Swarms of consultants descend on companies that have engaged their firms, racking up billable hours and cranking out PowerPoint presentations that summarize the data they’ve analyzed. That business model is at risk, given the amount of that work that AI can now handle. Recognizing the threat, some consulting firms are actively reengineering their businesses, with McKinsey out in front. In this short midweek episode, Shel and Neville review the actions of several firms and agencies, and discuss what might come next for consultants.

Links from this episode:

• AI Is Coming for the Consultants. Inside McKinsey, ‘This Is Existential.’


• The AI Revolution in PR: A Wake-Up Call for PR Agencies


• Inside the AI boom that’s transforming how consultants work at McKinsey, BCG, and Deloitte


• EY CEO says AI won’t decrease its 400,000-person workforce — but it might help it double in size


• PwC is training junior accountants to be like managers, because AI is going to be doing the entry-level work


• How AI is Redefining Strategy Consulting: Insights from McKinsey, BCG, and Bain


• Will AI Empower the PR Industry or Create Endless Seas of Spam?


• How AI Agents Benefit PR Agencies


• Study reveals rising application of AI across communications by the public relations industry


• Adapting to Change: The Key Trends Redefining Public Relations Firms


• July layoffs up 140% from last year

The next monthly, long-form episode of FIR will drop on Monday, August 25.

We host a Communicators Zoom Chat most Thursdays at 1 p.m. ET. To obtain the credentials needed to participate, contact Shel or Neville directly, request them in our Facebook group, or email fircomments@gmail.com.

Special thanks to Jay Moonah for the opening and closing music.

You can find the stories from which Shel’s FIR content is selected at Shel’s Link Blog. Shel has started a metaverse-focused Flipboard magazine. You can catch up with both co-hosts on Neville’s blog and Shel’s blog.

Disclaimer: The opinions expressed in this podcast are Shel’s and Neville’s and do not reflect the views of their employers and/or clients.

Raw Transcript:

@nevillehobson (00:02 )

Hi everyone and welcome to Four immediate release. This is episode 476. I’m Neville Hobson.

Shel Holtz (00:08 )

And I’m Shell Holtz. If you’ve been following the consulting industry lately, or maybe you’re part of it, you’re aware that AI is all the buzz. The Wall Street Journal recently reported that McKinsey & Company, the gold standard in management consulting, is deep in an existential transformation. And if you weren’t watching the video, you didn’t see me make air quotes around existential transformation. It’s their words. ⁓

AI is the catalyst for that transformation and the realization that it can do a lot of what McKinsey’s highly paid human consultants do faster, cheaper, and sometimes just as well. For nearly a century, McKinsey has built into business on armies of bright young consultants, fresh from top universities, synthesizing vast amounts of complex information and advising C-suites on what they ought to do next. But now,

instead of a small battalion of analysts, a project might require just two or three people, along with an assortment of AI agents, tools that write in the classic McKinsey tone, check the logic of arguments, summarize interviews, and crank out PowerPoint decks. McKinsey has rolled out, are you sitting down, 12,000 of these AI agents, and its CEO predicts a not too distant future with one AI agent for every human employee.

And they’re not alone. Boston Consulting Group has Dexter for presentation building in Gene, a conversational assistant. Deloitte has Sidekick and Zora AI. PwC, KPMG, EY, they all have their own fleets of AI helpers. At McKinsey, over 70 % of employees are already using a tool called Lili, which taps into a century’s worth of the firm’s knowledge.

EY is using AI with 80,000 of its tax professionals, and rather than seeing that as a job killer, its CEO says it could actually help them double the firm’s size. And that’s an important point. While AI is eliminating some roles, particularly entry-level repetitive work, it’s also changing the skill mix. For consultants, that means fewer suits with PowerPoints and more partners in the trenches.

co-creating solutions with clients and helping organizations implement change. As one Oliver Wyman executive put it, the age of arrogance of the management consultant is over. Clients don’t want abstract strategy anymore, they want execution, training and transformation. Now for those of us in organizational communication, there’s a clear parallel. AI is already reshaping our own work in much the same way, handling…

media monitoring, sentiment analysis, and first draft content creation. In public relations, agencies like Edelman and Golan are using AI to track reputation, analyze audience sentiment, and even test campaign ideas on synthetic focus groups. The USC Annenberg study on AI and communications found many agency leaders are building cultures of experimentation around AI, seeing it as a way to free their teams for higher value work. But, and this is a big but,

The risks are real. In both consulting and PR, the differentiator going forward won’t be who can use AI. It will be who can layer human judgment, creativity, and trust on top of AI speed and scale. As one McKinsey partner put it, the basic layer of mediocre expertise goes away. The distinctive expertise becomes even more valuable. And that’s a key takeaway for communicators. First, the business model has to adapt.

Just as consulting firms are moving from billable hours to outcome-based fees, agencies are rethinking traditional retainers in favor of value-based pricing, charging for results, not hours. We’ve talked about this on FIR before. Second, the human skills that AI can’t replicate, relationship building, empathy, strategic thinking, become even more critical. And third, the organizations that thrive will be the ones that treat AI as a collaborator, not a threat.

@nevillehobson (04:14 )

Thank

Shel Holtz (04:16 )

just as McKinsey is doing by pairing agents with experienced human experts. The AI era isn’t all about being replaced. There’s plenty of validity in the augmentation argument. The winners are gonna be the fast learners, the ones who can adapt their craft, rethink their value proposition, and work seamlessly with both humans and machines. But let’s not sugarcoat this. The threat to jobs isn’t hypothetical. According to HR Dive,

US employers cited AI as the reason for over 10,000 job cuts in July alone, and layoffs surged 140 % year over year in that month. In total, more than 800,000 job cuts have been announced so far this year. Now, many of these AI-related layoffs are under-reported or hidden, buried under euphemisms like technological updates or restructuring.

The outplacement firm Challenger Gray and Christmas notes that only 75 layoffs in the first half of the year were explicitly attributed to AI, but they warn the real number is almost certainly higher, much higher. This isn’t theoretical. Across sectors from consulting to communication, the integration of AI doesn’t just augment roles, it reshapes them and in some cases eliminates them entirely.

In any case, the future of consulting and of communication belongs to those who can bring something to the table that no chatbot ever will.

@nevillehobson (05:40 )

Yeah, but it’s interesting. It’s quite apparent that this will have a dramatic impact on this. see a lot of articles and opinion pieces published about the kind of tactical use to make of AI. But what you’ve explained in terms of what firms like the consulting firms you mentioned are doing, this is a quite a significant shift that’s happening.

A trigger in my mind ⁓ reminded me of a post I wrote in my own blog in February about the need to change the bill about hours model. As you said, we talked about it in FIR. We actually came up in our interview with Steve Rubell earlier this year as well. And I’ve been trying to do this. This is the catalyst where you can’t ignore this. No one’s going to want to pay a consultant on an hourly retainer basis.

when AI in its various shapes and forms,