Why It Is So Hard for Consulting Firms to Change

The Paradox of Clarity

Consulting firms have built their reputations on helping others navigate disruption. Yet when disruption comes to their own doorstep, change becomes almost impossible.

I have seen this paradox play out from the inside. For years, I worked with firms that prided themselves on foresight, frameworks, and transformation playbooks. But when the need for transformation turned inward, the same analytical strength that made them great advisors often made them hesitant executors.

The reason is not lack of awareness. Most leaders inside consulting firms understand that the traditional pyramid model is under pressure. They see what generative AI can do, they hear what clients are saying, and they know that the market for consulting will look very different five years from now. Yet awareness alone rarely translates into action.

Why Change Feels So Hard

There is a hidden truth about consulting firms that rarely gets discussed: they are not one company, but hundreds of small partnerships loosely held together by a brand and a compensation system.

Each partner is, in effect, a mini-enterprise. They control their book of business, their teams, and their P&L. They are measured and rewarded primarily by revenue sold and delivered. In that system, there is little incentive to reduce fees or change the delivery model, even if new technologies make work faster or cheaper.

One senior partner once shared an example that has stayed with me. He said, “We pitched a project for $500 thousand. The client pushed back to $400 thousand and we agreed. Honestly, even if it was $150 thousand, we could have done the work. The effort is not the problem anymore. But why would I price it lower unless the client demands it?”

That sentence captures the inertia perfectly.

Consulting firms will not voluntarily disrupt their own revenue base. They are waiting for clients to become more sophisticated buyers — buyers who demand that productivity gains be shared, not just claimed. Until then, the economic system rewards maintaining the illusion of labor intensity, not its reduction.

The Incentive Trap

For a partner, the math is brutally simple. If you sell a few large, multi-million-dollar projects a year, you secure your bonus and your influence. There is no reward for selling smaller, faster, more technology-enabled engagements that might deliver the same value in less time.

This creates what I call the incentive trap. Even as firms invest heavily in AI tools, knowledge platforms, and delivery accelerators, they rarely pass the majority of those productivity gains to clients. The gains become margin protection, not market transformation.

In other words, consulting firms are becoming more efficient, but not more affordable.

From a short-term financial perspective, this makes sense. From a long-term strategic perspective, it is dangerous. Because once clients learn how to capture those efficiencies on their own, the traditional consulting model begins to look overpriced and outdated.

The Cost of Waiting

Waiting for clients to force the change is risky. Markets rarely give incumbents the luxury of a gradual transition. We have seen this before in other industries.

Law firms once believed that their pricing models were unshakeable until alternative legal service providers emerged, offering modular, transparent pricing for specific parts of the legal workflow. Big firms initially dismissed them as niche. A decade later, many of those “niche” providers handle substantial portions of corporate legal work.

The same pattern is visible in consulting. Alternative Consulting Service Providers, or Alt-Consulting firms, are emerging across the world. They are smaller, senior-led, and often use AI to eliminate unnecessary layers of work. They deliver the same strategic insight, but at a fraction of the cost and in half the time.

Traditional firms are aware of this shift, but their own success stories make them slow to respond. They are caught between two business models — the legacy one that pays the bills and the emerging one that points to the future.

Structural Challenges Inside the Firm

Even when firm leadership wants to change, structural barriers get in the way.

1. Partnership Economics

   Every new idea must survive the scrutiny of partners who have personal income tied to the old model. When your livelihood depends on billable hours and leverage ratios, innovation that threatens those metrics looks less like opportunity and more like risk.

   
   

2. Resource Allocation

   Transforming a consulting model requires investment in technology, training, and new forms of delivery. But consulting firms do not have retained earnings like corporations. Profits are distributed annually. There is little long-term capital to fund experimentation at scale.

   
   

3. Cultural Identity

   Consulting firms take pride in their craft. Many partners built their careers mastering the frameworks and delivery systems that defined the profession. Asking them to reinvent those systems feels like asking artists to abandon their medium.

   
   

4. Brand and Client Expectations

   Even when innovation happens internally, clients often expect the familiar consulting experience — large teams, long timelines, and elaborate deliverables. A firm that tries to offer smaller, faster, tech-enabled solutions risks confusing its own market positioning.

Three Possible Futures

There are three broad scenarios for how consulting firms might evolve.

1. The Efficiency-Led Firm

   These firms will continue investing in AI and automation, but mainly to protect margins rather than transform the client experience. They will look more efficient on paper, but the client will feel little difference. Over time, they risk becoming expensive project managers overseeing increasingly commoditized analysis.

   
   

2. The Hybrid Firm

   Some firms will attempt to blend the old and the new. They will create parallel models — traditional consulting for large transformations and lean, AI-enabled units for faster advisory work. This approach will work for a while, but will create internal tension. The traditional side will see the new model as a threat. The new side will see the old one as an anchor.

   
   

3. The Reinvented Firm

   A few bold firms will fundamentally rewire how they operate. They will flatten their pyramids, redefine pricing around outcomes, and use technology as a co-pilot for both delivery and learning. Their focus will shift from selling hours to solving problems. These firms will be smaller, faster, and far more client-centric. They will also be the hardest to build because reinvention requires letting go of legacy economics.

The Leadership Dilemma

Every consulting leader faces a difficult choice. Continue to optimize the current model and enjoy strong near-term profitability, or take the painful steps to redesign the business before clients force the change.

Most will choose the first path, not because they lack vision, but because they are accountable to partners who expect predictable earnings. The structure itself discourages bold change.

It is a dilemma that Clayton Christensen described years ago in The Innovator’s Dilemma. Successful organizations fail not because they cannot see the future, but because they cannot bring themselves to sacrifice the present.

The irony is that consulting firms have spent decades teaching clients how to embrace disruption. Now, they are living their own case study.

What Might Finally Trigger Change

True transformation inside consulting firms will not come from internal conviction. It will come from external pressure.

When clients begin to demand transparency, flexible pricing, and measurable outcomes, firms will have no choice but to adapt. When AI tools become standard across client organizations, firms will need to redefine what unique value they bring.

In that future, consulting firms that survive will look less like pyramids. They will collaborate with ecosystems of specialists, AI platforms, and independent experts. They will focus on judgment, trust, and integration — the things that clients cannot easily replicate with software.

A Closing Reflection

I have great respect for the consulting profession. It has trained generations of leaders, shaped industries, and helped organizations navigate the most complex challenges of the past century. But its next chapter will test its willingness to change from within.

Disruption is no longer theoretical. It is here. The question is not whether consulting firms will adapt, but how many of them will adapt in time.

The book Alt-Consulting: What Comes After the End of Strategy Consulting as We Knew It explores this inflection point in detail — the structural, economic, and behavioral shifts that will determine which firms reinvent themselves and which become case studies for others to learn from.

Consulting firms know exactly what they need to do. The real challenge is whether they will apply their own advice to themselves. That's the leadership dilemma.