competitive insight. When you boil it down to the fundamentals of why consulting adds value, um you know many of those things AI is not gonna disrupt, right? It's not gonna it's not gonna invalidate. I think it's gonna raise the bar in all sorts of ways. Um but I I think the work that we'll be doing will be different. I think the questions we will be answering will be different. Uh I think you know, hopefully we'll be in a boom of economic productivity, which, you know, unfortunately, you know, the the the the bet the the benefits of that productivity, uh there's a very good chance it's gonna be very unevenly felt through society, and that's a debate but not a debate for this podcast. Um there's a part of me that thinks it's gonna look a lot like now but just better. What is it different? Um if I think about where consulting was 20 years ago, right? I mean on some levels just so fundamentally different, and on other levels so totally the same.

SPEAKER_01 40:52

So who knows? I think that's a good place to leave it. Um thank you, Tim. No, thank you for having me. Just listening to me drilling on. Uh that's been the Spotlight on Podcast. Um please uh tune in for for the next one.