The Horrors of Consulting Industry Fragmentation
- Kennedy Editorial
- Sep 16
- 3 min read
Updated: Sep 17
By Tom Rodenhauser, Managing Partner, Kennedy Intelligence I Consulting Industry’s Strategic Insights Partner I Host and Editor of Consultants Talk podcast
Is AI ‘The Substance’ for Consulting?
Who would have thought a horror film could offer a glimpse into the accelerating fragmentation of the global consulting market. Let me explain.
After all the recent Oscar hoopla, I reluctantly watched the Demi Moore film, The Substance. The movie’s premise was straightforward – aging Hollywood starlet, increasingly rejected by boorish execs, desperately seeks to recreate her youthful former self. Presented with the titular antidote, she makes the Faustian bargain to form a young-self from her old-self, neither of whom can occupy the same realm. Week on/Week off.
Of course, young-self really likes the new gig. Without giving away the ending, let’s just say sucking up life experiences takes on a whole new meaning here!
So, what does that have to do with consulting? I connected the dots after our recent ConsultantsTalk podcast with @James O’Dowd, a senior talent advisor to professional services. We talked about the impact of AI as it collapses the traditional organizational pyramid.
Understanding the Horrors of Consulting Industry Fragmentation in the Age of AI
Clearly, the latest AI tools vastly expedite mundane research by synthesizing data-collection chores, the role of many junior consultants. AI also organizes and presents the collective knowledge of both individuals and institutions, which (in theory) unshackles senior consultants from the old team leverage model that relies on foundational staff.
Within consulting, deconstruction traditionally leads to new firms being borne from those pieces and parts. This occurred 25 years ago, when we saw a wave of new firms arise when Arthur Andersen imploded and three of the big accounting firms sold their IT advisory businesses. Another phase of rebirth coincided with Digital 1.0 in the early 2010s, when traditional management consultancies donned black jeans and t-shirts to up their cool factor. The purest of these abandoned the term consulting and embraced all things digital.
Some of the firms that arose during each of these eras have achieved varying levels of eminence through long and sustained investments. But what if there was a shortcut?
Clearly the brand credibility of MBB and Big 4 goes far with clients. But taken to the extreme, do senior-level experts require the vast data and infrastructure associated with global consultancies? And will those experts see increasing opportunity to form new brands that leverage themselves and, using AI, create levels of scale that wouldn’t have been possible 10 years ago?
We’re staring at major disruption in the consulting industry. Yet whether it’s some new firm hiving off from an established player, or the big brands themselves, the challenge will be the same. To remain relevant, firms must create and deliver new knowledge-based solutions to solve new client problems.
Therefore, a word of caution for those folks who think they can create a new-self by merely drawing on the brand and knowledge from their old-self ... the end result will be quite horrific.
As firms wrestle with legacy structures and AI-powered opportunities, The Horrors of Consulting Industry Fragmentation serve as a warning. Reinvention without genuine innovation may end as badly as the Faustian bargains we see on screen.
About the Author: Tom Rodenhauser has been tracking the global consulting industry for 30 years. Kennedy Intelligence helps leaders adapt to changing landscapes and position their firms for success. Reach out to discuss:
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Note: This article is for educational and informational purposes only and does not constitute investment, tax, or legal advice. The views and opinions expressed in this article are those of the author and do not represent the views of any affiliate organization. Any opinions or views expressed are as of the date written and are subject to change without notice and may be updated or modified at any time.
