Q1 market pulse - Strategy Consulting & AI within PE, Portfolio Companies, Corporates & Scaleups

1) Intro

2) KPI Summary

3) Project breakdown

4) AI latest

5) Predictions for interim strategy consultants in '24

5) Get in touch

Having failed on my claim during the previous edition of this newsletter ( I would write one, weekly for the year - huge over promise ), I do now have the additional benefit in putting together one of these of a sufficient amount of time and data points to put together a piece of content which hopefully will provoke interest.

One promise I did make to myself at the beginning of Q1 was to stay very organised on my data - thankfully - as that made pulling together the data in this article significantly easier !

Quick reminder of what I do

I help Investor backed businesses, scaleups & corporate ventures to drive critical strategic initiatives - either by 'placing' interim strategy consultants or delivering consultancy projects within a statement of work (delivered by a bench of interim associates with a strategy consulting background).

I have worked in this space for 11 years and have a network of over 5,000 independent strategy consultants.

KPI Summary

Over the course of Q1, I oversaw the kick off of 7 new projects, up 40% from Q4 23.

1) Project Type

Notably, 100% of the projects that commenced during this period were commercial excellence oriented - namely, supporting in growth & innovation as opposed to pure cost reduction.

2) Industry

From an industry standpoint, there is no overarching theme; I worked across Private Equity companies at fund level, Private Equity portfolio companies, corporate entities (within new venture teams) and high tech scaleups in SaaS & Fintech ( all of which are investor backed ).

3) Consultant background ( won projects )

The consultants who won projects in pipeline had a diverse background - across MBB, LEK, Big 4, Elixirr, Accenture & Simon-Kucher.

3i) Consultant background ( all shortlists )

4) Pipeline velocity ( vs Q4 )

Pipeline velocity = time from taking a brief > the start date of a project. As you will note, this is down to 3 weeks in Q1 2024 ( from 5 weeks in Q4 2023) - a great sign for the overall buoyancy and confidence in the market.

5) Win rate

Win rate = % of briefs taken resulting in a project KO, within the quarter.

Re-enforcing the trends above, my overall win rate for Q1 was up 40% - anecdotally, the 'willingness to buy' has felt much higher, which is backed up by these numbers.

6) Contract type

The IN Group ( parent company of InX , the business I work for ) own a consultancy brand ( Definia ), with whom I work in partnership, and whose capability allows me to help clients solve strategic challenges within a statement of work. When adding this to our 'placement' capability, I am able to leverage the following contractual wrap arounds to the work that I do with clients:

• Interim placements ( Outside IR35 )
• Interim placements ( Inside IR35 )
• Consultancy statement of work ( Time & Materials )
• Consultancy statement of work ( Fixed Price )

With larger businesses, the engagement of interim 'contractors' can pose challenges as it relates to IR35 or 'headcount' numbers, which generally makes it difficult to engage the level of calibre that exists within the strategy consulting sector.

As such, more clients have begun to engage my bench of interim strategy consultants, from a contractual standpoint, either part of a statement of work ( time & materials or fixed price ). Typically, this is viewed as a 'capex' expenditure and will be derived from a consultancy budget as opposed to a 'recruitment' one - which is ultimately more appropriate for the types of projects being conducted.

Newly kicked off pieces of work:

• Strategy Consulting - New Venture team within UK Corporate

Snapshot: UK based B2B SaaS business, launching new digital media venture.

Consultant background: LEK / Corporate Strategy & Growth Expert

• Chief Transformation Officer - Large Cap Portfolio

Snapshot: IT Services/SaaS platform, owned by one of the world's best renown PE funds, looking to devise & execute value creation plan through hiring a Chief Transformation Officer.

Consultant background: Bain & Company / PE Growth Strategy Leader

• Innovation & AI Strategy - PE backed Fintech

Snapshot: Supporting Innovation function within PE backed fintech to devise & execute innovation strategy as it relates to digital & AI

Consultant background: Fintech Innovation Specialist

• Growth Strategy - Infrastructure/Energy

Snapshot: Investor backed infrastructure business, looking at range of new markets, innovations, service enhancements or market penetrations to drive growth.

Consultant background: Bain & Company / PE Strategy Leader

• Chief Product Officer - Blockchain

Snapshot: Blockchain business, looking at enterprise solutions monetisation strategy for their existing technology.

Consultant background: KPMG / Web3 Product Leader

• Pricing Support - Mid-market PE SaaS

Snapshot: Supporting a mid-market PE portfolio company to execute a SaaS pricing strategy.

Consultant background: Simon-Kucher Partners / SaaS Pricing Specialist

• Pricing Support - Mid-market PE

Snapshot: Supporting a mid market fund to evaluate a prospective acquisition through the lens of their pricing strategy.

Consultant background: Accenture / SaaS Pricing Specialist

• AI Transformation Programme - UK Corporate Ventures

Snapshot: Supporting a UK based corporate venture team to build adoption strategies for AI from a cultural & technical perspective.

Consultant background: McKinsey & Company / Digital Leader

AI - what is the latest?

Despite some movement, budget wise, during 2023, and a massive amount of hype, it feels like companies across the landscape ( PE funds at fund level, portfolio companies & corporates ) are beginning to strategically deploy resource & capital towards AI projects - most notably where the business is heavily indexed on digital ( as it relates to their customer facing product or internal processes ).

Predictions for remainder of 2024

• Inflation will continue to come down - with base interest rate being cut in August in the UK ( save for a further unforeseen event eg pandemic, war, destabilising departure from economically critical international union etc )
• Labour will win the UK general election, easily
• Biden will win the US election, but it'll be close
• Consulting firms will revert to the utilisation of interim / freelance consultants to deliver CDD & growth strategy projects in tandem with PE businesses growing their pipelines. Expect to see this at Senior Consultant -> Senior Manager within CDD specialist consultancies
• Businesses will invest more in 'growth' - ( innovation, GTM, market modelling, expansion, product development & monetisation strategies ) than they did last year which was cost out heavy
• AI will undergo a new wave of hype once we see some true stories of value captured over a sustained period, which will in turn result in some sizeable AI transformation projects - particularly within software businesses looking to capitalise on AI from a product standpoint

CTA

• Are you looking to execute critical projects, but can't engage 'contractors' due to headcount or IR35 challenges but do not have budget for a major consultancy ?
• Are you looking to hire an interim strategy consultant to support with critical initiatives or provide your team with extra bandwidth ?
• Are you trying to figure out how to leverage AI to augment & enhance your organisation's most critical KPIs across growth, product & efficiency ?

Get in touch:

[email protected]

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