UK Consultancy Market View: The Risk Aversion Inversion?
Is the private sector becoming more risk adverse in the face of intense customer scrutiny, whilst the public sector increases its risk appetite to drive step-change?
I really enjoy being part of the Business Transformation team at Arcadis. It’s interesting to work with a broad range of clients and I learn something from every client we work with. And even in these straitened times the market feels buoyant, with the Management Consultancy Association (MCA) predicting growing demand from both public and private clients over the next two years.
This isn’t surprising. Companies and organisations are facing multiple, and complex, challenges including net zero carbon targets, energy security and transition, aging assets, inflation, and the levelling up agenda to name just a few, some of which overlap, or even conflict. Given the further constraint of wide-spread skills and experience gaps, it makes sense that external consultants, and the different ideas and approaches they can bring, are in demand.
Based upon my observations over the last 6-12 months, I wonder if there is a rise in risk aversion in private sector, and a greater embracing of (calculated) risk in the public and regulated sectors?
This personal view is based on subjective indicators across some of our private sector clients, including the number of new governance processes being introduced, the pace of decision making, and a heightened atmosphere of (real or perceived) personal reputational risk, which is understandable in our 24/7 social media culture where the judgement, criticism and impact of shareholders and customers can be so direct, and so loud.
In contrast, a number of our clients in the public regulated sectors, which are facing epochal challenges of climate change and asset stewardship, are making quicker, and bolder, decisions, because they need to do so to drive different results. This can be seen through our digital transformation and strategic procurement advisory practices, with a discernible uptake in innovative digital, process and people approaches being embraced.
Does this resonate? And so what?
I’d be interested if my observation on the ‘risk aversion inversion’ resonates? It is also worth noting that the pace for new delivery models to move more risk out to supply chains is quickening across all sectors.
Let me know your views. Perhaps the bigger question is; what can we do to help our clients, wherever they fall on the risk-appetite continuum. Proactively mitigating micro as well as macro risks, and helping shape the perception of these risks, through clear optioneering, smart change management and broad data points is important. And the more creativity and clarity we can bring as consultants to shaping the incremental steps that are needed to tackle these complex problems, the more confidence our clients will have in finding ways to resolve them.
Astrid Berkman Mark Howard @nickjones @stevearmstrong @johncook
Associate at McKinsey & Company | Capital Excellence | Infrastructure
2yThis definitely resonates from speaking to folks, particularly in the public sector, over the last few years. I wonder if there is an element of private sector organisations and public sector ones being at different points in their journey towards adopting digital and strategic procurement practices though, and an element of the public sector playing catch-up? I'm not sure about other industries, but in energy, post the uptick in M&A activity in 2014/2015, there was a huge focus on digital transformation and more strategic procurement practices back then so I wonder if this is the public sector catching up now, particularly with the renewed focus on delivery? The point about more risk being moved out to supply chains is very interesting though, especially as I guess it would necessitate many organisations to transition to more collaborative contracting. There would be great opportunity in helping clients with contractual models, incentivisation structures, procurement strategies, etc, but also more creative solutions to help collaboration and early, and open/accountable information sharing like digital project tools, digital twins, smart contracts, etc. It's definitely an exciting time!
Highly experienced independent program director delivering business change/transformation, operational improvement and digital solutions. Looking to provide organisations with creative & high-impact solutions.
2yVery interesting reading and certainly resonates.