The ‘Big vs. Boutique’-Dilemma – Inside stories of why small consultancy firms should not be underestimated

 

Procuring the services of a boutique consulting firm rather than a bigger and, perhaps, better-known company may raise the occasional eyebrow. Common sense tells us that bigger firms have already proven their value. They have survived, blossomed, and grown up to become cornerstones of business. But what with these small firms? You might start to wonder – especially with boutique firms that have been around for more than a year or two – if they’re so good, why aren’t they big?

However, just as the old saying about smartness and riches fails to accurately portray their relationship, the quality of a consulting firm cannot be gauged by looking at its size. In fact, a small firm may in some cases provide better services than a bigger firm. What then, do small firms bring to the table?

 

Specialization, direct access, and other advantages

Surprisingly, relatively little has been written about what might be called the ‘Big vs. Boutique’-dilemma. In work that does address the question, what often gets listed as advantages of hiring a boutique firm includes

• competitive pricing due to lower overhead costs,
• the level of specialization,
• the higher flexibility of work processes,
• the ability – partly thanks to flexible work processes – to initiate or lead business innovation, and
• direct access company officials have to consulting partners.

There is more to the story, though. As true as these statements ring, the abstract wording obscures rather than reveals what makes smaller firms worthy of your attention and business. That is why we decided to draw up a ‘Hiring a boutique firm: the inside story’. We had a chat with two company officials whom we worked closely together with in the past. What did it look like in practice, working with a boutique firm? What obstacles did you run up against, if any, and what did you come to appreciate the most?

We did so, because Ruhl SP is one among many such small firms. Not by fate but by conviction. The interview below will help explain why – we ourselves learned from it, too. As we found out, for instance, hiring a small firm has obvious yet often overlooked advantages when it comes to trust. And ‘having direct access to your consulting partner’ turns out to have multiple meanings, some of which are surprisingly common yet highly significant for taking your business further.

 

Names, brands, and comfort levels

We spoke to a research engineer and a mobility manager; both from large global corporations. In the following, they will go by Erika and Robert, respectively, remaining anonymous for reasons of corporate non-disclosure.

Research engineer Erika got acquainted with Ruhl at an industry conference and subsequently hired the firm to work closely together with her company on a new project requiring a deep understanding of both the technical intricacies of the new product and market developments over the next years. Mobility manager Robert brought Ruhl on when working on a new venture within his company, based on previous encounters with Ruhl founding partner Adam Harms.

Ruhl SP: Thank you both for taking the time to share your experiences with us, it’s greatly appreciated. Diving in head-first, have either of you ever directly faced the ‘Big vs. Boutique’-dilemma?

Robert: I am actually in that situation right now. I am trying to bid a project out to a small firm. It’s always a bit of a battle, getting the executive committee not to utilize a name brand and still get that comfort level. Some folks don’t want to put their positions on the line by taking a chance with a boutique firm. They’ll say, ‘Oh well, I’ll go with a larger firm, because I know we’ll get good work.’ However, I feel like with many of the larger firms, it’s as if you’re getting regurgitated material. Repurposed work that they’ve already done in other studies. You’re not getting a pure fresh new look at what you’re trying to do. If a firm has already done a similar study, it seems they tend to get to that same outcome.

Ruhl SP: … if only for efficiency purposes?

Robert: Yeah, exactly, that’s the reason. You get these solid proposals back and there’s a lot of information in it. But the only way they can already include all this information in a proposal – while they haven’t even started on the project – is because they’ve already done this. It’s valuable, of course, when they have knowledge on the topic. But it can also limit innovation and creativity because it limits the way they approach the problem – a bias toward a certain solution.

 

Building trust

Ruhl SP: Does this ring true for you, too, Erika? That bigger firms are more likely to be locked into specific methodologies, the status of previous results, and so on.

Erika: That’s interesting. It’s very possible. Sometimes there’s the feeling you’re getting something canned, with just a few personalized add-ons. I think with Ruhl in particular, the whole personalization process – the adjustment to what we as a team needed – was actually happening right under our eyes.

In our case, there was no dilemma of hiring a boutique firm or a larger firm. We met them at a an Industry conference and were impressed. First, there was the perception of them being different, being so agile and flexible. Then came the realization that they were a small firm, but it didn’t pose a problem. When we pitched this [collaboration, ed.], there was a little push back. Our leaders were briefly asking, ‘Who is this company?’ But other than that, no. The advantage was, they were so agile.

Also, there were less concerns of how many people learn about our processes, precisely because the firm was small. It meant information was more easily contained. It’s easier to build trust because you share your knowledge with less people. And it posed no difficulty to truly embed them in our team, as opposed to having an external institutional partner that feeds you information.

 

The power of networks

Ruhl SP: So hiring a small firm has its collaborative perks, especially when it comes to sharing sensitive information. Surely, though, there must be disadvantages to having fewer people working with you, too.

Robert: True. When working with a boutique firm, they can’t do it all. They don’t have an unlimited resource pool, with experts in all these fields, drawing on all of these resources for whatever you need. Standing up new facilities, for instance, or knowing how to build a manufacturing site, staffing required, power utilization estimates… A boutique firm is not like a one-shop-does-it-all. But they are very agile in making up for that. They’ll immediately go through and find the right experts if they don’t have them. At least Ruhl SP did.

Ruhl SP: Glad to hear you feel that way. Is that relatable for you, too?

Erika: With Ruhl, we could focus on creating our own network. Working with a small firm made our team understand the power of network. The fact that Ruhl was able to deliver what you delivered as a small boutique company, thanks to the extensive network behind you, made us reflect. We realized: we can be a small team but generate powerful concepts and practices if we create our own network behind us. In a way, we are all relying on our networks – and that’s something our company wasn’t doing so deliberately before.

Ruhl SP: So working with a small firm also changed your self-understanding, your appreciation of what you can actually accomplish as a small team?

Erika: Yeah, for us as an R&D-group trying to move a technology, we had to deeply realize that we can’t do it on our own, but that we are capable of reaching our goals, nonetheless. Ruhl helped us develop our networks. We used to look at ourselves as simply a global material provider, but Ruhl helped us to identify partners along the value chain and engage in conversations with each one of them. Modelling partners, equipment manufacturers – we learnt to connect and choose the ones that resonated best with us and that has brought us forward.

Robert: And that’s how true innovation becomes possible – if I may add to that.

Ruhl SP: By truly thinking together innovation becomes possible, is that what you mean? Can you give an example?

 

Innovation, bias, and the future of one’s industry

Robert: I am working on program in sustainable transportation, an extremely important topic in today’s world. But it seems some have already made up their minds on what the solution to sustainability issues is. Now, I agree that electric vehicles are valuable, but it may not be the solution for everything in every case. You need to look at it broadly enough. Some of the proposals I got back for this study from bigger firms were already almost summarizing – ‘It’s going to go to this solution’. When there are so many other possible solutions out there! I want us to do the work, together, that gets us to that point. Maybe the proposed solution is the right solution, but I don’t want you to tell me it is before we even get into it. This comes back to what I was saying before, about bias.

Ruhl SP: Is this also a matter of how closely you get the chance to work together with your consultant? We’d say it can greatly help your thinking and day-to-day creativity to actually go at it together.

Robert: Absolutely. The first project I was working on with Ruhl provides a good example. At the time, everybody thought this specific technology was the be-all-and-end-all. I was adamant to take a step back and question it. Ruhl facilitated a strong workshop that helped to break everything down. Technologies, places, processes. Consequently, we came up with a unique solution. We didn’t go with the industry standard technology; we went for something else. I can’t say more yet, because we’re working on the patents, but it’s a very revolutionary approach.

I think that’s what you’re more likely to get with a boutique firm. When we worked with the other large firm involved, their minds were set. Supposedly, the industry standard technology was the solution. In the end, I had to convince them of why our solution was better – they almost didn’t trust us. They kept saying, ‘But that’s not what the industry is doing.’ But I don’t care what the industry is doing. I care what’s going to be the future of the industry. I want to discover where we can fill a gap that others might not be seeing. That was what Ruhl helped us with.

 

Close-knit connections

Ruhl SP: Do you feel this is particular to your experience with us? It sounds like you don’t, but for what reasons do you think this sort of approach is more likely to be taken by smaller firms?

Erika: The personal connection does seem to be stronger when working with a small group of consultants who become easily embedded and part of your own team.

Robert: With boutique firms in general, I find you get a more personal, more human approach. You can tell winning a program means a lot to them. You’re not just another project to them. It’s not just about checking the boxes and getting the numbers. They’re really engaged and try to truly understand you and your business. We’ve had another study done before by a big firm where I felt it was too generic. As if they were saying, ‘Well, you do manufacturing; this is a known manufacturing solution you could get into.’ But on the nitty gritty level, the similarities simply didn’t exist. Boutique firms – some of them at least – get to know you a bit more intimately. It is a smaller team that’s responsible and the relationships you build with them usually extend longer, I think. They’re able to tailor their services more specifically to what you’re trying to do. They don’t stress owning every little bit of work they do, either, like some larger firms do.

Ruhl SP: So, it’s a matter of human connection and actual collaboration… Thank you so much for your time connecting with us.

 

Taking chances

In multiple ways, then, consulting processes can benefit from bringing on board a boutique firm. Big is not always better. In today’s culture, that may still sound a little offbeat, with our capitalist assumption of expansion as key to a company’s existence. In popular consulting literature, too, the idea of a company choosing to remain small is considered an anomaly. The goal of scaling one’s firm is widely taken for granted – a recent bestseller like ‘The Boutique: How to Start, Scale, and Sell a Professional Services Firm’ by Greg Alexander even includes it in its title. It may take a little effort, therefore, to appreciate that small firms can bring specific kinds of value to the table, precisely because they are small.

In the end, all procurement decisions are a matter of taking chances, no matter the size of the firm in question. Company officials whose hands are not as tied to name recognition may truly benefit from partnering with a small, not-as-well-known consultancy firm. Despite its size, such a small firm may significantly outcompete larger firms when it comes to trust building, originality, innovative capacity, and network utilization. In and of itself, the size of a small firm surely does not guarantee that it will – but it does not necessarily limit it, either.

And so, it becomes clear why small firms may choose to remain small. Not because of fate or mediocrity. But by conviction.

“Let’s Achieve What’s Next”

Resilienz ist heutzutage eines der großen Modeworte. Vor dem Hintergrund globaler exogener Schocks ist die allerorts proklamierte Direktive für jedes Unternehmen, resilienter zu werden. Der bereits im letzten Beitrag [1] kurz erwähnte Autor Nassim Taleb prägte den Begriff des schwarzen Schwans für völlig unerwartet eintretende Ereignisse mit immensen Auswirkungen, die sich im Nachhinein aber klar erklären lassen. Es muss dabei kein globales und universelles Ereignis sein, sondern kann sich auch auf eine Branche oder ein Unternehmen beschränken.

Eine gute Verdeutlichung dafür lieferte – ungewollt – der ehemalige amerikanische Verteidigungsminister Donald Rumsfeld. In einer Rede zum Irakkrieg prägte er den Begriff der „unknown unknowns“ für Dinge, die nicht bekannt sind und von denen wir nicht wissen, dass wir sie nicht kennen (aber kennen sollten).

Die von Taleb entwickelte Theorie mündet in der fatalistischen Einsicht, dass es keine Möglichkeit gibt, aus der Vergangenheit Rückschlüsse auf die Zukunft zu ziehen und wirksame Prognosen zu erstellen. Das Konzept ist nicht unumstritten. So nennt Matthias Horx vom Zukunftsinstitut ihn – sicherlich wegen Talebs von sich selbst überzeugten, streitbaren Art, aber vielleicht auch ein wenig mit verletztem Berufsethos – ein „Rumpelstilzchen des Zufalls“ [2].

Tatsächlich scheint die Theorie etwas überdramatisiert. So kann beispielsweise für die Corona-Pandemie als historische Referenz sicherlich die SARS-Pandemie von 2002 herangezogen werden. Es ist wahrscheinlich nicht so, dass schwarze Schwäne immer einzigartige Ereignisse sind, sondern vielmehr können die Menschen durch ihre Neigung in Gewohntem zu verharren und die grundsätzliche Schwierigkeit, sich exponentielle Entwicklungen vorzustellen, diese nicht frühzeitig als solche erkennen. Womit Horx und Taleb irgendwie beide recht hätten.

Die Analogie zu schwarzen Schwänen im Innovationsbereich sind die „disruptiven Innovationen“. Hierbei wachsen kleine unbedeutende Unternehmen in einer vom Marktführer unbeachteten Nische mit einem komplett neuartigen Wertversprechen, mit dem sie am Ende auch die Kernmärkte übernehmen und den Marktführer verdrängen [3]. Insbesondere das typische exponentielle Wachstum des kleinen Disruptors und die Ignoranz des Marktführers verdeutlichen sehr schön die Parallelität zu schwarzen Schwänen. Außerdem wird ein weiterer interessanter Punkt deutlich: Schwarze Schwäne können positiv und negativ sein. Es ist genauso schwer sich negative exponentielle Entwicklungen vorzustellen, wie positive.

Das Mittel gegen schwarze Schwäne für Menschen, Unternehmen, Länder etc. (wir bleiben bei Unternehmen) beschreibt Taleb im gleichnamigen Buch als Antifragilität. Dabei werden drei Zustände unterschieden: fragil, resilient, antifragil. Fragile Unternehmen befinden sich in trügerischer Sicherheit und sind anfällig für schwarze Schwäne. Resiliente Unternehmen sind robust gegenüber negativen schwarzen Schwänen und gehen daran nicht bankrott. Allerdings können sie nicht von positiven schwarzen Schwänen profitieren. Das unterscheidet sie von den antifragilen Unternehmen. Diese wachsen an Stresssituationen und Schocks, wie ein Muskel, den man mit schweren Hanteln bearbeitet.

Taleb schlägt passend dazu eine Hantelstrategie vor. Unternehmen sollten, um antifragil zu werden, gleichzeitig zwei völlig konträre Extremstrategien verfolgen (Hantelscheiben mit nur einer dünnen Stange verbunden). Zum einen sollten sie möglichst alle Schwachstellen aufdecken und sich vor großem Schaden, egal aus welcher Richtung, schützen. Zum anderen sollten sie jederzeit bereit sein, aggressiv positive schwarze Schwäne zu nutzen und exponentielle Wachstumschancen zu ergreifen.

Diese Dualität findet sich interessanterweise in vielen Bereichen und Epochen wieder. So schreibt schon Konfuzius: „Der überlegene Mensch vergisst nie die Gefahr, wenn er in Sicherheit ist. Der Weise vergisst nicht das Gespenst des Verderbens, wenn er sich in vollständigem Wohlstand befindet. Der Intelligente vergisst nicht das Durcheinander, wenn seine Geschäfte geordnet sind.“

Morgan Housel empfiehlt für die persönliche Investmentstrategie: „Be optimistic about the future but paranoid about what will prevent you from getting there.“ und F. John Fitzgerald vielleicht am schönsten: „The test of first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.“

Selbst Horx schreibt: „Unsere Spezies ist erfolgreich, weil wir in der Lage sind, beides zu vollbringen: die Zukunft vorauszuahnen und mit Unberechenbarkeiten umzugehen.“

Im Innovationsbereich ist das Exploration-Exploitation-Dilemma und das darauf aufbauende Konzept der Ambidextrie die entsprechende Variante. Unternehmen sollten bei ihrer Innovationsstrategie gleichermaßen die kurzfristige Optimierung des Bestandsgeschäft betreiben (Exploitation) und gleichzeitig langfristig orientiert nach komplett neuen Geschäftsfeldern und bahnbrechenden Innovationen suchen (Exploration).

Konzentration auf ein Geschäftsfeld und Fokus auf Exploitation, Spezialisierung und Effizienzsteigerung allein sind laut Taleb der Weg in die Fragilität, da es dadurch mehr neuralgische systemkritische Punkte gibt, die ein Unternehmen anfällig für schwarze Schwäne und disruptive Wettbewerber machen. Diversifikation und Cross-Industry-Innovations scheinen daher eine geeignete Strategie zu sein, nicht, um kurzfristig den Gewinn zu maximieren, sondern, um langfristig gegen sich exponentiell entwickelnde Einflussfaktoren resilienter zu werden. Vielleicht eröffnet sich dabei sogar ungeahnter Erfolg durch einen positiven schwarzen Schwan.

Wie Sie nicht zuletzt im Editorial dieses Newsletters gesehen haben, sind die aktuellen Fortschritte auf dem Gebiet der Künstlichen Intelligenz gewaltig. Noch vor ein paar Monaten war die KI-Welt klar strukturiert – für das Technologie- und Innovationsmanagement waren insbesondere Unsupervised-Learning-Ansätze, wie auch wir sie in unseren Projekten einsetzen, von Relevanz. Doch selten hat ein Technologiefeld in so kurzer Zeit eine solche Dynamik aufgewiesen, wie dies aktuell im KI-Bereich der Fall ist: Neben den eindrucksvollen Text-to-Image-Modellen wie DALL-E oder Stable Diffusion sind inzwischen generative Modelle wie ChatGPT auf dem Vormarsch.

Doch was genau hat sich in den letzten Jahren getan? Welche Entwicklungen sind relevant? Und welche Rolle können die neuen Ansätze für das Technologie- und Innovationsmanagement spielen? Diesen Fragen widmen wir uns in unserem Format „ChatGPT, DALL-E, BERT – Workshop zu aktuellen KI-Technologien und ihrem Einsatzpotenzial im Innovationsmanagement“.

Anhand konkreter Beispiele werden wir aufzeigen, welche Daten verwendet werden können, welche Analysen möglich sind und wie diese interpretiert werden.

Haben wir Ihr Interesse geweckt? Dann sprechen Sie uns gerne an!

Liebe TIM-Interessierte und Freunde!

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