Without Internal Alignment, a Boutique Consultancy Is Doomed

This article was last updated on 12 December 2024.

A few months ago, a consultancy of around 40 consultants hired me to review its overall performance and assess the clarity of its consultancy proposition. 

Here are some basic facts about the consultancy that I can disclose:

• Established in 2018
• It has 3 founders and 4 director-level senior consultants
• Offers services in the expertise domain of data and analytics
• Caters to large consumer-facing businesses in a variety of industries

I had a separate call with each founder and three out of four directors. “Who is your ideal client?” I asked. I received six completely different answers, ranging from “a multinational company in retail” to “any large company that needs help centralising and optimising their first-party data efforts while being compliant with data privacy regulations.”

The foundational problem that resulted in significant business development challenges became abundantly clear: a severe lack of alignment among founders and leaders. 

In this article, I’d like to discuss the profound impact of internal misalignment on the growth prospects of a boutique consultancy.

What causes the misalignment within boutique consultancies

Getting boutique consultancy partners aligned on their strategic agenda, especially regarding expertise focus (how narrow) and value proposition specificity, is by far the most challenging aspect of my consultancy performance improvement work. 

I sometimes think that getting boutique consultancy partners to agree on their firm's identity and focus is like trying to herd cats—everyone goes in their own direction.

The lack of alignment stems from a mix of personal and professional reasons, making it even more challenging to get everyone on the same page.

So what are those reasons? From my observations, they fall into four main categories:

• Ego: A healthy amount of ambition, drive, and confidence are a good thing in a consulting business. I would even go as far as to say they are very much needed. However, there is a fine line between confidence and ego. When unchecked, the latter is a toxic trait that clouds decision-making and infects internal morale.
  
  
• FOMO: The Fear of Missing Out is a common issue among partners in boutique consultancies. When financial performance dips, every project looks like a lifeline, even when it's not an ideal fit. This fear of losing revenue can push consultancy owners to accept misaligned projects and clients to keep afloat. I get it—I’ve been there myself in my early consulting days. But if this pattern continues, the business risks straying from its core expertise, diluting its brand, and burning out the team, all for short-term survival.
  
  
• Siloed thinking: Occurs when different teams – with their leaders at the helm – operate independently without effective communication or collaboration, leading to fragmented perspectives and goals. This isolation often creates misunderstandings about project objectives, client needs, and strategic priorities, resulting in disjointed efforts that lack cohesion in each team pursuing its agenda.
  
  
• Existential stress: When a business struggles, I’ve witnessed many consultancy owners and leaders snap into a crisis management mode. Unfortunately, this often means different things to the leaders. Some think the way to recovery lies in cutting costs. Others start offering additional services to their clients or discounts to prospects. Yet others exponentially increase their sales efforts and begin reaching out to prospects outside the target audience.

Recommended reading: How a Consultancy Can Get Crushed by the Ego of Its Owners

The lack of alignment on what constitutes "Best Engagements"

The first step in my work with boutique consultancy clients is to review their past 10–15 “Best Engagements.” 

These are the projects they consider their absolute benchmarks—the ones they’d love to replicate over and over.

Florian Heinrichs and I dig into key details: project size, buyer profile, business issue solved, trigger point (why now?), type of engagement, service delivered, total cost, gross margin, impact, and—here’s the kicker—why they consider it a “best engagement.”

And this is where it almost always gets (very) challenging.

When we bring this question into partner discussions, it’s rarely straightforward:

• One partner highlights the financials: “This project was highly profitable.”
• Another talks about the client profile: “It was with a perfect-fit client we’d love to attract more of.”
• Someone else emphasizes collaboration quality: “It was a joy to work with that team.”
• Another points to client retention: “This engagement led to a long-term partnership with recurring opportunities.”

Discussions turn into debates, often into disagreements. The criteria for what makes a “best engagement” vary wildly within the same leadership team. Almost always. 

This lack of alignment often stems from one key issue: it hasn’t been clearly defined.

The ownership team hasn’t collectively decided what success exactly looks like—beyond a vague sense of good outcomes. This creates space for subjective interpretations, often pulling the team in conflicting directions.

The negative impacts of the lack of leadership alignment in boutique consultancies

When partners can't agree on their firm's profile, focus, or expertise, it creates a lack of clarity that ripples through everything—from value proposition design, business development, client acquisition, and project efficiency to financial stability. 

Until there is a unified vision and a high degree of discipline to adhere to in almost every situation, a consultancy risks standing for nothing and achieving even less.

I’ve observed different degrees of (mis)alignment throughout my years of work with boutique consultancies. Here are some of the most damaging consequences these firms faced as a result:

• Unclear positioning in the market: When a value proposition changes from one senior leader to another, the voice of the consultancy gets lost in the highly saturated consultancy market. Instead of being the go-to consultancy for a specific problem in a specific niche, it becomes one of the many unimpressive consultancies that try to grab every opportunity possible, irrespective of the ability to deliver equally well on all of them. That’s a massive red flag to prospects – that is if prospects ever even come across that consultancy.
  
  
• Inconsistent—and often conflicting—external and internal messaging: Conflicting priorities among consultancy leaders can lead to mixed signals for employees and clients, causing confusion about the consultancy's goals and direction.
  
  
• Inefficient resource allocation: Without a unified vision of what projects to take on and how to execute the work, resources often get misallocated to projects that don’t deliver the same financial value/long-term growth potential.
  
  
• Poor team morale and lack of collaboration: When a consultancy owner says one thing but the team leader gives a different set of instructions and priorities, employees feel frustrated and disengaged. Collaboration grinds to a halt, diminishing motivation and productivity and leading to high turnover rates.
  
  
• Dissatisfied clients: A lack of alignment can result in inconsistent service delivery, eroding client trust and satisfaction, ultimately affecting retention and referrals.
  
  
• Low marketing and business development ROI: Inconsistent messaging and priorities from leadership turn marketing and business development efforts into chaos. This confuses prospects and undermines the consultancy’s brand identity in the marketplace.
  
  
• Slower decision-making: Siloed leadership agendas can lead to protracted discussions and delays in decision-making, slowing down project timelines and responsiveness to market changes.

Internal alignment “acid tests”

In my client work, I don’t recall a single time where senior leadership told me right out of the gate that they lacked alignment. How is that possible? Don’t they know?

Too often, these firms did not even realise how deep the problem went. The lack of alignment does not necessarily bubble up onto the surface in the form of conflict, loud disagreements, and confrontations. Most of the time, it’s not antagonistic at all. 

Usually, it’s a few partners (owners, senior leaders, etc.) doing their own thing based on the priorities they believe would benefit the overall business and their teams and then not talking to each other. They dismiss the notion that differences in priorities can negatively impact the business. 

Most of the time, I must poke and probe to determine whether it is a strategic division of roles or a lack of alignment.

Here are some ‘acid tests’ I've used to poke and probe:

• Homepage alignment: Do they put it on the homepage after agreeing on the firm’s focus and expertise? A hesitation to immediately publish? Alignment alert!
  
  
• Prospect conversations: Do the partners say no when a prospect asks for work outside the agreed core expertise and value proposition? A hesitation? Alignment alert!
  
  
• External messaging: Can every partner communicate the firm’s value proposition and focus in the same clear terms (e.g., at a conference or in a hiring interview)? Scattered stories? Alignment alert!

Resolving the problem of misalignment: the starting point

So, how can consultancies address the misalignment problem once they identify it as an issue?

There are several ways to do it. My approach is always the same: I go back to the drawing board and (re) design the value proposition.

A consultancy’s value proposition is the foundation upon which everything else is built. And I do mean everything:

• What types of projects get accepted from which specific audiences, with what sort of problems, and what kind of improvements are needed
• How the consultancy pitches and explains its expertise, business case, and possible outcomes that can be achieved
• What business development activities get priority, and how are they executed by who
• How a signature methodology gets developed and standardised (SOPs) over time to create competitive differentiation
• How key clients/accounts get retained and programmatically developed over the long haul
• What investments are made into technology infrastructure (e.g., PSA) and in attracting, hiring, training, rewarding and retaining top talent
• How the pipeline gets managed and translated into financial forecasts and resource planning
• How the expertise gets shared in the market to educate and inspire the target audience
  
  + About a hundred other small and large decisions that consultancy owners and leaders need to consider regularly

Value proposition design is not easy, and it certainly cannot be accomplished in a single day. However, it can clarify where every leadership member stands on all the essential issues. As a result, it will reveal friction points, allowing leaders to identify the source of different perspectives and goals and develop a solution during such a foundational review. 

The good news is that a strong value proposition a leadership team is aligned around can have a hugely transformational impact on internal alignment in the short and long term. So, I invite consultancy owners and leaders to embark upon this journey.

Recommended reading: How Consultancies Can Get Started With Value Proposition Design

Internal alignment: a new KPI to monitor

I often recommend scheduling a quarterly internal alignment survey (with everybody participating—from owners/partners to the team) to keep everyone on the same page and prevent misalignment from creeping in.

As I wrote in my article, alignment issues usually manifest when partners and leaders have differing views on the business's direction or how to prioritize initiatives.

A short, focused quarterly internal survey can help reveal these discrepancies early and address them before they become more significant problems. A consultancy can consider it a new KPI to monitor, and the partner or leadership team discusses the score quarterly and takes corrective action.

Here are the three essential questions I suggest for the quarterly survey:

1. Do we have a clear and shared understanding of our consultancy’s vision and strategic goals?

2. Are our current clients and projects aligned with our defined value proposition and expertise focus?

3. Are we consistently disciplined in communicating with clients and prospects in a way that aligns with our internally agreed positioning?

In conclusion

Without internal alignment, a boutique consultancy is not just hindered – it’s set on a path to mediocrity or even failure. 

Misalignment among leadership stifles the firm’s ability to communicate a clear value proposition, make effective decisions, and maintain strong client relationships. It leads to wasted resources, poor team morale, and a diluted expertise reputation. 

I strongly urge boutique consultancies to stop living in denial and stop pretending that internal alignment is just about dividing and conquering tasks. Addressing the problem of internal alignment isn't just a business priority. It's essential for financial stability and future success. 

A carriage that gets pulled in different directions doesn’t get far. It can’t compete against one being pulled by 4 horses moving in the same direction.

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