How AI is Changing the Game for Consultants

This is the second of a seven-part series looking at artificial intelligence and its implications for the consulting industry.

1. AI in Consulting: The Beginning of a New Era
2. How AI is Changing the Game for Consultants
3. The Role of Consultants in an AI-Driven World
4. AI-Powered Consulting: Tools You Need to Know About
5. Real-World Examples of AI in Management Consulting
6. Ethical Implications of AI in Consulting: A Deep Dive
7. Leveling Up: Consulting Skills for an AI-Powered World

AI is revolutionising the consulting industry by automating repetitive tasks, making better predictions, and enabling the creation of entirely new business models. While AI algorithms can help clients understand complex business problems, they will also bring about disruptive change, which will be felt throughout the consulting industry.

1. Automating Repetitive Tasks

One of the key ways in which AI is transforming the consulting industry is by automating repetitive tasks like research and report generation. For example, AI can quickly generate key insights from unstructured data, such as customer feedback, emails, and social media posts, using natural language processing. Since this type of data has been traditionally time-consuming to analyse, AI can reveal insights that were previously difficult for consultants to uncover. This might include identifying customer pain points, understanding customer sentiment, and identifying new market trends.

AI can also automate report generation, providing consultants with the ability to generate reports at a much faster rate without compromising on quality. This can enable consultants to publish more detailed reports on things like market research and financial analysis.  It can also enable consultants to provide executives with more granular analysis of specific components of their business. For example, instead of publishing a report on a business’s supply chain, consultants might publish a series of reports on its individual components, such as sourcing, production, logistics, and distribution.

2. Making More Accurate Predictions

Another key way in which AI is transforming the consulting industry is by enabling consultants to make more accurate predictions. For example, AI could be used to analyse data, such as historical sales revenue numbers. Using predictive analytics, consultants could identify patterns in this data and predict future trends. This could be used to forecast sales, identify inefficiencies in supply chains, and anticipate customer behaviour.

3. Creating New Business Models

AI is also transforming the consulting industry by making it possible to create entirely new business models. One example of this would be the use of AI-powered chatbots to support clients at any time of day. This could greatly benefit clients by providing them with access to reliable and timely information. This could also allow consulting firms to scale up their services by providing support to clients in different time zones and regions.

For example, a consulting firm that specialises in human resources could use an AI-powered virtual assistant to provide instant access to information on benefits, policies, and procedures. This would streamline HR processes, reduce the workload of HR staff, and improve the overall employee experience. Similarly, a consulting firm that specialises in marketing could employ an AI-powered chatbot to provide clients with instant access to information on campaign performance and market trends.

The Winds of Disruptive Innovation

Despite the many benefits of AI, the consulting industry will not be immune to the forces of disruptive innovation unleashed by this new technology. Disruptive innovation, as defined by Clayton Christensen, refers to a new technology that enters an existing market by providing a simpler, more convenient, or less expensive product that serves the needs of a small, niche market. Over time, as the product improves, it eventually displaces established market leaders. In the consulting industry, AI has the potential to disrupt traditional consulting business models by providing a ‘good enough’ service at substantially lower cost. This could lead to the growth of more efficient and cost-effective upstarts in the consulting indsutry, and ultimately make it difficult for traditional firms to remain competitive.

For example, a start-up using AI-powered tools could offer a service that is similar in quality to a top-tier consulting firm, but at a fraction of the cost.  Some traditional consulting firms may lose clients to this lower-cost provider, and its lower price point may also attract small businesses that were previously neglected by existing consulting firms. In the near-term future, top-tier consulting firms will be protected by their strong brand names, deep alumni networks, and longstanding client relationships. However, to remain competitive, top-tier firms will need to adopt AI technology so that they are able to continue offering high quality and cost-effective services.

The bottom line

AI is transforming the consulting industry by automating repetitive tasks, making more accurate predictions, and making it possible to create entirely new business models. Although this change offers many benefits, it also poses a threat to the traditional consulting business model by making it possible for start-ups to offer similar services at lower cost. Established firms will need to respond to this threat by adopting AI technology. In established players are not willing or able to voluntarily upend their own business models, they may become casualties to the winds of disruptive change that are slowly but surely reshaping the industry.

Clare Gregory is a consultant who combines a background in philosophy with a passion for physics. Clare has styled herself into a go-to authority on artificial intelligence. When she’s not solving complex problems for clients, you can find her attending conferences, writing programs in LISP, or discussing the ideas of Descartes, Heidegger, or Dreyfus.

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