The Hard Part of Scaling Specialization

Specialist firms are built on depth. Growth can put that advantage under pressure. Newground co-founder Per Appelgren and Adelis partner Joel Russ discuss what it takes to scale specialist expertise without diluting it, and why changes in consulting may make that question more important than ever.

Specialization allows a firm to go deeper: in a field, an industry and the problems its clients are trying to solve.

But growth can pull in the opposite direction.

New clients bring adjacent needs. New hires bring additional capabilities. Larger assignments create pressure to do more. Over time, a specialist firm can gradually become broader, often without making a conscious decision to do so.

“The first risk is that you become broad,” says Per Appelgren, Managing Partner and co-founder of Newground. “And once you become broad, you start selling what you have rather than what the client actually needs.”

“You almost have to work against gravity. A specialist firm needs to keep asking what is creating value for clients within its field and how that field is changing. Reinvention is necessary. Becoming everything to everyone isn’t.”
— Per Appelgren

Specialization doesn’t mean standing still

A specialist firm has to evolve as its clients’ problems evolve. Per sees that ability to continually reinvent within a defined area as one of the strengths of the model.

“The pace of change is so high that the consulting you did five or ten years ago may already be obsolete in many respects. If you have chosen a field and keep developing within it, you have a much clearer reason to keep renewing your expertise.”

AI is accelerating that shift. Research, analysis, synthesis and presentation can increasingly be supported by technology. At the same time, companies are trying to understand how AI should be applied in their businesses and turned into real value.

That changes what clients need from consultants.

“There will be less value in delivering the perfect slide deck,” Per says. “Getting a good answer is becoming easier. But knowing whether it is the right answer in a specific context, and actually making change happen, is something else entirely.”

Joel Russ, partner at Adelis Equity Partners, sees the same shift increasing the importance of specialist knowledge.

“The value of a specialist is not just functional expertise. It is understanding the client, the industry and the context well enough to know what will actually work. As technology makes knowledge more accessible, that combination becomes even more important.”

But operating as a small independent specialist firm also comes with limitations. A firm can become dependent on a small number of clients, recruitment and succession can be more vulnerable, and larger client problems increasingly cross the boundaries between disciplines.

Growth can also become uneven. A firm wins a major assignment, recruits around it and becomes increasingly shaped by the needs of that particular client.

“You can end up being defined by the assignment rather than defining the company yourself,” Per says.

The challenge of scale

Newground was built to address some of those limitations.

Its model is based on independent specialist companies backed by a shared platform. The companies retain their own identity, specialization and business responsibility while gaining access to infrastructure, talent, market opportunities and expertise beyond their own organizations.

It also creates opportunities to combine capabilities when a client problem requires it. A specialist company can bring in expertise from another without having to build that capability itself.

For Joel, that was one of the things that made Newground interesting to Adelis.

“What we liked was that there was support around the entrepreneurs without taking the business away from them. You can bring experience, networks and capabilities into the companies, while the people closest to the clients still have responsibility for the business.”

But maintaining that balance becomes more important as the alliance grows.

“There is a big difference between standardizing certain things and centralizing decision-making,” Per says. “If you take the decisions away from the local company, you also take away the responsibility. And eventually you lose the entrepreneurship.”

Joel sees expertise and support as something that can be shared without moving every decision upward.

“The person with the deepest knowledge should still make the decision. The role of the wider organization is to bring in perspectives, ask the right questions and make that person better equipped to make it.”

The role of an owner

When Newground began looking for a new majority owner, the founders had decided not to present the business as something that needed to become fundamentally different.

“We decided we were going to sell what we are, not what somebody thought we could become,” Per says. “That sounds obvious, but it made a big difference in the conversations.”

Per says the difference with Adelis became apparent in the questions they asked.

“With Adelis, we felt quite quickly that they understood the model and got to the difficult questions fast. They were also comfortable with human capital businesses.”

That was central to Adelis’ assessment as well.

“In a human capital business, people are the business,” Joel says. “Retention, leadership and continuity are fundamental to the quality and resilience of the company. Before asking how fast a business can grow, you need to understand how you keep the qualities that made it successful.”

Newground, meanwhile, had a concern of its own: whether bringing in a private equity owner would create growth expectations that could eventually work against the specialist model.

“We were probably more worried that the growth expectations would be unrealistic,” Per says. “But the assumptions were very grounded. If you turn growth up too far, you eventually start compromising on clients, people or specialization. That is not how you build a better company.”

“Focus is what allows a specialist company to deliver more value. The goal isn’t to become bigger at the expense of specialization. It is to become better and grow because of it.”
— Joel Russ

Operational decisions should remain with the people running the business; the owner and board should focus on the questions that determine where it is going.

“The important questions are strategic,” says Joel. “What should this company be in three, four or five years? What are the difficult decisions we need to address to get there? The board should challenge management and work through those questions with them. It shouldn’t be making day-to-day operating decisions.”

Per sees value in the discipline that introduces.

“There are questions you never have to answer this month. What should Newground be in five years? You can always postpone that question. A good owner makes sure you don’t.”
— Per Appelgren

The point is not simply to set a future revenue target. It is to define what kind of company Newground should become and what it should be capable of doing for clients that it cannot do today.

Five years from now, Newground will look different. There may be more specialist companies, stronger positions in selected industries and more collaboration across the alliance. For Joel, the challenge is to make those connections stronger without weakening the expertise and entrepreneurship within the individual companies.

“Newground should still be specialist-driven. The opportunity is to have more specialist expertise and make the connections between those capabilities stronger, so the group can create more value for clients while each company remains very good at what it does.”

For Per, the test ultimately comes back to what clients will need from consultants in a changing market.

“The valuable consultant will be someone who has done it before, understands the domain deeply, but is wise enough to know that this time will be different. Then you give that person the best technology available and make them enormously productive.”

Scaling specialization is not about making specialist firms look more like large consulting firms.

It is about giving them more of the advantages of scale without losing the judgment, expertise and entrepreneurship that made them specialists in the first place.