A recent article in Businessweek quoted the CEO of Heidrick & Struggles (HSSII), L. Kevin Kelly, who claims that the Executive Search business model is "broken". He did not rename his company yet Heidrick & Struggeling though. After experiencing a once in a lifetime 43% profit drop, with 2009 promising even worse, this statement could be more the result of the massive shell shock related to the black swan of a crisis no one saw coming (its NASDAQ peer Korn/Ferry International (KFY) announced similar sharp drops in profit and revenue - which after this event did neither change into Kornflake). As I pointed out earlier, though the industry is ripe for a paradigm shift, it should not be regulated to the dustbin.

Far from that. Revenues and profits drop everywhere, look at any sector highly dependent on short term financing, Real Estate? Construction? or what about the Financial Industry, Car Manufacturing, anyone?

The diversification into management consultancy practices proposed by Mr. Kelly could, and will probably backfire when Heidrick & Struggles swims into waters with predators it did not encounter yet.

What about Mc Kinsey venturing into Executive Search ? Brand expansion has not been treated kindly by history, and I fully agree with Mr. Kelly that his venture into management consultancy represents, I quote, "a huge gamble". Heidrick will need to acquire the necessary expertise through the take-over of smaller firms, dissemate that know-how and skillset (despite a degree of cultural inertia), amongst its high rolling consultants, and refocus in the process a significant part of its activity. I wonder if we will see Mr. Kelly driving a car with the left foot on the accelerator, and the right on the brake, considering the urgency and short time span for the required delicate organizational overhaul.

Search consultants at Heidrick & Struggles are accomplished and recognized consultants in the field. However, at firms like these, the benefit of having a blue chip, multinational brandname could quickly become a curse in disguise. Consultants working in a firm like Heidrick & Struggles, Korn/Ferry International, or Egon Zehnder benefit from the big corporates retaining their services because their brands are universally associated with umbrellas of reliability, quality and strength. They do not have to do much business development, the rolling-up-the-sleeves type kind of work, knocking on the doors and get the message out.Lots of assignments in those firms originate from the email inbox or a humming fax-machine: as they have the majority of global service provider contracts with the large multinationals, work comes in, almost on "auto pilot" and execution skills, delegation to researchers, followed-up with the wining and dining of candidate executives in expensive power suits  becomes the skillset most sharply honed.

Forgive me the satire, but the shift from "execution' mode to "business development" mode won't be easy. It is a skill more required within their existing business model; rather than a diversification into exotic new realms of consulting. Those same business development skills are required over there, however, this time in a different field, selling unfamilar consultancy services,  of which there is no execution experience, and without the umbrella of a recognized brand. Do you get the grist ?

Business is shrinking, no surprise. We are all hit. The answer to these difficult times is belt-tightening, cost cutting, increasing efficiencies, and most important a focus on the unique and core differentiators of one's business. If effective and efficient business development is one of them, it will be undoubtly be easier to weather the black swan.