Meet the future of consulting

December 21, 2011, 11:41 AM UTC

By Reena Jana, contributor

Piers Fawkes
FORTUNE — It’s a chilly but bright winter day in Manhattan, and sunlight streams into the sparsely decorated, industrial-chic offices of PSFK on Bond Street. The elevator opens directly onto the polished, hardwood floor of the company’s open workspace, where a number of casually-dressed twenty- and thirty-somethings sit side by side at long tables, typing away on laptops. This could easily be mistaken for a design school study hall or a spartan technology start up. Instead, it is home of what could be the next generation of consulting firm. PSFK is a younger, nimbler, 21st-century re-boot of the McKinseys of the world,offering trend insight and business strategies to top corporations from Apple to Johnson & Johnson.

Piers Fawkes, PSFK’s bearded founder and president, sits in a glass walled conference room wearing an untucked plaid shirt and jeans. Across the table is the company’s COO, Hedyeh Parsia, an elegant Wharton alumna with upswept black hair, hoop earrings, and a tastefully cool gray top and skirt, and Jeff Weiner, PSFK’s commercial director, who sports neatly cropped hair and crisp business-casual clothes. The trio who head the company are wrapping up end-of-year business over coffee. Laughing and smiling, they have the habit of finishing each other’s sentences.

Although it only has seven full-time employees and has been around less than a decade, PSFK has a client list to rival even the most established corporate consultancies: Coca-Cola (KO), Target (TGT), BMW, Nike (NKE), Microsoft (MSFT), Procter & Gamble (PG) and Intel (INTC), to name a few. Since 2005, leading companies have been hiring PSFK to provide custom research and recommendations around specific technology and innovation topics, such as retailers’ in-store use of smart phones and tablets, or new ways that consumers are tracking their health via apps for their mobile devices.

What makes PSFK so different? “[They] are more curious than your standard trend watchers,” observes Chris Riley, founder of Portland, Oregon-based marketing communications consultancy Studio Riley, a former head of strategic planning at ad agency Wieden + Kennedy, and a former strategic planning director in Apple’s (AAPL) graphic design and marketing communication group. “Piers has the insight of humility, the awareness that there are many people with different views on the world and by engaging with them he can draw out the complexity of what we are living through,” Riley continues. In the past, he has hired PSFK to analyze how people relate to their online experiences in the context of their offline lives. “PSFK stimulates your thinking rather than offering [the] ‘top ten things you don’t really care about.'”

Founded in 2004, when blogging was just beginning to explode, PSFK started out as the personal web site of Fawkes, then a young British advertising executive who had followed his girlfriend — Parsia, to whom he’s now married — from London to New York, where she moved because of a job. He didn’t have a visa and couldn’t get a job of his own, so Fawkes passed the time riding a bike around the city, snapping digital photos and posting tidbits of what he thought was interesting online.

“I arrived when the self-publishing era started, when blogs like Engadget, and Nick Denton’s sites, were all starting,” Fawkes says in a soft and refined English accent. “I was trying to post signs of change and progress, writing three to four hours a day, hoping to inspire people to make their lives better. My friends asked to post, too, including my friend Simon King, the S.K. in PSFK, who wrote from London.” Fawkes published their insights on innovations in the social-good, design, video game, retail and technology fields that they witnessed as they lived and worked and traveled around the world for work and fun.

The consulting business came about unintentionally, seven months after he began blogging, Fawkes says. In early 2005, he received an unsolicited e-mail from an executive at Anheuser-Busch (BUD), asking him and PSFK to compile a bi-monthly report of trends and observations regarding the drinking habits of young adults in the UK. The business was born.

Today, about half of consulting clients come to PSFK via its Web site or events like an invite-only salon on video games at New York’s tony SoHo House in early December, co-hosted by former U.S. Vice President and Nobel Laureate Al Gore, who hired PSFK to organize a game-design competition for his Climate Reality Project. Apple, a client for three years, approached the company after an executive attended one of PSFK’s conferences. “The nice thing about the site and the events is that we prove our thought leadership to potential clients rather than having to sell it to them…” starts Parsia. “And our point of view…” Fawkes finishes her sentence. “What differentiates us is that we’re very subjective,” adds Weiner. “At other consultancies’ web sites, you read about their services, and maybe there’s new research posted once a month. But on our site, you’ll find an almost overwhelming amount of content. For a qualitative consultancy, that’s important.”

For consulting clients, PSFK gathers trend insights into a private, intranet version of the PSFK web site, then assembles their research into a slick print report, as well as in-person presentations of the analyses. All of these offer advice on how a specific client might use the information to help deploy new technologies or adapt innovative ideas. In the last 18 months, clients have been increasingly asking for advice on business tactics. “We’ve moved from classic trends research to product concepts and future user scenarios in that time,” Fawkes says. The context is to create discussion internally for clients, to challenge existing thinking and sometimes affirm existing ideas. PSFK doesn’t design the actual product prototypes to eventually bring to market.

PSFK also publishes and sells, via, glossy print reports around general topics, such as “The Future of Retail.” These reports cost $150 a copy. They’re a bargain compared to, say, a $2,495 topic-focused report such as “Consumerization Drives Smartphone Proliferation” from Forrester Research. The sales of the publicly available PSFK reports, Parsia says, generally result in “two and a half times the revenue of a typical client project,” without stating exact numbers.

Parsia, Gore and Fawkes
Recent consulting projects, meanwhile, have included a “Future of Real-Time Information” report, commissioned by the United Nation’s Global Pulse Initiative, which seeks to provide U.N. members with informational tools to improve evidence-based decision-making.

For consulting clients, PSFK has a method for compiling research to discover a trend, rather than follow what’s already been declared one by the mainstream media. The company also uses this method for its topic-based reports for sale to non-clients. For several weeks, PSFK researchers around the world gather hundreds of examples of emerging innovations. Then, the researchers use PSFK’s method of pattern recognition to define a trend, which Fawkes explains is validated by tallying the numbers of similar examples the team has catalogued in the private PSFK intranet. The patterns are then supported by insights gained from experts that PSFK taps from its vast network, and their observations — all primary research — are quoted in the report. For the“Future of Retail” report, for instance, opinions from Mike Peck, Senior Design Manager, Brand and Packaging for Starbucks (SBUX), and Mike Milley, Manager of Design Research and Strategy for Samsung, backed up trends that PSFK consultants identified, such as “digitally empowered staff” or “store-within-a-store.”

And that is PSFK’s secret sauce. Rather than an arbiter of good design or effective strategy, it acts as an aggregator and validator, a brain trust as much as a tastemaker. Parsia and Fawkes say that the privately held company has more than doubled the number of corporate consulting clients since 2009, which accounts for the majority of the firm’s revenue. About 70% of this comes from consulting. Twenty percent of revenue comes from conferences, which draw hundreds of attendees, and smaller events. The final 10% comes from content sponsorship and advertising.

While custom research is driving revenue today, Weiner says the company hopes that the stream will become more balanced between the three parts of the business. This is likely to take the form of commissioned thought leadership, or articles on specific topics that will be sponsored by a corporation, bundled with related events and a possible custom report. PSFK has been working recently with tech giants Microsoft and Intel on such projects recently.

But the free, daily site is still a draw even for many of the company’s consulting clients — and 1 million site visitors a month. Some contributors and contributing editors have day jobs at influential companies — from athletic gear maker Adidas to advertising agency Wieden + Kennedy — who write posts of only a few hundred words spotting products and products that catch their eye personally. Fawkes and others on the full-time payroll also contribute. Recently, these posts have included pithy observations on Disney’s (DIS) debut of life-sized augmented reality villains in Times Square, or an overview of clothing made with “intelligent textiles” embedded with sensors, accelerometers and other tools to measure wearers’ activity and health.

At Microsoft, the Brand Strategy team and Trends Council, among other employees at the software company, regularly read and discuss what they come across on PSFK’s site, says Robin Lanahan, director of Brand Strategy at Microsoft. “Their blog is essential reading for keeping track of what’s to come, because they see beneath the culture to the underlying trends that percolate up before they become significant,” says Lanahan.

Despite its impressive client list and growing capabilities, it’s unlikely that PSFK will threaten the likes of McKinsey, an 85-year-old firm that has some 9,000 consultants worldwide, or McKinsey’s peers such as Boston Consulting Group, especially in the arena of management consulting. (Although in terms of building a thought-leadership brand, PSFK could be considered an upstart competitor.) Nor is PSFK even trying to compete with the likes of decades-old innovation and design firms such as IDEO or Smart Design, which in recent years have begun to offer business strategy on emerging technology and cultural trends that affect product design and development.

But these aren’t really PSFK’s ambitions. The company wants to remain nimble and keep their start-up feel and energy, says Fawkes. That way, the consultancy and its media platform will continue to provide blogger-style curiosity and speed, in terms of research and analysis of off-the-mainstream-radar trends that essentially appeal to the staff’s personal, youthful tastes and stylish sensibilities. “We want growth, but I don’t know whether we need to be a 50 or 100 person company,” Fawkes says. “What we do well is curating inspiring ideas to help companies paint a picture where innovation can happen.”

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