Business model innovation in the Management Consulting Industry

Despite extensive research on business models, gaps remain regarding how digital transformation is shaping the business model of management consulting firms (MCFs). This is especially important for consulting companies offering advice on these models. This paper uses data from a longitudinal study of major international consulting firms mainly operating in Europe, to provide an overview of how they respond to digitization. We propose that business consulting firms are making important changes in three key areas: value proposition, value creation and value capturing. Findings suggest that there is a shift in value proposition by consulting firms from solely giving advice and, eventually, supporting IT implementation, to providing end-to-end solutions. To materialize value proposition, consulting firms acquire new knowledge and digital assets through talents acquisition and M&A. Findings also highlight that consulting firms rely heavily on complementary knowledge and capabilities of actors with ecosystems; thus, they focus on expanding and creating their own ecosystems. Within this, they are both competing and collaborating, especially with IT vendors, as MCFs are into software development/configuration while software vendors enrich their offer with management advice. Such a radical change in the value proposition of the MCFs has also led to redesigning revenue streams.