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Can consultng services be commoditized???

How the sophisticated application of data analysis in evidence-based research and de-mystification of “unique solutions” will let you not only survive but thrive in a hostile, no-growth environment – while former competitors may become extinct!

The German Psychologists’ victorious quest for parity
Or: Can consulting services be commoditized???

German Psychologists had been advocating for the appreciation of their science and profession for several decades. But it was not until German and Swiss Psychologists united at the University of Bern in the early 1990’s that their dream would become reality. How did they do it? By raising the bar when it comes to the understanding and application of mathematics, particularly statistics and research design to a new level. In the most comprehensive therapy outcome metaanalysis conducted until that time, commonly practiced therapy approaches including pharmacological treatment were scrutinized for their efficacy remedying the most common psychiatric disorders. The results led to true parity for psychologists and changed health care administration irrevocably:

1. Particular therapeutic approaches were found to be significantly superior over pharmacological treatment in their efficacy mid- and long-term for most psychiatric disorders.
2. Even if less credentialed and/or academically trained professionals follow the identified and standardized best practice treatment protocols progress remains significant in mid- and long-term efficacy and superior to other approaches applied by extensively and expensively trained experts.
3. Long-term psychoanalysis failed to prove its efficacy and hence to justify its status quo.
4. Practitioners of therapeutic schools that failed to prove their efficacy are not being reimbursed anymore by health insurance providers. These approaches are becoming extinct.

Be particularly aware of bullet point ‘3.’. Old-school, long-term psychoanalysts had always claimed that their approach needs to be considered more of an art, something that cannot really be captured, standardized, explained or reproduced easily. Unless, they said, you have undergone your own psychoanalysis, which costs years of weekly therapy sessions and easily amounts to the value of a single family home after it’s all said and done. However the most comprehensive therapy outcome study ever conducted by the most prominent psychoanalysts of their time revealed embarrassing results for long-term psychoanalysis (Wallerstein, R.S. (1989). Forty-two lives in treatment: A study of psychoanalysis and psychotherapy. New York: Guilford Press.).
Now, what does all that have to do with your consulting business and trends seen in our globalized economy? Everything! One of the largest consulting companies operating on the biggest profit margin has already analyzed and captured their best practices. It has lead to the capability to place fixed bids in response to comprehensive RFP’s. In addition it enabled them to significantly shorten and streamline the training of new consultants resulting in earlier and higher profitability per consultant.
a) If you do not utilize sophisticated data analysis tools to capture best practices and increase transparency and predictability you will continue to operate on an inferior profit margin, giving away up to 15% in net profit.
b) If you continue to market yourself as a unique solution provider while failing to quantify the efficacy of your services in comparison to competitors you will lose your client’s trust and become extinct.

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