Last week, the Trump administration announced that global tariffs, which had been imposed only a few days earlier and caused stock markets to drop precipitously, would be put on hold for 90 days. This about turn only reinforces our view that we now inhabit an unreliable world. 

Indeed, if tariffs become bargaining chips at the individual country and corporation level, more big decisions could turn on a dime. 

We recently published an article that lays out three possible scenarios for how client organisations might respond to this unreliability. In the short term, client organisations will either react very quickly, combining crisis management with strategic realignment (what we’d call our polarisation scenario), or wait in the hope that things will sort themselves out (our paralysis scenario). But neither response is sustainable in the long-term: Both are highly stressful for business leaders, who will therefore be looking for long-term solutions (our partnering scenario). 

So, what are these long-term solutions likely to be? How might clients partner differently with firms in the future? 

At the heart of the problem facing clients is the fact that their organisations and operating models are designed to thrive in a different era. The 1990s saw vast changes in ideas about organisational design, as corporations re-drew the boundaries around their “core” businesses. Gone was the notion that big companies had to be vertically integrated, controlling every stage of their production process, from the acquisition of raw materials to renting houses to their salespeople. “Non-core” activities—from mining to real estate—could be done better by experts in those fields. Moreover, jettisoning them reduced corporations’ fixed costs. 

Something like this could again happen in the next few years, driven by the same two factors. First is economic volatility: In the 1990s, growth was tepid, while rising costs were threatening profit margins and forcing organisations to change. The necessity to act in today’s unreliable world will similarly drive innovation. The second factor is technology: In the 1990s, ERP technology changed how organisations worked by giving them the consistent, integrated processes and data on which first outsourcing and then offshoring depended. Now, it’s AI that may provide us with completely different ways of working, not only because it will automate many knowledge-based processes, but also because it will enable us to analyse data from right across our organisations far more quickly.  

But, because this new wave of operational and organisational restructuring comes on top of the changes organisations already made in the 1990s, the solutions are likely to be more radical. This will, we think, involve clients carving out parts of their business, many of which could be regarded as core business functions—cybersecurity, for example, or onboarding new customers in highly regulated industries such as banking, or keeping up and complying with tax regulations.  Imagine an onion: Three decades ago, companies shed their outer layer; today, they’re looking to shed many of the inner layers, leaving them with a smaller, more resilient corporate centre. 

This will have a significant impact on the consulting and professional services industry, just as it did in the 1990s, when the change gave birth to an entirely new industry. Third parties were invited to take over non-core activities because they could do them more cheaply—outsourcing—and that, in time, lead to another innovation—offshoring. Listening to what clients say today, the goal will be different: To increase value, not just to cut costs. How? By means of scalability and the creation of new value. Greater scalability will enable organisations to drastically reduce their fixed costs while creating the ability to grow/shrink their operations as required. New value creation will involve clients carving out parts of their business, selling them to third parties who invest in building that scalability, and earning a return from these new entities.  

This will create substantial new opportunities for consulting and professional services firms. Rather than running cost-focused outsourcing projects that typically result in painful haggling over change, their role will be to build new businesses from which both they and the divesting organisation earn profits. And that’s quite different to low-cost, pay-as-you-go outsourcing. Furthermore, this will lead to very different relationships between consulting firms and their clients: They’ll be part of each other’s ecosystems, collaborating to create value in a difficult economic environment.  

For the moment, this is an idea. But an unreliable world is going to need new ideas. 

To explore what these new ways of working will mean for firms and clients and to understand how to apply them directly, join our webinar on the 15th May to discuss ‘Forecasting client demand in an unreliable world: new needs new partnerships’. 

Our CEO, Fiona Czerniawska, will lead the session analysing our latest market data and revealing hot-off-the-press insight into your clients’ needs. Register here