When Your Expertise Is No Longer Wanted

Can hyperspecialization be a problem?

Here's a thought-provoking question from a reader:

"Hi Danilo. Thanks for those posts, they come at a very timely moment as we're making key changes to our firm. Over the last years, we took the hard but correct decision of narrowing our specialization. I believe this was key for us to differentiate and increase our fees. But now I'm wondering: As a small firm, what happens when your specialization is no longer wanted in the market?"

The partner raises an important point that many marketing advisors overlook.

If you're starting your consulting practice or repositioning your firm, the advice you will hear the most is to "niche until it hurts." Focus on a market segment or a specific service - ideally you do both, specializing both vertically and horizontally.

This is the best way to reduce or make the competition irrelevant, increase perceived value, and improve your value proposition (among many other advantages). It works. But every coin has two sides.

As the partner's message shows, the high specialization in most healthy boutique firms tend to have ended up becoming one of their unique challenges. What happens when your hyperspecialized expertise is no longer wanted in the market?

Larger consultancies may be able to build on other markets or practice areas they have when parts of their market fall away. Soloists or boutique firms do not have that option. It takes time, money, and a lot of energy to cultivate expertise, hire people, and/or create custom methodologies. You can't do that overnight.

I believe one of the keys to mitigating this risk is by making a fundamental change to your business development approach. If the downside of increasing specialization is relying on a smaller addressable market, you need to change your business model.

Instead of waiting for clients to come to you (capturing existing demand), you need to proactively educate and show the value you can help them unlock (creating demand).

The responses we've been getting in our current research already point in this direction. Traditionally, consultants took a reactive approach, mostly waiting for demand. Now many firms are actively investing in not only creating demand. Some of the most innovative ones are even creating new clients from scratch.

So the short answer to the reader would be: The lack of interest in your services is probably not indicative that your specialization is no longer valued. To avoid pipeline problems and ensure the firm remains sustainably profitable, I'd recommend you to first (1) invest in initiatives to proactively create demand and (2) review how you communicate your current positioning.

Both of these activities will require you to do what most consultants avoid: approaching and engaging with clients and prospects.

Thanks for reading. You can get more specialized and actionable growth insights for micro consultancies in our newsletter. Every Tuesday, you get one idea from Danilo, one quote from other experts, one number you need to hear, and one question for you to level up your consulting practice.

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