Why Struggling Utilities May Gain the Most from Consulting
The strategy consulting industry is often seen as a luxury for elite companies—multinationals seeking an edge or governments refining bold reforms. But new research tells a different story: the biggest gains from consulting are not where you might expect.
A landmark study from the National Bureau of Economic Research (NBER, July 2025) offers the first systematic, economy-wide look at what management consulting actually does. Using transaction-level VAT data covering the entire Belgian economy from 2002 to 2023, the researchers tracked who hired consultants, how much they spent, and what happened next. The data is clear: it's the firms that are struggling—not thriving—that benefit the most.
The Catch-Up Effect Is Real
While consulting take-up is more common among large, well-resourced firms, the most meaningful productivity gains came from those at the bottom end of performance—low-productivity, low-profitability organisations with room to improve.
On average, firms that brought in consultants saw:
3.6% growth in labor productivity over five years
2.7% increases in average wages, without reducing labor's share of value-added
Modest reductions in employment, but stable or growing revenues
The gains were significantly larger for initially underperforming firms, suggesting that consulting helps to close performance gaps.
Short Engagements, Long Effects
This is not about long-term retained advisory work. In most cases:
Firms spent about 3% of payroll on consulting
Engagements were episodic, typically lasting less than one year
Benefits persisted well after the consultants left
Small interventions made big differences—particularly where internal resources were stretched, morale was low, or leadership needed external validation to drive change.
Why This Matters for the Water Sector
Across Australia, many water utilities and councils face mounting challenges: asset backlogs, digital transformation, constrained budgets, and evolving regulatory expectations. In these conditions, internal bandwidth is often overwhelmed, and opportunities for improvement go unrealised.
This research validates what many of us in the sector already knew from experience:
That modest, well-targeted consulting can unlock value
That underperformance is not a permanent condition
That sometimes, a fresh pair of eyes is what’s needed to realign strategy with delivery
At Strabo Rivers, we’ve built our work around these moments—whether it's developing business cases for infrastructure funding, reshaping asset investment priorities, or supporting regulatory submissions. Our clients are often not at the top of the performance curve, but they want to get there.
Final Thought
For public sector leaders, this study offers a gentle provocation: consulting is not just for the top performers. In fact, it might matter most when performance is weakest.
The biggest return on investment might come not from pushing the frontier, but from getting the basics right, under pressure, with external help.