The Strategic Importance of Growth Consulting
Business growth consulting—whether internal or external—provides structured methodologies, specialized expertise, and objective perspectives that help organizations identify and capitalize on growth opportunities. According to research by McKinsey & Company, companies that effectively leverage consulting resources achieve 27% higher revenue growth and 31% higher EBITDA growth compared to industry peers over a five-year period.
Growth consulting isn't merely about solving immediate problems—it's about building the capabilities and perspectives that drive sustainable competitive advantage. The question isn't whether organizations need these capabilities, but rather how they should access and develop them.
— Sarah Johnson, former CEO of Global Strategy Partners
The decision between internal capability building and external partnerships represents a fundamental strategic choice with long-term implications for organizational effectiveness, agility, and competitive positioning.
Internal Growth Consulting: Building Organizational Capabilities
Internal consulting groups—sometimes called strategy teams, transformation offices, or growth centers—have gained prominence in recent years. Major corporations including Google, Bayer, and SNCF have built internal consulting capabilities that rival external firms in sophistication and impact.
Advantages of Internal Consulting Capabilities
1. Deep Organizational Knowledge
Internal consultants develop profound understanding of organizational culture, processes, and politics that external partners may never fully grasp. This institutional knowledge enables more contextually appropriate recommendations and implementation approaches.
External consultants often spend 30-40% of their engagement time just understanding the organization's context and constraints. Internal consultants start with this knowledge, allowing them to move more quickly to solution development and implementation.
— Dr. Michael Chen, Professor of Strategy at INSEAD
2. Long-Term Capability Building
Internal consulting groups create lasting organizational capabilities that remain after specific initiatives conclude. This knowledge retention supports continuous improvement and reduces dependency on external expertise over time.
Research by the Corporate Executive Board found that organizations with mature internal consulting functions achieve 23% higher implementation success rates for strategic initiatives compared to those relying primarily on external support.
3. Alignment with Organizational Priorities
Internal consultants typically maintain closer alignment with leadership priorities and strategic direction. This alignment enables more consistent focus on initiatives with the highest organizational impact rather than isolated optimization efforts.
When we established our internal strategy group, we saw a step-change in how consistently our growth initiatives connected to our overall corporate strategy. External firms brought valuable expertise, but our internal team ensured that expertise was applied to our most strategic priorities.
— Thomas Williams, COO of Enterprise Solutions Inc.
4. Enhanced Confidentiality and Security
For initiatives involving sensitive information or intellectual property, internal consulting teams offer enhanced security and confidentiality. This advantage becomes particularly important in highly regulated industries or when dealing with proprietary technologies and business models.
Case Study: Global Financial Services' Internal Consulting Transformation
Global Financial Services (GFS), a Fortune 500 financial institution, established an internal consulting group after spending over $50 million annually on external consulting services. Their approach included:
- Recruiting experienced consultants from top firms to establish credibility and capabilities
- Creating a distinct organizational identity with career paths comparable to external consulting
- Implementing project-based staffing models similar to external firms
- Developing proprietary methodologies tailored to their industry context
- Establishing knowledge management systems to capture and disseminate insights
We didn't eliminate external consulting entirely. But we became much more strategic about when and how we used external partners. Our internal team now handles approximately 70% of our consulting needs, with external firms engaged primarily for specialized expertise or when we need additional capacity.
— Jennifer Martinez, GFS's Chief Transformation Officer
The results have been substantial: GFS reduced overall consulting expenditures by 35% while increasing the number of strategic initiatives successfully implemented by 42%. Perhaps most importantly, the organization has developed lasting capabilities in areas like digital transformation, customer experience design, and agile implementation that continue to drive competitive advantage.
External Growth Consulting: Leveraging Specialized Expertise
Despite the rise of internal consulting capabilities, external consulting partnerships remain a critical resource for organizations seeking growth. The global management consulting market exceeds $250 billion annually, with growth consulting representing a significant portion of this spending.
Advantages of External Consulting Partnerships
1. Specialized Expertise and Methodologies
External consultants offer specialized expertise developed through work across multiple organizations and industries. This cross-industry perspective often brings innovative approaches that wouldn't emerge from within a single organization.
Research by Su & Tsang (2008) found that external partnerships significantly enhance innovation capabilities, particularly when organizations seek to enter new markets or develop disruptive offerings. Their study demonstrated that firms actively engaging external expertise achieved 34% higher new product success rates compared to those relying primarily on internal resources.
The most valuable aspect of external consulting isn't just their knowledge, but their methodologies—the structured approaches they've refined across hundreds of client engagements. These battle-tested frameworks accelerate our ability to solve complex growth challenges.
— Richard Thompson, CEO of Technology Solutions Group
2. Objective, Outside Perspective
External consultants provide objective perspectives unencumbered by organizational politics, historical constraints, or cultural blind spots. This objectivity enables them to challenge assumptions and propose solutions that might be difficult for internal teams to envision or advocate.
Sometimes you need someone to tell you your baby is ugly. Our external growth consultants have the credibility and independence to deliver difficult messages that might be career-limiting for internal team members.
— Alexandra Rodriguez, CMO of Consumer Products International
3. Flexible Resource Scaling
External partnerships allow organizations to rapidly scale specialized resources up or down based on specific initiative requirements. This flexibility proves particularly valuable for organizations with fluctuating needs or those undertaking transformational initiatives requiring temporary surge capacity.
According to research by Bain & Company, organizations with effective external consulting strategies maintain 18% lower fixed costs in strategy and transformation functions while achieving comparable or superior outcomes.
4. Access to Benchmarks and Best Practices
External consultants bring valuable benchmarking data and best practices developed through work with multiple organizations. This comparative perspective helps companies understand their relative performance and identify improvement opportunities that might not be apparent through internal analysis alone.
The benchmarking data our consulting partners provide has been invaluable in setting appropriate targets and building executive confidence in our growth initiatives. When our CEO knows that similar companies have achieved comparable results, it significantly reduces perceived risk.
— David Chen, CFO of Manufacturing Excellence Corporation
Case Study: TechNova's External Partnership Strategy
TechNova, a mid-sized technology company with approximately $500 million in annual revenue, developed a sophisticated approach to leveraging external growth consulting while building selective internal capabilities. Key elements included:
- Creating a small internal team focused on consultant management and knowledge transfer
- Establishing preferred partnerships with three consulting firms having complementary specializations
- Implementing structured knowledge transfer requirements in all consulting contracts
- Developing a proprietary knowledge repository to capture insights from external engagements
- Creating joint teams that paired internal and external resources on key initiatives
We recognized that building a comprehensive internal consulting function wasn't economically viable for a company our size. Instead, we focused on becoming excellent partners to our external consultants while systematically building internal capabilities in our most strategically important areas.
— Michael Zhang, TechNova's Head of Strategy
This balanced approach enabled TechNova to achieve 28% annual growth over a five-year period while keeping consulting expenditures below industry benchmarks. The company has developed deep internal capabilities in product strategy and customer experience design while continuing to leverage external expertise for specialized needs like pricing optimization and supply chain transformation.
The Integrated Approach: Combining Internal and External Capabilities
While the internal versus external decision is often presented as a binary choice, leading organizations increasingly adopt integrated approaches that combine the advantages of both models. Research by Chen (2022) demonstrates that the most successful growth outcomes typically result from thoughtful integration of internal capabilities and external partnerships.
Strategic Framework for Capability Decisions
Organizations should consider several key factors when determining the optimal balance between internal and external consulting resources:
1. Strategic Importance and Frequency
Capabilities that are both strategically important and frequently needed typically justify investment in internal resources. Conversely, specialized expertise required only occasionally may be more efficiently accessed through external partnerships.
We built internal capabilities in customer experience design because it's central to our competitive strategy and something we need continuously. For pricing strategy, which we revisit annually, we maintain a partnership with an external specialist.
— Sarah Thompson, Chief Customer Officer at Digital Services Inc.
2. Market Availability and Distinctiveness
When required expertise is readily available in the consulting market, external partnerships often provide the most efficient access. However, when organizations need truly distinctive capabilities that provide competitive differentiation, internal development may be preferable despite higher initial costs.
Research by the Corporate Strategy Board found that 72% of executives believe their most distinctive capabilities should be developed internally, while 65% prefer to access standardized capabilities through external partnerships.
3. Knowledge Sensitivity and Integration Requirements
Capabilities involving highly sensitive information or requiring deep integration with other organizational processes may be better developed internally. This consideration becomes particularly important in regulated industries or when dealing with proprietary technologies and data.
4. Development Timeline and Resource Constraints
Internal capability building typically requires significant time and resource investment before delivering value. Organizations facing immediate growth challenges or resource constraints may need to leverage external partnerships while simultaneously building internal capabilities for longer-term advantage.
We initially engaged external consultants to accelerate our digital transformation while simultaneously building our internal capabilities. This hybrid approach allowed us to deliver immediate results while developing the long-term capabilities we needed.
— Robert Johnson, CIO of Healthcare Solutions Group
Case Study: Pharmaceutical Innovation Group's Integrated Model
Pharmaceutical Innovation Group (PIG), a global pharmaceutical company, developed a sophisticated integrated model that combines internal and external consulting resources. Their approach includes:
- A core internal consulting team focused on strategy development and implementation management
- Strategic partnerships with specialized external firms for specific capability areas
- A formal rotation program that cycles high-potential employees through the internal consulting group
- Joint teams that combine internal consultants, external partners, and operational staff
- A dedicated knowledge management function that captures insights from both internal and external work
Our integrated model gives us the best of both worlds. We maintain deep institutional knowledge and continuity through our internal team while accessing specialized expertise and fresh perspectives through our external partnerships.
— Dr. Jennifer Martinez, PIG's Chief Strategy Officer
This approach has enabled PIG to successfully launch multiple new therapeutic areas while simultaneously optimizing its core business, achieving 18% annual growth in a market growing at just 4% annually.
Implementation Considerations: Making Either Approach Successful
Whether organizations emphasize internal capability building, external partnerships, or an integrated approach, several implementation factors significantly impact success:
For Internal Capability Building
1. Organizational Positioning and Governance
Internal consulting functions require appropriate organizational positioning and governance to be effective. Key considerations include:
- Reporting relationship (typically to CEO, COO, or Chief Strategy Officer)
- Funding model (centralized vs. chargeback mechanisms)
- Career paths and compensation structures
- Performance measurement and accountability
The positioning of the internal consulting function sends a powerful message about its strategic importance. Functions reporting directly to the CEO typically have greater influence and access than those buried within functional silos.
— Dr. Elizabeth Chen, author of "Building Internal Consulting Capabilities"
2. Talent Strategy and Development
Internal consulting functions live or die by their talent quality. Successful organizations implement sophisticated approaches to:
- Recruiting experienced consultants from top firms
- Rotating high-potential internal talent through the consulting function
- Providing continuous learning and development opportunities
- Creating compelling career paths that retain top performers
For External Partnership Management
1. Strategic Vendor Management
Organizations that excel at leveraging external consulting treat these relationships as strategic partnerships rather than transactional vendor arrangements. Key practices include:
- Establishing preferred partnerships with carefully selected firms
- Creating joint governance structures for major initiatives
- Implementing structured knowledge transfer mechanisms
- Developing internal capabilities to effectively manage external resources
2. Results-Based Contracting
Leading organizations increasingly structure consulting contracts around measurable outcomes rather than time and materials. This approach:
- Aligns incentives between client and consultant
- Focuses efforts on business impact rather than deliverables
- Reduces risk by tying compensation to results
- Creates shared accountability for implementation success
Conclusion: Making the Strategic Choice
The decision between building internal growth consulting capabilities and leveraging external partnerships represents a fundamental strategic choice with significant implications for organizational effectiveness and competitive advantage. While each approach offers distinct benefits and challenges, the most successful organizations increasingly adopt integrated models that combine internal capabilities with external expertise.
For senior executives navigating this decision, several key principles should guide the approach:
- Align consulting strategy with overall business strategy and growth objectives
- Consider the full spectrum of options rather than viewing the choice as binary
- Develop clear decision criteria for when to build internal capabilities versus leverage external partnerships
- Implement robust governance and management processes for both internal and external resources
- Focus relentlessly on knowledge transfer and capability building regardless of approach
By thoughtfully addressing these considerations, organizations can develop consulting approaches that provide both immediate impact and long-term competitive advantage, ultimately accelerating their business growth trajectory in an increasingly complex and competitive environment.