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AI is changing how consulting firms like McKinsey & Company work and how they get paid.
- McKinsey is moving away from billing clients based on hours worked.
- They now use outcomes-based pricing more often.
- This means the fee depends on the good results the firm delivers.
- About one-quarter of McKinsey's fees now use this new model.
- Clients want help with complex, multi-year projects, often related to AI changes. AI makes this new way of charging a good fit.
- Consultants are becoming partners who share in the success of the client's goals, not just suppliers.
- Other firms, like EY, are also thinking about changing how they charge.
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Discussion
Human work in consulting includes good judgment, honest advice, and managing the client relationship. Is the human's job more or less important now that machines do the basic work?
What is the main difference between a "partner" and a "vendor"? When a company uses many AI tools (like a software service), how can the consulting firm still be a true "partner"? What new actions or contract rules are needed to show this difference?
If AI does the easy first jobs, how will firms teach and prepare their future senior leaders?