It's Curtains for Consulting!

The New Path for Strategy Development

The Consulting Crash is Coming…is the title of a recent article in the Free Press online publication. But it’s unlikely that any crash will occur. A decline and phase-out of big consulting is more likely. Taking some liberties, however, the general digital transformation, which includes AI, will undoubtedly influence the consulting industry. Therefore, big consulting firms are in challenging times, their value proposition is diminishing, and so too is their prestige. People’s general awareness of certain technologies that allow them to do things themselves is a major force impacting the consulting industry.

However, while generative AI, particularly, has contributed to the decline, the hype surrounding AI-everything misleads many into thinking that AI will replace entire workforces, including consultants. 

Generative AI solutions are getting increasingly better and more focused on certain service and task areas. A simple Google search can help many acquire a reasonable amount of information and ‘expertise’ on any given topic. Often enough to get pointed in the right direction. 

The human element, however, is still needed, but that doesn’t mean it has to be a consultant anymore. The user themselves and other relationships can serve as the executive decision makers when engaging with intelligent technology solutions. No need for a consultant who will basically tell you what you already know or can find out for yourself with a little effort.

So, it becomes difficult for any sensible person to justify paying high consulting fees for much of what they can accomplish themselves. And that’s the rub!

If consulting firms persist in the future, they’ll no longer be as large or nearly as profitable as they are now.

AI Won’t Save Consulting

Nobel Laureate Daron Acemoglu, drawing from his research, The Simple Macroeconomics of AI, adds, “AI might automate only 5% of tasks and add just 1% to global GDP over the next decade.” While many are lured by promises that AI will rapidly transform everything, the macroeconomic facts tell a different story, he explains.

A 2024 study titled “The AI Productivity Paradox: Why Aren’t More Workers Using ChatGPT?” The author Julia Winn says Despite the transformative potential of tools like ChatGPT, most knowledge workers I’ve spoken to don’t use it at all. And those who do primarily stick to basic tasks like summarization. Only a little over 5% of ChatGPT’s user base pays for plus, just a small fraction of potential professional users, suggesting a scarcity of power users.

A new report from MIT said that 95% of generative AI pilots deliver zero return on investment. The findings were based on 300 public deployments, more than 150 executive interviews, and $30 to $40 billion invested in these pilots, suggesting that billions of dollars have been spent on generative AI experiments/projects that never scale.

And recently, an article in The New Yorker by Cal Newport, a Professor of Computer Science at UC Berkeley, questioned “what if A.I. doesn’t get much better than this,” and whether it has indeed reached the scaling wall and “once the bubble begins to burst, everyone runs away from the technology even if it has some valuable uses.”

The recent OpenAI GPT-5 release doesn’t help either; it confirms what many have been saying for a while now, that there is nothing truly new or groundbreaking here, with GPT, or with LLMs in general. It is hard to see, therefore, where the compelling value proposition of AI will come from for consulting or the enterprise, for that matter. 

For example, Accenture announced it is changing its growth model to “Reinvent Itself for the Age of AI.” However, this is nothing more than recalibrating the consulting con, using AI for expertise while still effectively running the same business model and charging the same high, unjustifiable rates.

“Accenture has delivered on its strategy to be its clients’ reinvention partner of choice and to lead in Gen AI through its deeply skilled people and by bringing its clients multi-service solutions, including world-class, AI-enabled assets and platforms, as only Accenture can.”

Again, clients can access many AI systems and platforms themselves. So why would any intelligent executive pay exorbitant rates for things they can do themselves, and at a fraction of the cost?

Gary Marcus, an AI entrepreneur and professor emeritus of psychology and neural science at N.Y.U., and a well-known AI critic, says that GPT-5 has been a flop: “nearly three years I have been saying that the pure scaling of LLMs — adding more data and more parameters — would eventually run out, and that it would fail to solve hallucinations and boneheaded errors and that scaling laws were merely empirical generalizations.”

“The myth that you could predict an AI system’s performance simply based on how much data and how many parameters you use — which motivated a half trillion dollar industry — is dead,” he added.

The myth around consulting and its value has been well-crafted but overplayed, and much of the advice and work provided by consultants doesn’t help anybody except their own bottom line.

The Consulting Fallacy

In the #1 New York Times bestseller, GRIT, The Power of Passion and Perseverance, author Angela Duckworth, PhD, is a professor of psychology at the University of Pennsylvania. Duckworth’s work explains how people succeed and achieve. Notably, she was also a McKinsey consultant at one time.

During her McKinsey experience, she says that their belief and policy was to hire consultants who have the “most talent — intrinsic gifts, skills, knowledge, experience, intelligence, judgment, attitude, character, and drive.” McKinsey is famous for recruiting and rewarding smart men and women, Duckworth writes. MBAs from places like Harvard and Stanford, and the rest who possess credentials like PhDs, are the norm.

This is mainly to impress clients, but the firm’s central value proposition is built on the fallacy, she explained, because having the best talent doesn’t mean they are best qualified to advise. They’ve essentially spun a well-constructed illusion, because “the best” must also include the most experienced and skilled, too, Duckworth says. Fresh out of college, MBAs and PhD types with academic credentials alone are not “the best”.

Duckworth says that when she joined the New York Office, she was immediately shipped to a fancy hotel in Clearwater, Florida, joining three dozen hires: “I sat next to an MBA guy and next to him a guy with a PhD in physics. On my other side was a surgeon, and behind me were two lawyers. None of us knew much about management in general, or about any industry in particular.” But in a single month, she said, they would get a crash course called the “mini-MBA.”

“Newly equipped with a casual acquaintance with cash flow, the difference between revenue and profit, and some other rudimentary facts about the private sector, we were shipped off to our around the world…to solve whatever problems they threw our way.”

Duckworth referenced a study, to prove her point, by Stanford psychologist Catharine Cox, published in 1926, about what counts most in creating a “genius.” Intelligence and IQ were examined, but the unexpected big observation was how little IQ mattered to success. Experience and skill, coupled with vision, passion and perseverance, mattered more, it was found! 

Further, the rate at which one can effectively learn and get increasingly better over time in mastering their domain was also a meaningful contributing factor.

This is easily understandable by putting on our calculus hats for a moment: the derivatives, or variables involved in measuring outputs relative to the rate of change of something, i.e., the knowledge acquisition rate. They are a function of time. Authentic knowledge, experience and know-how can’t be acquired by any other method than through productive, quality time. It is quite prosperous to believe you can transform inexperienced junior consultants into highly experienced and skilled advisors in a month, through a “mini-MBA” bootcamp. McKinsey’s program is just bogus!

Duckworth said that they were told that the goal for McKinsey consultants was to produce really appealing presentations that could not have been generated in-house.

“It occurred to me, as I was putting together slides summarizing bold, sweeping recommendations for a multibillion-dollar medical products conglomerate, that, really, I had no idea what I was talking about.”

Accordingly, it is worth noting that many of the corporate maleficence and messes in corporate history have come as a result of lazy companies outsourcing to consultants. 

Remember the ‘bold and brilliant’ former McKinsey consultant Jeff Skilling, Enron’s CEO, who orchestrated the largest fraud…leading to the biggest bankruptcy in American corporate history. And there is McKinsey and the opioid crisis: the company “knowingly and intentionally” conspired with pharmaceutical firm Purdue Pharma to “aid and abet the misbranding of prescription drugs… without valid prescriptions”, according to the US Department of Justice. They devised an aggressive marketing strategy that was, in reality, a roadmap to boost sales of highly addictive opioids. Their actions resulted in powerful prescription painkillers being used in an unsafe, ineffective, and medically unnecessary manner.

More recently, another former McKinsey consultant, Laxman Narasimhan, became the CEO of Starbucks, but was dismissed after seventeen months on the job due to poor performance. During his tenure, however, Starbucks market value plummeted by approximately 22%, or $32 billion.

Narasimhan was the ideal McKinsey consultant. He holds a Mechanical Engineering degree from the College of Engineering (how that relates to selling coffee is beyond me), Pune, an MA in International Studies from the University of Pennsylvania’s Lauder Institute, and an MBA in Finance from the University of Pennsylvania’s Wharton School. Still, he was a disaster! When he actually had to run a business rather than consulting for one. 

It was reported that Narasimhan came across as the typical know-it-all McKinsey consultant, Ivory Tower academic, separated from real-world practicalities and experiences.

The applied intelligence Philosophy

There may be a lot of things that individuals pursue, but many do so without a philosophy. One must have a philosophy! A lot of goals and projects never come to fruition because of a lack of a viable strategy. 

“As a human being, you have no choice about the fact that you need a philosophy. Your only choice is whether you define your philosophy by a conscious, rational, disciplined process of thought… or let your subconscious accumulate a junk heap of unwarranted conclusions…”

— Ayn Rand

What’s your philosophy…the specific steps necessary to acquire wealth? Multibillionaire investor Warren Buffett is frequently known to ask those who express their investment goals to him.

Therefore, serious people must have a philosophy, a clear, well-defined framework with a step-by-step methodology and boundaries to keep them on track. Without such a methodology, you’re likely to be unsuccessful and squander opportunities repeatedly. Accordingly, the applied intelligence (ai) is a process that guides users through six (6ai) progressive and integral steps, retrieving highly relevant knowledge and developing insights which can be turned into warrantable strategies.

The secret to developing winning strategies, therefore, is learning and having a strong system for thinking and acting. 6ai software provides a framework for developing fact-based strategies with tremendous speed and accuracy.

The Socratic Conversational Method (SCM), which is intrinsic to the 6ai process, forms the basis of prioritization, contextualization, and discovery of strategic insight. It’s a discovery process that combines Socratic and scientific methods to solve complex business and social problems. The entire process is self-contained and driven by autonomous entities. These multiple agents perform multiple tasks simultaneously in concert with other agents, forming an integrated and complete set of capabilities rather than isolated functions.

Consultants are said to be subject matter experts, but all they do is take existing strategy decks from their extensive library of client information gathered over many years. Then leverage them with quick searches for relevant industry verticals and competitors. Then, voilà, regurgitate, cut and paste into a new shiny static PowerPoint presentation.

Consultants offer nothing new, no philosophy, no innovation, ingenuity, creativity or any fresh or original strategy ideas that can provide their clientele with even a semblance of a competitive advantage in the marketplace.

Conversely, the applied intelligence (ai) philosophy…approach is to partner with insiders to cultivate an entrepreneurial culture for authentic strategy development. 

Another excellent example of why you shouldn’t outsource management and strategy to consultants is the Nike example. McKinsey used one of its playbooks to advise incoming Nike CEO John Donahoe to slash costs and rely more on data for decision-making.

Following McKinsey’s guidance and spending millions, Donahoe pivoted Nike to a “Direct to Consumer” (“DTC”)-led model, severing most of Nike’s valued wholesale reseller relationships, which is how Nike grew to a prominent, trusted culture-driven brand. And in his genius, Donahoe also decided to centralize marketing, making things entirely digital and data-driven.

Long story short, the result of consultant-driven management was an unmitigated disaster that crashed Nike stock; the share price dropped by a third, and its market capitalization shed over $25 billion in a single day, leading to Donahoe’s ouster in September 2024.

A Harvard Business Review (HBR) study, titled Digital Transformation Is Not About Technology, summarizes how companies often pour millions into AI/digital transformation but are not getting the returns. Many organizations, in fear of being left behind, buy into the AI-everything hype, expecting significant efficiency and growth gains from AI initiatives. But the vast majority of them fail, according to HBR.

AI-everything initiatives continue to fail because companies keep putting the cart before the horse, focusing on “AI” rather than doing the hard work of developing a business strategy first! The strategy will determine the technology, not the other way around.

Another lesson from the HBR study is that when it comes to technology and transformation, “leveraging insiders and not outsourcing strategy is pivotal to the success or failure of the project.”

“Organizations that seek digital transformations frequently bring in an army of outside consultants who tend to apply one-size-fits-all solutions in the name of best practices.”

Furthermore, when employees perceive that digital transformation could threaten their jobs, they may consciously or unconsciously resist change. If the digital transformation turns out to be ineffective, management will eventually abandon it, and their jobs will be saved (or so the thinking goes). 

Leaders, therefore, must recognize that the sequence of the initiatives matters and must further emphasize to employees that the digital transformation process is also an opportunity for them to upgrade their skills and value to align with the future of work. This is precisely the mission of 6ai Technologies (6aitech.com) — designed to partner, not replace, human experience.

Staff who have intimate knowledge about what works and what doesn’t in their daily operations are best suited to build strategies for their organizations. Not consultants. 

6ai strategy development software provides an augmenting tool that enhances worker productivity and enterprise value simultaneously.

6ai is a human-centric software that does not seek to make AI competitive, surpass, or replace human intelligence. Instead, it takes an augmenting approach, which utilizes generative AI as necessary, an amplifying tool that is used practically, purposefully, and responsibly to enhance human intelligence capacity, capabilities, and ingenuity.