Microsoft Copilot for 365 was supposed to change everything for consulting firms. We had high hopes it would finally let us reason through unstructured datasets and documents with precision.
The reality didn't meet the hype.
I watched as Copilot failed to find the needle in the haystack. It couldn't distinguish between a project scope and general project discussion. It missed the difference between actual deliverables and casual mentions of deliverables.
That's when I realized this wasn't a training issue. It was a fundamental limitation of how vector search works.
The Similarity Trap
Vector embeddings operate on similarity-based search with highest probability matches. For some use cases, that's fine.
For high-stakes consulting work, it's dangerous.
Good enough is rarely ok in consulting. A plausible answer that's factually wrong will cause the firm to lose credibility. Trust is now the primary factor for 87% of clients choosing consulting services.
Most companies follow the RAG hype and reasoning model hype. But they're missing the connections and semantic relationships that exist in knowledge graphs.
When Connections Matter More Than Similarity
Consider a 200-page contract where payment terms in section 12 contradict deliverable requirements in section 3. Vector search treats these as isolated chunks.
It cannot reason across those connections.
Vector search matches each passage independently. Facts can't be connected or aggregated. Key details embedded across sentences get lost when entire passages compress into single vectors.
Most RAG systems with even the best reasoning models will miss these key insights. The technology has an inherited limitation that similarity-based search cannot overcome.
The Convenience vs Effectiveness Problem
Why does the industry keep pushing vector-only solutions if the limitations are so clear?
Vector-based RAG solutions are very easy to implement. Look around and you'll find hundreds of companies offering RAG solutions on your data, all working in similar fashion.
Creating and maintaining knowledge graphs is hard. It requires a commitment to get things right.
Most AI startups choose vector databases because they're simple to spin up and offer fast retrieval. The true challenge comes with optimizing for performance and accuracy.
Convenience wins over effectiveness, even when precision matters most.
Domain Knowledge Changes Everything
Knowledge graph solutions are sensitive to the domain and industry of the particular organization. Understanding the nuance and vocabulary of the particular company and its industry makes the difference.
An AI that speaks the customer language is key to success.
A knowledge graph built for healthcare won't understand consulting deliverables or contract structures. Generic solutions miss the specific domain concepts and relationships that matter most.
The industry will realize that horizontal solutions fitting everybody are limited. Vertical solutions are necessary for success.
The Trust Factor
When I look at firms that have made the jump from vector-only RAG to proper knowledge graph implementations, one thing changes most dramatically.
They trust their AI.
For consulting leaders sitting on the fence, attracted to vector search simplicity but seeing its limitations in high-stakes work, my advice is simple. Be open minded. Look around and understand the limitations. Look for solutions that solve specific business problems and challenges.
The firms that earn client trust through reliable, explainable AI systems will dominate. In consulting, credibility isn't just important.
It's everything.