Management consulting services: does the industry already benefit from modularization advantages? A descripto-explanatory study under the mass customization and knowledge management perspective

Giorgia Marzolla

Student thesis: Master thesis

Abstract

Modularization is a strategic approach that allows for flexibility and cost reductions thanks to the redesign of Product, Process and Knowledge Architectures in such a way that variety can be leveraged and economies of scale, scope and substitution are achieved. Within the service industry, modularization approaches appear more challenging, due to the human nature of services and the unclear delimitation of process modules that, in theory, do not allow for the full exploitation of modularization strategies. Management consulting services represent one of the current major service industries, which have been growing almost undisturbed in the past century. The reason for this is due to the opacity of such services, which protects the industry and fuels the commonly shared perception of consultants as people who know best, keeping the business model unchanged and subject to slow innovation rates. However, in light of the current economic, social and technological challenges, consulting services need to redefine themselves both at a strategic and operational level. In fact, some authors argue that consulting services will have to face a shift towards modularization strategies, in order to increase competitiveness whilst keeping costs under control. This project aims to uncover the theoretical linkage between management consulting services and modularization, in order to understand whether such businesses already hold in nature the potential for the exploitation of modularization. To do so, consulting services are analyzed through the lenses of knowledge management and mass customization. Knowledge management and mass customization are relevant concepts in the industry: the former represents the core activities and systems set up to deliver the end service, which is precisely knowledge; the latter is the ultimate strategic goal pursued by consulting companies. Both theories are also conceptually connected to modularization. Knowledge management is the tool to implement codified and standardized knowledge domains (a pre-requisite for modularity), while mass customization can be achieved through modularization techniques. From the analysis of the consulting business model and processes, the following results can be derived. First, the strategic advantages of modularity are recognized as coinciding with the traditional consulting model. Hence, the paper states that at a strategic level modularity and consulting services are one. Then, knowledge intensity is confirmed through the analysis of business processes under the knowledge management perspective. Moreover, thanks to the study of the most common mass customization implementation methods, consulting services are confirmed as highly mass customized and, given the strategic modularity specified above, also in theory are able to pursue the modularization method depicted by the mass customization analysis. Finally, modularization is tested at a structural level through the understanding of the consulting architectural management and the degree of modularity. Architectures are proven ready for modularity, thanks to the confirmation of the modularization pre-requisites within the industry. The degree of modularity is measured as high thanks the study of Customer Closeness. More empirical and quantitative tests are, however, strongly recommended. From the results obtained, it appears that consulting services will not face a shift towards modularization approaches, but rather that they are already embedded in their nature. Instead, the focus of both researchers and managers should be towards an understanding of the degree of modularity and the development of ad hoc models and frameworks to help consulting companies in exploiting such inner potential. Under a theoretical perspective this study confirms the suitability of modularization theories on the service industry by providing an example of a service industry where modularization is not only applicable, but also part of the intrinsic business model

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2015
Number of pages85