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Big Four firms have rebuilt their consulting practices and this group is once again a force to be reckoned with, as evidenced in their thought leadership performance, according to a new report, which evaluates thought leadership published by the top global consulting firms.
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Big Four make a comeback in thought leadership
The large audit firms were the first to compete with McKinsey and its peers for a lucrative slice of the consulting market back in the 60’s. They have since undergone enormous change due to consolidation and regulation, resulting in a smaller number of big firms and the sale of some consulting operations. In the last couple of years three of the Big Four firms have rebuilt their consulting practices and this group is once again a force to be reckoned with, as evidenced in their recent performance in thought leadership (reports, articles, white papers and books).
White Space, which evaluates the latest thought leadership published by the top global consulting firms, is authored by Fiona Czerniawska, renowned consulting author and commentator, and published by Arkimeda.
According to the report, of the Big Four firms, PricewaterhouseCoopers (PwC) produced the most thought leadership in 2006 with 5% of the global market, putting them in third place after McKinsey and Accenture. PwC’s nearest Big Four rival is Deloitte with 3% of the thought leadership market. This is a reverse of the situation in 2005 when Deloitte outperformed PwC in volume terms and suggests that Deloitte may either be investing less in thought leadership or has simply not managed to keep pace with its immediate rival as the battle for the intellectual high ground intensifies. KPMG and Ernst & Young, having only recently returned to the consulting market, are still producing relatively small amounts of thought leadership.
In an overall ranking of the global consulting firms PwC scores highly for differentiation (the originality or distinctiveness of their conclusions); Deloitte for resilience (the depth of thinking and/or the extent of research evident); and Ernst & Young for commercialisation (the likelihood that the material will encourage the audience to take action). Whilst KPMG produces more material than Ernst & Young, it doesn’t have a specific focus and seems to be suffering from a lack of investment.
| Evaluation of Big Four firms’ thought leadership |
| Appeal | Differentiation | Resilience | Commercialization | Total (out of 20) | | Deloitte | 4 | 4 | 5 | 3 | 16 | | PwC | 3 | 5 | 4 | 3 | 15 | | E&Y; | 2 | 3 | 2 | 5 | 12 | | KPMG | 3 | 2 | 3 | 2 | 10 |
Source: White Space (Arkimeda)
The Big Four firms appear to model their thought leadership positioning on that of the pure strategy firms. Economics and market studies and strategy formulation account for almost half of their output, well ahead of the more operational topics such as technology or business processes. In terms of sector focus, PwC is particularly strong in energy & utilities, media and leisure and retail. Deloitte is strong in public sector and retail.
PwC is also strong on mergers, acquisitions and alliances – indeed it is ranked above Bain in terms of quality on this topic. Within this area PwC focuses its attention on individual sectors, particularly the energy/utility industry.
Material on governance issues accounted for 3 per cent of the total thought leadership market in 2006 and is one of the key areas on which the Big Four firms are focusing. The clear leader (in volume) here is Ernst & Young with 22 per cent of the market. This gives the firm more than a fifth of all material on this topic, well ahead of its nearest rivals Bearingpoint and PwC.
If anything, regulatory changes have been a bigger driver for growth when it comes to thought leadership on reporting issues. Again Big Four firms are prominent here, but the market is dominated by PwC, which generates more than 40 per cent of all thought leadership on this topic and has a clear lead in terms of quality.
CSR never seems to have quite taken off as a focal point for thought leadership, perhaps because consulting firms have struggled to identify commercially-viable propositions in this space. Ernst & Young dominates this market, generating more than a third of all material. However this picture is very misleading, as the actual volume of material here is very small.
The Big Four firms with their global resources and strong brands pose a significant threat to their rivals in the consulting space. With the right levels of investment and the right sector and issue focus their thought leadership programmes could easily overtake those currently sitting at the top of the global rankings.
This assessment of thought leadership contributions is based on Fiona Czerniawska’s new report White Space, the findings of which will form a key part of Fiona’s forthcoming seminar Using thought leadership to generate £millions in extra client fees.
White Space is a unique research programme that evaluates the latest thought leadership published by the top global consulting firms, identifying those that produce the most, the best and the worst material across a range of subject areas and sectors. More details about the 2007 edition of Arkimeda's unique report can be found at http://www.arkimeda.com/whitespace.
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