Every consulting firm is trying to determine how they can compete in an AI world where business information and prompts are freely available. Many firms have experimented with AI tools, chatbots, or workflow automation. These pilot programs have generally failed or provided no competitive advantage because the tools are available to every consulting firm. More disconnected AI products is not a winning strategy. More connected AI operating systems such as STAR that drive enterprise value is the winning strategy.
The challenge for most mid-market and small consulting firms is that they sell projects based on billable hours. Revenue grows based on the markup of billable junior staff working in a bloated hierarchal structure or all of the valuable work is done by the partners. This model has significant limitations. Growth requires more people or the partners need to work much harder. Partners that are working real hard on client matters are creating owner dependency risks that effectively reduce the enterprise value of the firm to zero.
Partners have no ability to sell new work because they are drowning in existing projects. The work is project based which creates pockets of strong demand and slow demand so the firms must be structured to be lean on junior staff and junior staff are not very productive because the partners have no time to train them. It becomes easier for the partners to just do the work themselves. However, the partners belief that is easier to do the work multiplies the dependence on the partners and the ability to scale the business.
Institutional knowledge is uneven across individual partners and risk is magnified by customized approaches to most client matters. Enterprise value is constrained because of the actual dependence on the partners and the of the risk of losing key employees.
The first step toward increasing enterprise value is not becoming a software or platform company. It is learning how to deliver our STAR productized service models in recurring revenue engagements. Our STAR productized systems and complimentary assets took us 18 months to build. Your firm can immediately shift from selling hours to selling systems that produce predictable and measurable outcomes at unprecedented speeds. This is exactly what clients want and are starting to demand.
The recurring revenue opportunities do not stop there. Consulting firms can sublicense these same products that they are using to their clients to build their enterprise value and their client’s enterprise value. Consultants move from being hired guns that solve one problem to long-term partners who help clients implement operating systems. The clients enterprise value strengthens and the consulting firms enterprise value strengthens by leveraging the same products that we use to build enterprise value in our company.
Another significant benefit of this model is that it builds the consulting firm's intellectual capital and the client’s intellectual capital. Every engagement generates new new assets that can be applied to other engagements. Knowledge can be captured, curated, and transformed into permanent organizational assets. Over time, the firm's intellectual capital compounds, delivery becomes more consistent, consultants become more productive, and AI becomes increasingly effective because it is draws upon the firm's accumulated experience instead of the partners siloed expertise.
Once consulting firms learn how to successfully deliver the STAR line of productized services, they can begin creating products based upon their own specialized expertise. At that point, they understand how successful products are structured, implemented, supported, priced, and continuously improved. Product development becomes a disciplined extension of experience rather than a speculative investment that they never even have time to get to. The result is a growing portfolio of proprietary intellectual property that further differentiates the firm and contributes to long-term enterprise value.
This evolution fundamentally changes the economics of consulting. Revenue becomes more recurring. Margins improve through standardization and AI-enabled delivery. Client relationships deepen because the firm is no longer engaged only for isolated projects but for continuous value creation. Intellectual capital accumulates rather than disappears at the end of each engagement. Most importantly, enterprise value increases because the firm's future is no longer dependent solely on hiring additional consultants to generate additional revenue or partner heroics. In other words, partners now have an asset with value instead of a job with high risks of vanishing if a partner or key employee suddenly becomes unavailable.
The consulting firms that lead the next decade will not be those that build the most AI tools and prompts. They will build the next generation of productized service models that maximize enterprise value.
AI is not the destination. Productization is not the destination. Even licensing is not the destination. They are mechanisms to build enterprise value that compound year after year because every client engagement leaves the business stronger than it was before. That is the future of consulting, not simply using AI, but using every innovation available to systematically create more enterprise valuable for firms.