A Brief History of Thought Leadership Marketing
By Bob Buday
The management consulting industry began more than 124 years ago (when Cambridge, Mass., consultancy Arthur D. Little was formed in 1886), and the IT services industry is only 48 years old (launched in 1962 when a former IBM salesman, H. Ross Perot, pioneered the business of providing data processing services to organizations). Yet until the 1980s, the practice of marketing was largely absent from both sectors. Following professional services sectors like law, consultants did little or no advertising, largely considering all forms of marketing (other than handing out business cards) to be beneath them.
The demand for consulting and IT services has exploded over the last 40 years, because of the ever-increasing fragmentation and complexity of business; the top 10 in-demand jobs in 2010 for instance, did not even exist in 2004. In particular, there has been an unrelenting increase in the variety and complexity of issues and solutions pertaining to IT, and the share of the business that can be supported by it. (The IT proportion of spend in banking has risen from a few percent to nearly 50% in a couple of decades—now standing at $50 billion per year in the US.) Therefore, there is an ever-increasing need to communicate ever more specialized applications and their implications to bewildered buyers. In the 80’s it might have been how to manage the PC in the corporation; today it’s how to take advantage of the cloud without compromising security, and a hundred things besides. In a Bloom Group 2006 survey, consulting and IT services firms said the key drivers of becoming recognized as thought leaders in their domains were increasing competition and greater client due diligence i.e., clients requesting consulting and IT services firms to demonstrate their expertise, not just assert it.
Of course, thought leadership marketing is not the only way these firms have promoted themselves. For many years, consulting and IT services firms such as Accenture have spent heavily on national print advertising campaigns, and Accenture, BearingPoint, Booz and others have invested large sums on sponsoring professional golf tournaments and other sporting events.
And yet even professional firms that have spent heavily on image marketing are also investing large sums today on thought leadership marketing: publishing articles and books, printing whole management journals, running seminars, speaking at public conferences and, more recently, creating topic-focused websites.
Where did this all start? We believe thought leadership marketing in the management consulting industry effectively began in 1964, when strategy consultancy McKinsey & Company launched its McKinsey Quarterly management journal. Resembling an academic journal, the Quarterly gave McKinsey a channel it could control, and the journal wound up in many executive suites of McKinsey’s Fortune 500 clients. Today, some 50,000 McKinsey clients get its print edition. Few other consulting firms have ever published anything similar (aside from Booz & Company’s strategy+business magazine); Boston Consulting Group’s founder and former bible salesman, Bruce Henderson, issued a periodic pamphlet that he dubbed Perspectives. It was in Perspectives that BCG unleashed such strategy concepts as the experience curve, the growth-share matrix and segment-of-one marketing.
But McKinsey was not to be outdone. Its 1981 publication of “In Search of Excellence” turned business books into national bestsellers (“In Search of” has sold more than 5 million copies since then, and was on The New York Times best seller list for two years).[i] For nearly 30 years now, several business books by consultants have become national bestsellers (“Reengineering the Corporation” by Michael Hammer and James Champy, and “Built to Last” and “Good to Great” by Jim Collins are just a few).
Innovations in thought leadership marketing also arose in the ways that consulting and IT services firms created their ideas, not just in the way they marketed them. Beginning in the 1980s, a small number of IT consulting firms began conducting programmatic research sponsored by numerous large companies on various IT-related business topics. Two, in particular, were successful: Nolan Norton & Co. and Index Group. In the early 1990s, similar research programs were launched by Ernst & Young’s consulting business and later Accenture.
Their research differed at the time from the research conducted by IT research firms such as IDC, Gartner, Meta, and Forrester. These firms focused on researching IT products and IT vendors, and far less on the business operations and management implications of IT. Other entities conducting research on the business and management implications of IT included MIT’s Sloan School (CISR, the Center for Information Systems Research).
In the mid-1980s, the Index Group (an IT consultancy at the time) launched a management research business with an ex-MIT computer science professor named Michael Hammer. The business, called PRISM (an acronym for Partnership for Research in Information Systems Management), at the time was one of the few research programs focusing on how IT was managed and used in large organizations. By the early 1990s, Index launched several other research programs that explored different facets of IT strategy and management. Index and Hammer conducted in-depth research on how the sponsors of their service were managing and using IT in their businesses. Out of this rich data came the concept of “business reengineering.” Reengineering ultimately became a multibillion-dollar consulting industry and the fuel behind Index’s growth from $30 million in revenue in 1987 to $250 million by 1995.
McKinsey took note of these more programmatic approaches to thought leadership R&D. In 1990 it launched the McKinsey Global Institute to focus on larger business and economic issues. Today MGI has 10 full-time directors and senior fellows who conduct research. About a decade later, Accenture (in 1998), Deloitte (2000) and IBM (2001) followed suit, launching or acquiring research organizations that developed new consulting services and consulting approaches. Accenture launch its version of PRISM, the Accenture Institute for Strategic Change (now called the Accenture Institute for High Performance). IBM purchased an Internet business research and consulting firm called Mainspring for $80 million in 2001,[ii] which became a key asset for an IBM research group that today is called the IBM Institute for Business Value. (Note: Though apparently most of the original Mainspring employees have since left IBM.)
In the new millennium, other consulting firms would form or acquire thought leadership R&D organizations: AnswerThink (a $190 million company which owns research firm Hackett Benchmarking and has rebranded the entire company Hackett Group Inc.), Diamond Technology Partners (which provided refuge for some of the key players involved in Index’s Vanguard research program including Chunka Mui and Alan Kay).
On the heels of blockbuster concepts such as reengineering, thought leadership investments to bring ideas to market also grew in the 1990s. Booz & Co., Diamond and Accenture have invested heavily in print and online publications. Diamond, for example, hired an ex-Wall Street Journal reporter (Paul Carroll) in 1997 in the early years of the dot-com explosion to launch its quarterly Context magazine (print and online editions), only later to pull the plug on it when its consulting business hit the skids following the dot-com implosion of the early 2000s. McKinsey launched an online version of McKinsey Quarterly, which has gained 2 million online viewers, many of whom pay an annual subscription fee.
In the past two decades, a rapid evolution of the marketplace has forced consulting and IT services firms to get themselves in front of many more prospective customers, to explain the implications for their business of technology and other complex matters, and to position themselves as best positioned to help. That forces them to spend heavily on thought leadership marketing to keep themselves in their customers’ sights.
This is quite a change for an industry that did almost no marketing 20 years ago.