By 2025, a two-person AI-powered consultancy could outbid McKinsey for a Fortune 500 contract. Sounds far-fetched? Think again.

It was a sunny day in Madrid. The South Summit 2024 was in full swing, and I had a clear goal - pick the brains of fellow speakers about AI's impact on consulting.

I'd just wrapped my last meeting of the day. Sweat-soaked and brain-fried, I caught a phrase that cut through the haze:

"80% of consulting will vanish because of AI."

Bullshit, I thought. Then I paused.

What if it's true? Maybe instead of killing, it would do the opposite - democratize it?

Let’s find the data-driven answers - based on conversation with 384 people! 👇️ 

The future of presentations, powered by AI

🧠 The Great “Intelligence Democratization”

Buckle up. I'm about to take you on a data-driven journey with insights gathered from interviews conducted with consultants worldwide.

• In-person interviews: with 32 subject matter experts at South Summit 2024.

• AI-Assisted Interviews: with 145 consultants on their “AI predictions for consulting industry” (June-August, 2024).

• AI Maturity Index****: Data coming from 206 AI-assisted interviews with consultants, benchmarked to 1,822 interviews with other knowledge workers (August-November 2024).

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Today I publish part 1 of my research. If you want to get access to full table of contents (preview below), hit me up on LinkedIn.

The data reveals six fundamental shifts reshaping the consulting landscape, each powered by AI's democratizing force.

We're witnessing the dawn of a new era - move from „knowledge” to „allocation” economy in consulting. In this paradigm, success isn't just about knowledge, but how effectively you can leverage AI to apply that knowledge at scale. This isn't just disruption; it's democratization.

AI is enabling smaller firms and independent consultants to compete more effectively - our AI Maturity Index is showing first signs of this.

• Believed by approximately 40% of consultants, who see AI tools as enabling them to perform tasks previously requiring larger teams.

• Noted by around 45% of interviewed, highlighting access to advanced AI allows offering sophisticated services like data analytics and predictive modeling.

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In the new "allocation economy" of consulting, the rules of engagement are being rewritten. AI is not just leveling the playing field; it's tilting it in favor of agile, innovative smaller firms.

Here are the Six Key Market Shifts that are coming:

1. SMB Market Explosion: As small and medium businesses (SMBs) rush to automate with AI, they're turning to consultants who understand their unique needs. Smaller consulting firms, often more attuned to SMB challenges, are perfectly positioned to capture this burgeoning market.

2. Productization of Services and Price Reduction: AI enables consultants to standardize and scale their offerings, reducing costs. High-quality consulting becomes accessible to a wider range of clients, allowing smaller firms to compete on price without sacrificing quality.

3. Scalable Expertise: AI allows small firms to punch above their weight. A two-person team armed with the right AI tools can now compete for contracts that previously required armies of analysts.

4. Democratized Data Insights: AI enables boutique firms to harness data-driven insights once exclusive to large consultancies. Small teams can now offer Fortune 500-level analytics to businesses of all sizes.

5. Niche Domination: AI facilitates the rise of ultra-specialized micro-consultancies. These firms can leverage AI to become unrivaled experts in niche industries or specific problem areas, outperforming generalist giants.

6. Reduction in Need for Junior Staff: With AI automating routine tasks, there's less need for large teams of junior consultants. This levels the playing field for smaller firms that couldn't previously afford extensive staffing.

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To understand the real impact of these shifts, let's erexamine the current state of AI adoption in consulting - backed by fresh data from the AIMI.

🌍 The Current Status of AI in Consulting

To understand how AI is reshaping consulting, we turn to fresh insights from the AI Maturity Index (AIMI), which assesses AI readiness among knowledge workers through personalized AI-assisted conversations.

1. The Experience Paradox

Despite consultants having the highest average experience (17 years) and being among the older professionals (avg. age 48), they're not leading in AI maturity. This suggests that experience, while valuable, isn't automatically translating into AI leadership.

AIMI Scores by Dimension

Dimension

Score

Rank

Leader

Productivity

61/100

5th

Design & UX (67)

Collaboration

32/100

5th

Design & UX (36)

Innovation

40/100

3rd

Executive Leadership (45)

Decision-Making

25/100

2nd

Software Engineering (26)

Skills and Attributes

Dimension

Score

Rank

Leader

Skill

3.68/5

2nd

Marketing (3.85)

Trust

3.20/5

3rd

Analytics (3.26)

Ethics

3.06/5

4th

IT Support (3.67)

Creativity

3.17/5

3rd

Marketing (3.59)

Customization

2.52/5

2nd

Marketing (2.53)

2. High Frequency of AI Usage Among Consultants

Surprisingly, 48% of consultants use AI tools at least once a day, with 38% using them multiple times daily.

While almost half consultants use AI daily, this actually places them third in adoption rates behind:

• Marketing & Communications (50% daily usage, with a higher usage score of 78.82)

• Engineering & Development (56% daily usage, with a usage score of 71.10)

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Interestingly, consultants with over 20 years of experience are 25% more likely to use AI tools multiple times a day than their younger counterparts, challenging the stereotype that tech adoption is a young person's game.

3. AI's Psychological Impact on Consultants

Consultants who frequently use AI report a 30% reduction in workload stress.

Other benefits include:

• 45% report better work-life balance.

• 38% feel more confident in their deliverables.

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However, the psychological impact score for consultants is 59/100, placing them fourth among other professions, indicating room for improvement.

4. The Innovation Gap

Consultants rank 3rd in innovation scores (40/100).

This innovation gap is particularly revealing when we look at the usage patterns:

• 75% of consultants use AI for brainstorming

• But only 31% leverage it for project planning

• And just 35% for product design and innovation

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The disconnect between high usage intent (75% for brainstorming) and relatively low innovation outcomes (41) points to a critical insight: consultants are using AI more as a ideation tool rather than an end-to-end innovation partner.

This suggests three key opportunities:

1. Integration: Moving from isolated AI use to integrated innovation workflows.

2. Implementation: Bridging the gap between ideation and execution.

3. Innovation Process: Developing AI-enhanced methodologies for the entire innovation cycle.

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5. Productivity Gap

Consultants reported 12.9 hours average weekly hours saved thanks to AI.

However, only 60% express confidence in the time saved, indicating that a lack of skills or understanding may hinder others from reaping full benefits.

6. Female Consultants Excel in Creative AI Use

Female consultants are 30% more likely to use AI for idea generation and creative tasks

Female consultants are showing particular strength in creative AI applications:

• 30% more likely to use AI for idea generation and creative tasks

• Higher rates of AI integration in client-facing deliverables

• More innovative approaches to AI-powered problem-solving

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7. The Decision-Making Dilemma

Only 45% of consultants use AI for predictive analysis, risk assessment, scenario planning, and gathering insights.

While consultants have a 2nd place in decision-making scores (25/100), this position masks a crucial challenge: even the best performers are only utilizing about a quarter of AI's potential in decision support.

8. The Experience Advantage

Consultants with 20+ years of experience are 25% more likely to use AI multiple times daily.

This counterintuitive finding - that senior consultants are leading AI adoption - suggests the technology is being embraced as a strategic differentiator rather than just a productivity tool. However, the gap between senior and junior adoption rates points to potential knowledge transfer issues within firms.

🦾 Which consulting tasks will be disrupted by AI

LLM’s are becoming increasingly good in keeping larger context - number of tokens they can have in their memory for a single conversation. Just to show you the growth we went through: GPT-3.5 - 16,385 tokens, vs GPT-4 up to 128,000 while Sonnet 3.5 is 200,000 tokens. And it will only continue to grow. This gives a huge opportunity to upload various documents into LLM to give full context on the decision you want to make.

A lot of unknowns - how to measure the impact of AI on your work? One of the frameworks that could help is called STEP Framework (Segmentation,Transition,Education,Performance) to understand where you should focus as a human, and where you can hire AI to co(-create).

Group 1: Tasks that AI can’t or shouldn’t do

Despite AI's capabilities, some aspects of consulting remain firmly in the human domain. Creative problem-solving, emotional intelligence in client relationships, and nuanced strategic thinking are areas where human consultants continue to shine.

Group 2: Tasks for which AI can augment workers’ action

Support human efforts by providing insights or automating sub-tasks. AI Assistants are supercharging human capabilities. They're helping consultants work smarter and faster, from enhancing research capabilities to providing real-time data analysis during client meetings.

Group 3: Tasks that can be automated by AI.

Guided AI Agents are taking on entire workflows autonomously. These agents can handle everything from initial client outreach to generating preliminary reports, freeing consultants to focus on high-value strategic thinking.

Especially the third group is worth analyzing, as. AI Agents are still far from mass adoption. Presently, an AI agent will use an LLM to generate a to-do list of tasks, and integrations with existing software to execute those tasks. But, that to-do list, if created by a more generalized LLM, may not be ideal for your industry or need.

A generalized AI Agent might understand the broad strokes of your field. But it may not realize exactly what kind of writing tone or industry nuances are needed for a specific client.

With AI being capable of both knowledge AND action, the game changer is on the horizon. **The coupling of knowledge + action is a critical moment for this field, because AI stops being a tool and starts being a collaborator.

But… it’s already really good at gathering data on analyzing it on autopilot. This is exactly how we used it for AI Maturity Index for Teams. 👇️ 

Preview of an AI generated AIMI Team Report.

Check out the full demo 👇 → AI Maturity Index Report

Ok, let's dive deeper into how these AI-enhanced tasks are reshaping each stage of the consulting process, opening new doors for agile, innovative firms ready to embrace the future:

Process Stage

Task

Traditional Method

AI-Enhanced Task

AI Solution

Key Benefit

Client Acquisition

Lead Identification

Manual research and networking

AI-powered analysis of online behavior and public data

AI Agent

Faster discovery of high-potential leads

Client Acquisition

Ideal Client Profiling

Subjective analysis of past clients

AI analysis of successful past engagements

AI Assistant

More accurate targeting of ideal clients

Client Acquisition

Initial Client Interaction

Phone calls or emails

AI-powered chatbots for initial screening

AI Agent

24/7 availability and consistent qualification

Client Acquisition

Content Personalization

Generic, static ebooks or white-papers

Interactive, AI-personalized content adapting in real-time

AI Assistant

Higher engagement with tailored, dynamic content

Client Acquisition

Client Discovery

Standard questionnaires or interviews

AI-powered conversation assessments with instant reports

AI Agent

Deeper insights and faster client understanding

Problem Definition

Market Trend Analysis

Manual market research

AI-enhanced analysis with real-time data integration

AI Assistant

More comprehensive and up-to-date insights

Problem Definition

Competitor Benchmarking

Periodic manual analysis

Intelligent benchmarking with adaptive metrics

AI Agent

Continuous, real-time competitive positioning

Problem Definition

Customer Sentiment Analysis

Manual survey analysis

Automated sentiment analysis across multiple channels

AI Agent

Broader and more accurate customer insights

Data Gathering & Analysis

Data Cleaning

Manual data cleaning

AI-enhanced cleaning with anomaly detection

AI Assistant

More accurate and efficient data preparation

Data Gathering & Analysis

Hypothesis Testing

Manual statistical analysis

Interactive testing with instant statistical validation

AI Assistant

Faster and more rigorous hypothesis validation

Data Gathering & Analysis

Exploratory Data Analysis

Manual data exploration

Guided analysis with intelligent feature suggestion

AI Assistant

More comprehensive and efficient data exploration

Solution Development

Innovation Brainstorming

Traditional brainstorming sessions

AI-powered brainstorming with cross-industry suggestions

AI Assistant

More diverse and innovative solution ideas

Solution Development

Financial Modeling

Static financial models

Intelligent modeling with market-responsive assumptions

AI Assistant

More accurate and adaptive financial projections

Solution Development

Risk Assessment

Manual risk analysis

Risk assessment using historical and predictive data

AI Assistant

More comprehensive risk identification and mitigation

Implementation Planning

Project Timeline Optimization

Manual timeline creation

AI-enhanced timeline optimization

AI Assistant

More efficient and realistic project scheduling

Implementation Planning

Resource Allocation

Manual resource assignment

Algorithmic portfolio optimization for resource allocation

AI Agent

More efficient use of available resources

Implementation Planning

Progress Tracking

Periodic manual updates

Automated progress tracking and reporting

AI Agent

Real-time visibility into project status

Monitoring & Evaluation

KPI Tracking

Manual KPI monitoring

Real-time KPI dashboards with predictive alerts

AI Assistant

Proactive performance management

Monitoring & Evaluation

Anomaly Detection

Manual review of performance data

AI-enhanced anomaly detection in performance metrics

AI Agent

Faster identification of potential issues

Monitoring & Evaluation

Root Cause Analysis

Manual investigation of issues

Intelligent root cause analysis for performance deviations

AI Assistant

More accurate and efficient problem solving

While task disruption is significant, the real revolution lies in how AI is transforming entire consulting business models.

Forget hourly rates and project fees.

Welcome to the brave new world of AI-enabled consulting services.

But… that’s all for today. In next editions I will cover:

• 🦸‍♀️ Where AI is Impacting Consulting Work

• ⚠️ Top Barriers and Challenges in AI Adoption

• 💰 New Consulting Business Models Enabled by AI

• 🔮 How AI will impact consulting in the next 5 years?

• 🤖 The Future is Now: Are You Ready to Evolve?

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Have a great weekend,

Iwo