Episode 23: Rob Garner, Luk Smeyers & Deri Hughes - The Four Forces Shaping Consulting in 2026

Speaker 1 Welcome to Unlocking Value. I'm John Howard, a partner at Garwood Growth. This podcast is for founders, owners, and leaders of professional services businesses who are building great firms and want to fast track their success by learning from the experience of others. In each episode, I talk to guests with real world experience of building, growing, and realizing value in professional services. You'll hear candid, practical conversations about what works and what sometimes doesn't when it comes to growing a great firm. If an investment or exit process might be on the horizon for your firm at some point down the line, feel free to jump back to the first six episodes of the show. There are six part master class and everything you need to know about how transaction processes work in professional services. Wherever you are in your journey, we hope there's something to show for you. Thanks for listening. This episode's a little different from our usual format. Rather than me interviewing a guest, we're sharing the audio of a recent webinar hosted by Derry Hughes at Honeycomb Consulting Skills Training alongside Luke Smyers from the Visible Authority and my Garwood colleague Rob Garner. The three of them spent an hour looking ahead at what 2026 is likely to mean for consulting firms, the pressures they're seeing in the market, the impact of AI on delivery models, the rise of specialist boutiques, and the skills firms will need as the industry continues to shift. It's an open, thoughtful discussion shaped by the hundreds of firms they speak to every year. There's a lot in this conversation that I hope will be helpful as you think about the year ahead, and I really appreciate Dairy giving us the opportunity to share the session here on Unlucky Value. If you'd like to hear more conversations like this, please follow the show so you don't miss future episodes. So without further ado, it's over to Dairy Luke and Rob. Speaker 2 I'm super excited today to have two of the biggest experts I know on the consulting industry in the UK and Europe with us, and I'm super excited to hear their thoughts. So we're going to have a bit of an open discussion, looking back a little bit, and then mostly looking forward into 2026. So I'm just going to ask these two wonderful gentlemen to introduce themselves and then we're going to dive into the conversation. So, Rob Garner, I'll come to you first. Speaker 3 Thank you very much for the invitation to join you today. Really excited likewise for the conversation. By way of brief introduction, So founder and partner of Garwood Growth, we're a professional services specialist advisory firm working with organisations around growth operations and M&A. For my sins, 30 plus years in professional services. XKPMG partner founded my own managed business which I scaled and exited and kind of concluded an exec career as CEO over listed. Speaker 4 Tech. Speaker 3 I now balance my time in Garwood with a series of non exec directors as well. Speaker 2 Awesome. Thank you, Rob, and great to have you here. And Luke, over to you. Speaker 4 Hi everybody, So my name is Luke Smyers and I am the Managing Partner of the visibleauthority.com. What I do is I work with consulting firms both boutique and the big firms on one thing which is design or redesign their consulting propositions and service portfolios as the foundation for performance and profitability. So my background is in consulting for now almost 25 years, but in very different positions. I was the European Chief HR Officer for Nielsen Consulting, which in those days was a 5000 person consulting firm in Europe, of course globally, but I was based in Europe in 2008, which has always been my dream. I found that a boutique analytics consultancy in the early days of analytics called Diagnostics and that firm was acquired by Deloitte eight years later in 2016. And I stayed with Deloitte during my earn out period for three years where within Deloitte, I let and tripled the practice revenue in the analytics practice. And after my earn out period in 2019, I started what I'm doing today, which is there we always say DVA. So divisibleauthority.com helping consulting firms with their consulting proposition and service portfolio design. Speaker 2 Awesome. Thank you, Luke. For those that don't know me, I'm Derry Hughes, founder and Managing Director of Honeycomb Consulting Skills Training. So we help consulting team leaders develop exceptional teams and it's really about behavior changing. Capability development and training is a big part of that, but we wrap that around all kinds of programs. Some of you may have seen on LinkedIn on Friday this week we're publishing our Consulting People Report 2026, which we've written alongside Caroline from New Minds. And so as part of that, I've been talking to loads of people and reviewing the data and the state of the market in 2025 and heading into 2026. So in summary, across the three of us, we work with literally hundreds of consulting firms across the year. And what we're going to try and do is still what we've learned from those conversations down to the key trends that emerged last year and the big things that we're expecting to see this year. We will revisit this in eight or nine months time and see how right and how wrong we are on the trends for this year. Certainly, what we do know is the world has been changing very quickly in recent years. So everything is moving at pace. So Luke, I'll come to you first this time on the biggest trend that you saw in 2025 that emerged in consulting. Speaker 4 Yeah, I'm always almost afraid to say the AI thing. I tried to kind of package it in the way that we have experienced it and I tried to give it the name. So I called it looking back at 25, the AI double squeeze, which is a challenge for consulting firms all over the world, I think except for Asia. We talk about let's say the Western Hemisphere to a few hundreds of consulting firms. And of course, we do between 20 and 30 projects per year where we dive deep and all of them somehow were suffering from or challenged by the AI double squeeze. And let me explain that in a lot of consulting firms, there is a substantial share of revenue coming from smaller, maybe ad hoc projects. And for the first time at the somewhat bigger scale, that part of the revenue shrank materially across most of those firms. And the reason why is that a lot of their clients began generating insides themselves using AI tools, integrate with their existing platforms or internal data and so on, so forth. And that's the first side of the double squeeze. And that small order take like tasks that had traditionally been delivered by a group or a pyramid of juniors under senior supervision. Of course, the typical consulting grind, as David Miser would say, that started dropping. And with this grind dropping in volume, the consulting firms began reducing their junior headcount as a result, sometimes hiring free, sometime real reduction realignment. And what we were seeing then, and that's where then the double squeeze starts happening, is that some of that smaller work that still happened, sometimes time critical requests that come in were pushed to the senior experts. And sometimes we've had chats where it's sometimes landed at the desk of Harness. So that of course then becomes a cost challenge. So you have the revenue challenged one end, So revenue pressure because of the declining small order taking project work and cost pressure because some of that work was moved to higher cost seniors. They were dragged into that work that used to be leveraged before. And so that double squeeze was like present everywhere. And I will come back later on when we talk about 26 how to deal with it. But it all starts of course with delivering small order take project work that gets challenged by the clients these days and some of that work that is taken internally. Speaker 3 I mean, I was going to add to that, Luke, because I think there's probably a triple squeeze to use your phraseology or to build on your phraseology in that action. What we've observed is that in the slightly larger engagement, not necessarily the kind of smaller order taking gate, but in the slightly larger engagement, there's an expectation from clients that there's much more kind of AI leverage in it. And therefore there is an expectation that there is at least cost containment, if not cost reduction in some of those bigger projects. And I think you start to put all of those things together and you're starting to look at quite a significant commercial challenge for actually many tiers of the market. You know, you can take it into a a kind of a human content in terms of, you know, challenges of routes into the market progression through what does that look like? But you could also take it into the commercial dimension without being too grubby about it. You know, how do you make money out of a consulting business model if actually, you know, that is changing dramatically and what has historically been an engine room of margin has been eroded through those kind of triple effect. In essence, I think we saw the heritage or, or the early stages of that probably before 2025, but we saw it kind of starting to really come through in 2025. On a slightly more positive note was that I think we saw 2025 as a return to growth or maybe the the kind of early stages of growth within the industries. You know, we all read the, the kind of press and, and the doom mongering that the consulting sector is a doom sector and you know, we're all working in a failing kind of industry. I don't believe that at all. And actually, I think 2025 showed the early signs of return to growth. I think that you know, bigger firms might have been flat or low digit, but some of the specialist firms and some of the niche firms started to show real signs of growth. And I I think that's another trend that we see is the sort of not necessarily the rye, but but the success perhaps of some of the boutique firm relative to sort of mid service and larger organizations. And and then again, that then plays into dimensions of how the industry and we be as leaders of that industry, you kind of react, respond and see that coming through. Speaker 4 Rob, you could then almost talk about a quadruple squeeze to innovate the service offerings with AI. So you have the revenue challenge, clients doing some of the basic work themselves. You have the cost challenge because there are fewer juniors, so there's a cost challenge seniors doing the work. Then there is what you said, an expectation that things are AI done. And so you get cost discussions, pricing discussions. And then there is of course the whole innovation pressure within the consulting firms to innovate with AI and to come up with new services that are AI based or whatever you call it or AI first or AI empowered or strengthens what whatever you call it. And so it's almost like a quadruple squeeze, not easy to deal with. Speaker 2 And I think a lot of those trends are actually interconnected as well. The fact the lions now feel like they can do a lot of things themselves that they could didn't used to be able to do is then emphasizing the need for specialist support that genuinely drives value. That a real clear line between like expertise and value delivered. And that whole thing is just creating this flywheel. I think from my point of view. And maybe I'll use my kind of 25 look back to then pivot into the looking forwards and we can start think about that because I think that's the key thing for people. So what we noticed at the back end of last year, and I'm talking kind of September onwards, so maybe for 18 months or so now, I've been expecting clients to start to come to us with a capability development need around AI. And I would say up until September, roughly 0 clients asked us anything about how do we develop our teams to use AI because they weren't ready. And I think this double, triple, quadruple squeeze piece is starting to bite now at the point where people are saying, you know what, we really have to start to use AI. And we started to get questions about what AI use cases should we be using? What do the team really need to be able would do? How can we build that into training? So people are starting to think about the solution to that pressure that they're feeling. I think the other side that we saw come through very strongly was a real desire to upskill people in what I call human skills. The human connection, the empathy, the building trust, going back to all the foundations of the trusted advisor and the trust equation that still remain really important. And I think as everything is changing so quickly, people are realizing that internally and with the client, they really need those skills more than ever before to help everybody navigate through all of this change without it being just a massive stress and resilience problem for people. That's the stuff I saw at the back end of last year. So you've got these specialist firms kind of starting to grow, starting to see positivity. We certainly saw our level of inbound inquiries go up dramatically in Q4 as people return to optimism. But what they're really thinking about is how do we actually use AI now? What does that mean for human skills? And that's the stuff that people are kind of running into 2026 with. I'm interested to know from you guys, like if we fast forwarded 12 months from now, what do you think we'd be saying as the things that change the most about consulting in 2026? So what's going to happen over the next 12 months that it's going to be exciting and change things up. Speaker 4 Yeah, Maybe building on also what Rob said before, if I may, the consulting bashing that happened in the past year, I got really bored by it because there was like every day and on LinkedIn three or four people saying consulting will disappear. It's really nonsense, ridiculous. I love this industry so much that I am a bit biased, but I think we are in a phase where consulting is getting more difficult because at the client side the complexity is growing, business issues are becoming more complex. There is a requirement of speed and immediate results. And so in general, I think that there is enough work to do for consulting. There is so much opportunity there in the market and that's also why I think this growing complexity that is helping the industry as you both set dairy and and Rob that there is some early signs of growth. Again, if you look at the bigger guys, which is the BIG4 plus Accenture, they're still growing so lowered single digit. But despite the headwinds and the announcements that they are about about to disappear, they are still growing. So 456 percent, which is amazing because that is growth on top of 50, sixty, 70 billion. But of course, they all have a challenging and we all have a challenging macroeconomic environment and they are doing some workforce realignments. But a lot of the announcements that we've seen are also result of the post COVID boom years 2223. So they are now realigning themselves a little bit. And of course there is this AI thing and that challenges them. Of course, it's not easy, but if you look within them, and that's also important for the boutiques to learn from. There are pockets in the big firms that are doing extremely well. Everything with risk and cyber and a few technology domains, of course. And also AI of course is doing very well. But there are also also pockets that are struggling and some of them are having a big struggle like human capital, human resources. Now if you look at the boutiques, that's of course a patchwork of all kinds of firms and all kinds of sizes. So it's more difficult to assess. But as you said also Rob and there there are some early signs. They're also seeing this early sign of recovery. And what they studied is that clients apparently seem to be prepared to shift some of their spend to more outcome based consulting support from specialists. So outcome over effort, the big guys with their multiple billable hours compared to the outcomes that some of the specialists can deliver. So the positive signs, but a challenging market and I'll come back to that later on in 26. Speaker 3 I think even in the, I'll use the word niche as opposed to specialists, but in the niche kind of provided it is those organisations and I look across our client base, I don't have to look any further than that, that are doing well. That are the ones that have got either a risk and compliance model. Organisations in that base are doing really well, have grown quite rapidly or are in quite niche areas of kind of transformation, particularly in kind of highly competitive market. So I can think of an organization that works in a very niche area of transformation within financial services in investment banking and they're doing very well indeed. I see three areas of growth. There are two undoubted areas of growth that whole risk combines and then transformation and transformation has been around for a while. But I think the other one of which is enduring because of the perhaps some of the macroeconomic and global kind of instability is anything that's kind of got and I use these words loosely and advisory, but kind of cost reduction, you know, anything that in that base also seems to be doing well at the moment. You also highlight something else, which is we have to look at 2526 almost in a cycle of post HOVID. You know, they're not years isolated in their own right. They are part of a cycle of recovery almost where the industry grew too fast that suffered terribly as a result of over bantion in 24. And is still there's a bit of a pendulum here where that still swinging to kind of find the new equilibrium in kind of capacity fields. And you as we come off the back of that kind of almost COVID correction, as it were, then did dealing with some of these other sort of technical innovation challenges. And you know, AI the forefront of them as both an opportunity and a threat, as we've already said. Because I think we've focused a little bit on the kind of internal impact of AI in terms of consulting, what it means for people and commercial. But of course there is AI consulting angle to this, which is, you know, actually there's only ancient, there are, you know, new roles, new opportunity, things that 345 years ago we wouldn't have seen as being necessarily kind of services that are being offered in a different guise in a different way. Still comes back round to what I see in 2026, which is going to be stuff around again, kind of government risk assurance around how AI is being adopted. And you know, you get aspects of that which rub into the cybersecurity type, you know, how how it's being adopted and some of the technical exposure risk, but you also get stuff like fires and fairness and things like that. I was talking to somebody that's got a small consulting business that's growing quite well and the only thing they do is effectively advising on and eradicating bias within AI recruitment model as a service offering. You know, those sorts of businesses are going to emerge and we will start see, yeah, a proliferation I think of new offering that are actually coming off the sort of ramifications of what AI mean. Yeah. I think we've come through a journey where you might describe 24 as that sort of the the are we are, we kind of year do we don't we kind of thing. The 25 is in sort of proof of concept, 26 ought to be kind of gala and value return. I think there are some headwinds of that. One of the headwinds to that is actually, you know kind of almost human adoption actually are we going to be the break on kind of AI within our own industries and within our own organizations and therein lies a whole other debate. But I'm not going to sit here with a crystal ball and forecast exactly how, but I think aspects of that will play out pro definitely in 26. Speaker 2 Yeah. I think what I'm seeing is related to that. So the kind of AI journey that I see with a lot of firms is that they've realized that their clients need thinking about AI. So they've tried to stay one step ahead of clients in terms of their ability to advise them. But I don't think it's too much of A stretch to say, like many consultants, they may not have been walking the walk internally versus what they were advising their clients to do. And they're very good reasons for that. I don't judge anyone for that. What I think is now going to happen is people are going to start using AI properly internally. And I think that to start with that is going to be about the leverage model and confirms do things more efficiently, more effectively using AI and other automation tools because a lot of firms are behind the curve. In terms of how much they automate internally to get their cost base down effectively, and there's been a lot of talk about that, but there really are many firms who are doing anything concrete on it in 2025, IC 2026 as a year that that changes. I think then there's two big build from the AI capability point of view on top of that. One is this speed to expertise point that we've been talking about, like the importance of expertise and how can you use AI to enable your internal knowledge management to get people to an expert level faster when they need to, Whether that's when they join the firm for the first time time or when they're allocated to a new project in a new sector or a new problem that they haven't worked on before. AI enabled knowledge transfer is going to be the kind of second wave after cost reduction. And then I think we get AI enabled new propositions. People are kind of talking about how can we use AI to deliver more client value. I don't think there's many firms that are really out there beyond what is fundamentally A transformation conversation about how should you start to use AI. They're not AI enabling propositions yet. There are a few examples out there, but not many within the firm terms that we speak to. So I see that the use of AI internally initially for efficiency as the kind of starting point here. And then it'll be about expertise and then it'll be about new propositions. I'll see that kind of flowing through in 2026. Speaker 4 I wrote a LinkedIn post yesterday in Dairy and the title was AI will reward Consulting firms that quit improvising and while I was writing was that most consulting firms, and I get that, I've been there myself, they carry a legacy of saying yes to almost everything, of course, to protect revenue. But the result is, of course, that they start every project from scratch and that makes codifying the work impossible. And in an AI space, the consulting firm that can codify repeated observations and reduce, as I always say, outcome variability, those will be the ones that ultimately will be able to predict project outcomes and build, differentiate IP. And that is, I think, where it becomes attractive because if you repeat, you gather data, you can codify that you can use AI to study those outcomes, reduce variability, and then ultimately predict your outcomes better than than ever before. And that's where specialism will become more and more attractive in the market. But yeah, if of course you keep saying yes to everything, then you have no chance to leverage that capability. Speaker 3 I just to kind of move conversation a little bit because we've kind of really focused on the kind of, but the impact of we keep using AI, but basically the digital agenda in 25 and 26 in the pace of the digital agenda and what it's doing to our clients and to ourselves. I think there is another dimension to this to pick up, which is actually in addition to the kind of technical skills or the consulting skills of digital clients are expecting a greater degree of specialism in terms of sector knowledge and sector understanding. You know, the day of the generalist that could move liberally from public to private and back again. Maybe that was dead a while ago, I don't know. But actually even around, you know, sub sectors within public and sub sectors within private, there is a much greater demand now for people to be sector specialists and understand what's going on in a sector that I can't do beyond quadruple in terms of threats to businesses. My maths and my brain aren't that good. But what I can see is that that is another dimension to this because actually it's hard to add to. We actually need a greater focus on subject matter expertise from a sectoral point of view. Does that mean we recruit from industry? Does that we recruit from competitors? How do we develop that expertise at a time when we've already said, but they're probably fewer junior consultant coming into the industry than they have been for a long while because of the squeeze that that we see? Speaker 2 Well, I think that's a good point actually to pivot into taking some of the questions because there are a couple of questions that speak to those kind of themes. So Rob, just to pick up on that because there's two related questions actually. The one is around, if in 2026 you were to start a new consulting business, no legacy structures, no baggage, how would you approach the design and build up of the firm? And they're related to that as a question around one of the business models for consultancies in 2026 and that sector expertise point is kind of central to that. But, and I'd love to get your thoughts. And Luke, obviously we were chatting before we went live on air about the challenges of starting up a new firm. What are your thoughts on what you would do now if you wanted to start up a new consulting business with no legacy structures? And I guess what does that mean for existing businesses as well that do have those structures and baggage, but could maybe choose to get rid of some of them? Speaker 3 I mean, there's always been that kind of dichotomy in consulting businesses about whether you're kind of capability first or whether you're kind of sector first in terms both your go to market kind of approach, your messaging, but actually also often reflected in terms of your internal organization. Use the vernacular. Are you a horizontal or a vertical? And of course the answer is you, you have to be in blend of the two. You can't just simply be one or the other. What I see in terms of sort of success at the moment and I can think of a number of organization we work with is actually they've almost reduced that down to a one by one. We only really work in one sector and we only really do one thing. And I think with that there are whole host of kind of advantages and challenges. You know, this isn't about saying I'm in financial service, this is about saying I'm in you know a very narrow sub sector or whatever it have to be. This is not about saying I do transformation for financial. This is about saying this is what I am really good at and that where I would be positioned that business, what those things are. That's quite interesting. I think the one word that I would pick up on from actually something Luke said and I've already said myself, which is anything that is kind of obviating risk or mitigating and managing risk is also very pertinent at the moment and I think people see that more than ever. So you know, if you're a single sector, single service and you've got a kind of risk bias to it in some way, I wouldn't definitely say a winner, but you're certainly on to the right track as far as I would be concerned in terms of, you know, where would I be starting. Speaker 2 Just to clarify what you mean by that, your proposition is helping clients manage and mitigate their risk in some way. Speaker 3 Exactly. And and that can manifest itself everything from kind of cyber, you know, that sort of risk, but right through to I work with an organization that does human capital risk within the legal sector, you know, that is quite niche, but actually quite high demand as well. Speaker 2 From a business model perspective, I 100% agree with the specialist focus and finding the intersection of the vertical and the horizontal. And I often, and if you want to go narrower than you are comfortable being, you've got to feel like you've picked such a small niche that you're never going to be able to build a proper business around it. Because once you win in that niche, then you get the rights to expand if you need to, but you're not going to win if you try and go big from the start. What that also enables from a business model perspective is a few different things. One is your marketing and your authority building, as Luke would call it, can be super focused and that allows you to then build expertise as quickly as is possible, which isn't very quick. It still takes time, could build that expertise as quickly as possible. And I think from a delivery perspective, I would be looking at more of a kind of diamond or POD model with heavy use of agents. And again, the specialism enables you to use the agents. If you are a generalist, you can't build automations and agents that do anything very useful. So that if you want to have an efficient low cost, high impact consulting proposition in 2026, deep specialism with a POD system that is built around agents with the technical knowledge to do a lot of the what we would have traditionally used the bottom of the pyramid for. And there's another question about the future of the pyramid, which we'll come to and enables your marketing and ultimately your pricing. Speaker 4 Maybe for the little story near very early 25, I wrote an article about if I were to start again and the article got like almost 200,000 clicks, which I've never had before. So there is some interest in the subject. So I fully support Rob there and what he says about specialism. I'm, I'm a skeptic about industry for a boutique by the way, because what most boutiques do is they list the whole series of industries where they have done a project, but that's not industry focus for me. So I agree with you, Rob. When you have a matrix capability versus industry 1, capability 1 industry, that is the success. I would say that would be what I would focus on, but I would turn it into, as we always do when we do proposition and service design, we start with the issue. So we would say what is the high state issue that you guys with your expertise can solve all quickly, reliably and can build repeatable processes. And then of course, the whole thing about AI, codification of data, reducing variance and all that stuff. So therefore, that focus is very important. But as we discussed before the the webinar and that was in my article, that was actually the starting point. Today I would treat a startup consulting boutique specialist as a startup in SAS, meaning I would hire senior people first, I would invest. So I would make sure that I can grow fast, that I can build credibility fast, that I focus on one value proposition with an immediate or a fast validation. So testing, piloting so that I can validate that quickly, that I can build proof concept that I can explain that to the market. And then of course, you have what you said dairy, the whole go to market behind it, marketing fault leadership, visibility and so on and so forth. And if you are like Rob said, you focus on, as we say, a capability in general. So like we are a data and analytics consulting firm, of course, then you are amongst $1 million of data consulting firms and you will be in trouble. So therefore, pick one and go for it, invest in it. I think that is one of the biggest differences. If I compare myself like in 2008 when we started, we had like 2-3, four years time to bootstrap our consulting firm days in such a brutal competition, I wouldn't do it that way anymore. So I would pre invest like in a sauce and then go for it with one thing, high stake, not to get too much into the order taker kind of profile. So high stake solutions like cyber or whatever and then go for it all the way. That's what I would do. Speaker 3 If I could just add one thing to what we both said, because I agree holastly. I think the other thing I would say is that from a capability proposition point of view, it's 1 sector, it's one market or whatever. Actually, your offering has to be deep. So it has to go from advisory to delivery, even into kind of managed service kind of delivery. Yeah, actually, you need to be able to stand shoulder to shoulder with your client, not just to kind of lead them, but actually to deliver on their behalf or deliver with them. And I think that's also quite an important distinction in terms of how I see successful organisations moving forward. And to your point about analytics, I was involved with analytic business here in the UK. We actually sold it last year and you know that was a new specialist and that worked in a sub sector of health and it did one type of analytic for that sub sector of health and actually within a space of four or five years it became market leader and market dominant. Speaker 4 We work with a few data analytics also and I think last year two of them and they both reduce the scope of data analytics and say they focus on one particular business issue. Of course, doesn't mean that you have to throw away all the rest. So you can still have that there. And of course you need that kind of expertise like data integration, data cleaning and whatever. But that's not the way you go to market with. You go to market with a high stake issue that you can solve better than anybody else and the rest is in the back background and you move that step by step to the front. So it's like a fade in, fade out scenario of becoming that expert and all the rest of the expertise is in the background to support that expertise. All right. Speaker 2 I'm going to move on with another question here. This was specifically to Rob, but I'm sure Luke, you'll have views as well around this point that boutiques and specialists are doing better. I think you've answered a few of these, Rob, but just if there's anything you need to add to this, maybe we can try and get to a kind of definition of a boutique. And then the follow on question is like how do these boutiques bill, is it time days, etcetera? Speaker 3 I think there are several things in that. So what do I mean by boutique, It really hard to judge because I think you go across different capabilities, different sectors and actually you kind of get to a kind of different numbers. If I'm going to say anything on it, I think about businesses that are kind of 50 to 253-5400 star, something of that nature. They're probably more national than international. You know, there is no absolute in any of that. It varies wildly. Speaker 2 What I would say is I've seen plenty of firms who have that very focused proposition, who are a couple of 100 people. You can grow a very material boutique consulting firm with a very tight proposition. Speaker 3 I would agree there. So I think you're in that territory in terms of scale. I've seen kind of niche specialists in, well, actually just about every sector you know, or he mentioned kind of financial services, health, the law, you know. So I think you see them coming from that point of view and I think a lot of them do have that kind of advisory to delivery capability. You know, they are genuine in that sense kind of business partners of their clients and not just simply as perhaps historically we might have seen boutiques, perhaps slight more strategy based organizations. I don't think that's true anymore. Far from it. I think these are deep delivery organizations in terms of how people bill and charge for their time. I think Luke's already touched on it. We see a lot more outcome based pricing for all firms. This is not specific to any sector or sub sector of organization or grouping, but we do see a much greater emphasis on kind of some form of outcome, whether that's fixed or whether that's capped or whether that's kind of some sort of gain share, risk share, whatever you want to use in that kind of terminology. But much more kind of outcome based pricing people are far less likely to pay on a what one might think of. And I now say traditionally because 10/15/20 years ago much more input based pricing and the client therefore shouldering far more of the risk as it were. And actually that not being shared in the way that I now see many organizations sharing that risk. Speaker 2 Yeah. I think for me to definitely see more of the outcome based pricing and I think that is more enabled but better technology. Like when I was doing outcome based pricing projects 15 years ago, it was an incredible amount of effort just to agree on the measures and agree on the baseline and actually track all of that, that it almost wasn't worth it. That's much easier these days in many, many ways. I do think the pricing model is somewhat client dependent, sector dependent. So if you're in the private sector, most firms would these days be pricing mostly on a project basis with some value upside as opposed to saying we're going to bill you for X number of days of X number of people. In public sector is much harder to get away with that because of the procurement processes. I've seen some shocking examples of people gaming those procurement processes with day rates by grade etcetera, which that's a different story. Speaker 4 About this outcome based pricing, I'm always very careful with it for two reasons. I'm not a big fan of giving away the control to the client because you can not always control what's happening in there from an engagement, from a presence, from a political whatever. So I'm I'm always very careful with that, but that's the client side. On the consulting side, I agree with you. There is a lot of writing about this, but I think before going there, I would always advise A consulting firm make sure that your proposition is well defined before and that you can prove the outcomes that you can confidently deliver before you go into maybe even before that outcome definition or outcome based contracts, not even pricing, but outcome based agreements. And so if you say yes to everything and you have like a service crawl and the legacy of starting from scratch all the time, you will never get there defining outcomes, making sure that you can prove the value that you can deliver and the outcomes that you can deliver. So I would say be careful on the building side because of a well defined position that you need and need to be repeated over multiple projects before you can predict outcomes or project. And at the client side, I would say be careful to give away the risk management of your outcomes to the client. So bit skeptical there. Speaker 3 I think what I do see is a more engaged and a more mature dialogue around how you do those things. I mean historically 1015 years ago, as you say dairy when you know you trying to do it before or whatever, the consultant would you be looking at the upside and the client would be looking at the downside and never the twain shall be kind of thing. You know where now there seems to be a much more kind of shared understanding that there could be upside and downside for both parties in these outcome. And actually how do we codify that and actually how do we create something where there is hand of shared endeavour to achieve That just feels like a more mature kind of conversation than certainly I was party to 10/15/20 years ago or whatever. Speaker 2 Yeah, I'd agree with that. OK. I think we got time from one or two more questions around the future of The Apprentice model and particularly with pyramids, and this is something that we told the clients quite a lot about, is if we have the pyramid model moving more to a diamond with fewer junior resources, like what does that mean for development? So my take on this is that we're still going to need juniors. They're just going to need a different type of skill that's going to be more related to AI. If you've got an AI enabled delivery. I also think that one of the things that firms are going to find is that The Apprentice model almost needs to move to a two way model where the junior team are helping the senior team stay up to speed with some of the latest trends. Because what we're going to find through this next 12 to 18 months, it's the senior folks who are going to have to adapt way more than they've realized yet to AIAI delivery, AI, quality assurance, managing Gen. Z, and then Gen. Alpha people entering the workforce and all the differences there. If firms can start to use the junior people to bring the senior people up to speed, those senior people need to be prepared to learn, which we don't see everywhere. I almost see it moving into a two way apprentice model but interested in what you guys see on that. Speaker 3 I had not thought about it in that way. But actually what I had observed is the sort of dichotomy that you've got 2 main skills that are being demanded at the moment, sector expertise and digital. And actually they are in different generations and different kind of components of the industry or even in different layers of your organizational model. And actually, how do you recruit for them? And then how do you share that expertise? I think he's an ongoing challenge. And I think with your business and your business model, you're probably closer to this than I am, but I'm not sure it's one that many organizations have entirely resolved yet. Speaker 2 I think the risk is if you only look at AI as a cost saving measure, then you're going to say, oh, we don't need so many junior people. And if you have a short term view, which too many firms do, then that apprenticeship model is under risk and the development model is under risk. But I think that if you have a view on what we still going to need experts, clients are going to demand experts who are even more expert in a couple of years time, then you understand a huge part of the value that your junior team are bringing beyond just their day-to-day. Delivery in that moment on that particular project. Speaker 4 I think the biggest change that will happen is that we used to bring those juniors along with us in the projects and we build for training them. So the client was actually paying for their training. And that of course will change because of the whole new space of AI and all that grind work that will most likely be automated to a high level or to a high degree. But at the same time, I think that consultancies will start need to invest. So we used to have like 2-3 years, I hired juniors in my Deloitte years and they had like 3 years time to become a decent level of consultant. But that is I think getting under pressure, which means that consulting firms will need to invest. So instead of billing them to the client for the training and taking the time for it, I think that consulting firms will now need to open the money back and invest in those people, which is totally different from the past. So that will also change the costs base. But because of fewer juniors, that's probably affordable. But I think that most consulting firms and especially the bigger ones weren't used to do that kind of investment. And that is also a mindset change that also need to be calculated. Is that to what degree can we go? Is that still profitable? And so on, so forth. Speaker 2 Yeah, 100% and Genius have often been a good source of high gross margins. Well, Luke, where's the best place for people if they want to follow some of your things? Speaker 4 Go to LinkedIn and follow me there. The all the other information like website, newsletter. So it's all in LinkedIn and I publish daily so you can follow me there. Speaker 2 Daily from Luke on LinkedIn. Awesome. And Rob, what about you? What's the best place for people to find out more about you? Speaker 3 Yeah. I mean, LinkedIn sayings, Luke, do follow us on LinkedIn. I don't quite publish daily, but two or three times a week. So there's plenty of kind of output. Or go to our website, goalwithgrowth.com and look at the kind of resources section all around consulting and professional services and the kind of development of those dimensions, I suppose. Speaker 2 Thank you very much guys, please do get in touch if you want to chat about any of this stuff. Really enjoyed that conversation. Speaker 1 Thanks for listening to Unlocking Value. If you've enjoyed today's episode, we'd love for you to follow us and share the show with others. We'll be back soon with more real world conversations about how to build and unlock value in professional services. In the meantime, if you've got guest recommendations or any feedback, please feel free to drop me a line at [email protected]. Thanks again and see you next time.