I started StrategyU to teach knowledge workers the tools, frameworks, mindsets, and approaches that I learned in strategy consulting. When I started this, I thought that my audience would be people in big companies stuck inside strategy, finance, or analytics groups that didn’t have access to training.

This was one of the segments that have found value in my work but a second segment that surprised me has been small and medium-sized consulting firms ranging from 5 people to 200.

Over the last five years, we’ve done work for at least ten firms and have talked to CEOs or leaders from at least 15-20 more.

I had a call with the leader of a small firm last week, and it made me realize I should write up and share some of the common things I’ve seen across these kinds of firms.

Eight common challenges of small and medium-sized consulting firms

#1 The fastest growing firms are aligned with growing fields:

While strategy consulting has maintained impressive growth rates in the past 20 years, the fastest-growing small firms are growing even faster, sometimes from 50-200% per year. “hot” areas include data analytics, digital marketing, and pharmaceuticals. While the first two are riding the wave of the digital economy, the latter is a sector that’s always had lots of consultants involved in its work, something I expect to continue.

#2 These firms often succeed based on the founder relationships:

Most small firms have found some form of service-market fit because of the strength of the founders of the firm. This often shapes a lot of the early work that the firms focus on. The downside of this is that the founder often focuses most of their time on commercial relationship building (which makes sense) but this is at the expense of internal capability building. This can work if the founder brings in other colleagues who have complemented their skills in the past. It can also work if the founder can work with a small number of junior consultants 1-on-1. But this breaks down pretty quickly as the firm grows.

#3 The firm will absorb the strongest behaviors of the founder(s):

If the founder is obsessed with detail, the firm will likely become obsessed with detail. If they are obsessed with speed, the firm will prioritize speed. Also, if the founder is not good at giving feedback, the firm will struggle to have a good feedback culture. On a small scale, some of the downsides of these cultural norms can be diminished by quality 1-on-1 time with colleagues but these challenges can become more intense as the firm grows.

#4 The senior leaders are often experienced hires, from a wide range of firms:

Experienced consulting talent is hard to find and not everyone can hire from or even afford top consulting talent from places like McKinsey. It’s common to find firms with a leader from three different consulting firms like Accenture, KPMG, and Deloitte and then a few other leaders from places like Academia and F500. These “high ego” hires all tend to have strong points of view of how work should be done which often leads to challenges in establishing a clear culture or process for doing work.

#5 Because of this, there is often a lack of shared language or defined process for work

People from different firms are trained to focus on different things and they use different language. This is often confusing for junior colleagues, and everyone settles into a “grind through the work” approach to work because they can’t quite predict how any project will go, which is dependent on the senior leader working on it.

#6 Many firms find the shift from tactical to “strategic” to be very hard

Many consulting firms get their start from a few people doing very tactical work or at least working in a very narrow niche. The clients they serve often really like working with them and then want the growing consulting firm to do more work. This is great, right?! Often it's much harder than people expect. People who were excellent at executing struggled to take a step back and be a thought partner with the client, helping design a longer more strategic approach to a problem.

#7 No one is responsible for the process

With almost everyone I’ve worked with, I ask them, “Who is responsible for obsessing over your internal process and performance?” Almost everyone quickly realizes that the answer is the CEO and also nobody. Small firms don’t spend enough time thinking about the underlying culture, process, and infrastructure needed to scale (often rightly so, as early days are often just about surviving)

#8 How you treat training is how you treat learning

I’ll never forget how obsessed McKinsey was with training. If you were at a training week and were caught skipping sessions to work on client work (beyond some minor stuff), the senior people leading the training would call you out. Training was vital to the success of the firm, and everyone treated it as such. If training is something you can deprioritize, your firm will struggle with developing internal capabilities.

P.S. We run customized training for consulting firms, data-driven teams, and customer-focused organizations. You can reply for more information or submit interest here.