The Old Consulting Model Is Out. Welcome to the Outcome Economy.

We work with consultancies every day, examining their business models, business development approaches, sales cycles, external messaging, marketing strategies, and financials.

As we compare what high-performing consultancies do differently from run-of-the-mill firms, we observe a widening gap in performance and profitability. This gap is driven by drastically different approaches to how these consulting firms perceive and communicate their value.

We refer to these approaches as the old and new consulting models.

In this article, I’ll explain the difference between the two models and why one challenges consulting firms while the other fuels strategic growth.

Old vs. New Consulting Model

The old model is essentially built around going to market by selling a capability: "We are experts in X. Who here needs X?"

These firms are selling their capacity: “Oh, you need X? Great, we’ve got 10 people who are excellent in X available.”

Capability and capacity selling. 

As a result, most of these consulting firms usually do project-based work and grow rather opportunistically. Since they haven’t clearly defined how clients should best apply their expertise, they end up taking on almost any project that seems like a fit.

That’s how most consulting firms get started, and it’s a valid model. However, it is not fit for long-term growth and scaling.

This old model is under increasing pressure today. With the rise of freelance/contractor platforms, software solutions, and AI, clients have many other ways of accessing expertise and capacity, and many of them come with a much more straightforward proposition. 

There's also more competition than ever. With large firms downsizing and tech companies shedding staff, many more experts are launching their own consultancies.

Consulting firms that operate under the new model don’t promote raw capabilities. Instead, they sell outcomes, specifically what clients want to achieve: “We will help you achieve X.”

Instead of showcasing their capabilities, they define the typical business problem they can solve, paint a clear picture of the transformation that can be achieved, and lay out a structured path to success.

By educating potential clients on the impact of the transformation, they position themselves as partners in solving real client challenges, not just providers of expertise.

The two approaches dramatically shift how a consulting firm positions itself in the market. This shift is often a significant leap for both boutique and larger firms.

Recommended reading: There Are Two Ways to Run a Consulting Firm. One Drains Profitability.

How the Old Consulting Model Undermines Growth

The two core problems with capability-selling consulting firms:

a) Buyer behaviour: they aren’t aligned with how buyers search and buy professional services. Potential clients do their homework; they seek problem-resolution expertise/experience, not mere capabilities. 

b) Commoditisation: they often end up in a “commodity position” as they sell vaguely explained (laundry lists of) services to an unspecified target market (not explaining the ideal client profile) and are not particularly differentiated.

When consulting firms focus on promoting their capabilities, this may occur: 

• Confusion: They force prospects to determine how these capabilities might benefit them in their specific (problem) context. Clients must connect the dots and figure out how the consulting firm's service offerings align with their needs, which can lead to confusion and hesitation in making decisions.
• Marketing inefficiency: This confusion, in turn, impacts the ability of marketing and business development campaigns to attract the right people and convert leads.
• Service provider profile: When old-model firms are hired, they often find themselves in the role of mere service providers, facing relentless pricing pressure and scrutiny from procurement. They are frequently subjected to intense negotiations and have minimal control over the engagement and scope management.

• Growth blocker: Ultimately, in the long run, it impacts growth. Client acquisition costs are higher. Due to the high variance in projects, creating consistent success stories or retaining clients effectively is challenging. Moreover, even when consultancies detain clients, it is often by saying “yes” to almost everything, which adds complexity to the consulting firm's management. 

The result? Even when it appears on the surface that a consultancy is growing, its margins erode over time, creating financial instability. 

Recommended reading: How to Structure Multiple Value Propositions Without Losing Your Firm’s Identity

The Barriers to Transitioning to the New Consulting Model

Proposition-led selling in consulting helps clients understand how to use a consultancy's expertise. In other words, it specifies the target audience, which problem(s) are solved, and clarifies the benefits and outcomes clients can expect, reducing confusion and helping them make informed decisions.

Now, shifting from the old to the new model isn't as easy as hammering out new messaging or updating your website. It requires a foundational shift in how the consulting firm thinks about itself and how it goes to market.

There are a lot of barriers to making that change. Here are some common ones that we’ve come across in our work with consulting firms:

• Opportunism (or "flexibility"): Saying “yes” to everything in hopes of new work, diluting the firm’s expertise. It is often a coping mechanism for not having a refined proposition. It’s baked into the core of many consultancies.
  
  
• FOMO (Fear of Missing Out): Refusing to specialise because “we might miss out on some opportunity!” Many leaders fear that by narrowing their focus, they will miss out on revenue streams.
  
  
• Entrepreneurial curiosity: Burning out the team because “exploring the unknown is such a thrill!” Many founders relish new challenges and flourish in ambiguity. Unfortunately, reinventing the wheel every week introduces complexity and results in team frustration and long-term inefficiencies.
  
  
• Ego, pride, and “me-me-me”: Focusing on the firm and its greatness instead of a client’s pains and needs. Whether it’s ego or legacy thinking, many consulting leaders talk about how great the consultancy is, how exceptional the people are and how strong their culture is. Prospects’ pain points, priorities, needs, and opportunities become an afterthought.
  
  
• Misaligned incentives: Rewarding revenue generation, no matter what sort of project, reinforces a culture of opportunism. If a compensation structure rewards behaviours aligned with capability selling, consulting firms reinforce the very habits they are trying to change, rather than embracing proposition-selling that focuses on solving specific client problems.
  
  
• “Rescue-us” senior hires: Appointing senior staff from large consulting firms can lead to challenges, as they are used to capability-selling and taking on nearly any project. This method can be problematic when a new consulting firm transitions to a proposition-led model, as these seniors may find it difficult to adapt and continue selling broadly, which is characteristic of larger firms.

Moving Forward: From Capability Selling to Selling Clarity and Impact

The era of winning work by listing capabilities and services is over. Today’s clients are no longer buying breadth. They’re buying clarity. Confidence. Outcomes.

Shifting from the old to the new model, from capability selling to proposition selling, demands more than a new pitch deck. It requires a redefinition of how the consulting firm positions, sells, and delivers, starting with how it defines its own identity.

It’s not an easy leap. But it’s the only path to:

• Pricing power based on perceived value.

• Longer, deeper client relationships.

• More predictable, sustainable growth.

In our experience, the consulting firms that break away from the default old model and commit to a sharp, issue-led, and outcome-based proposition outperform, not occasionally, but consistently.

The future belongs to the new model.

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