Introduction to Management Consulting
For most management graduates and students in business schools, working for the world famous Big Five management consultancies such as McKinsey, Booze Allen, Boston Consulting Group (BCG), Price Waterhouse (PWC), and Anderson consulting is a dream come true.
Indeed, the fact that these consultancies are often given the Day Zero or the opening slots in the campus hiring calendar is testament to the brand image and the perceptions among management professionals. This means that it is important to know what these firms do and how they add value to society. For that, we need to understand how they work, what they do, and why they are the management professionals ultimate dream.
Management Consulting and Investment Banking
This article introduces the field of management consulting so that the readers would have a fair idea about these consultancies. Before launching into the discussion, it would be worthwhile to note that management consultancies compete with investment banks for the mind space of both the industry leaders as well as the management professionals.
As we discuss subsequently, this has a direct bearing on how the business world works in terms of which firm or investment bank is often hired to consult by the business leaders.
Indeed, both management consultancies and investment banks consult with the industry to ensure that firms derive value from their operations and the difference between their pitches is often to do with the terms of reference wherein management consultancies encompass a broader swathe and realm of operations whereas investment bankers often focus on the financials as well as the strategies to be put in place to raise capital and ensuring that the firms are competitive on this front.
What Management Consultants Do
Management consultants are hired to suggest and recommend strategies and ways and means of improving the profitability of firms. This can encompass operations, finance, marketing, strategy, planning, human resources, and the very nature and purpose of the firm.
For instance, it is not uncommon for management consultants to recommend a complete overhaul of the firms operations by restricting the organization and either moving it away from its present focus or refocusing on the present strategies. Indeed, the term core competencies arose as a result of painstaking research and detailed consulting wherein the authors of this term suggested that firms must first identify their core competencies and then refocus their strategies and organization structure around such competencies.
Apart from this, the terms such as repositioning, rebranding, restructuring, and rebalancing are all concepts used by management consultants to recommend alternative strategies to the firms. Perhaps the most famous product of management consulting has been the BCGs growth matrix in addition to the Ansoff Matrix both of whom identify and categorize the position of the firm in the present scheme of things and suggest ways and means to improve profitability.
Do Management Consultants always get it Right?
Of course, this does not mean that management consultants are always right when they consult with industry. For instance, in the aftermath of the global financial crisis of 2008, management consultants along with investment bankers drew much flak because either they failed to see the crisis coming or because they were too much like the Ostrich with its head in the sand to alert the firms about the crisis.
Even before the crisis, management consultants were being exhorted to be more circumspect and not be carried away by fads, manias, and irrational exuberance as can be seen in their wrong approach to the dotcom boom and the subsequent bust wherein they and their recommendations to many firms were found to be wrong with hindsight.
Indeed, if there is a valid criticism against management consultants, it is that they use a lot of jargon and market their suggestions and recommendations in a glib and polished manner some of which when the sheen wears off are found to be wanting.
An On Balance Assessment of Management Consulting
Having said that, one must not dismiss management consultants that easily. For instance, one of the reasons why many CEOs (Chief Executive Officers) hire them in the first place is because they bring in an outsiders perspective as well as can approach the problems being faced by the firms in an objective and fresh manner.
Apart from this, management consultants also bring to the table their expertise and experience wherein they are in a position to recommend alternative strategies because of their deep engagement as well as wealth of information and knowledge of business which enables them to spot trends and anticipate changes in advance. Therefore, what we are saying is that management consulting must be evaluated in a balanced manner taking the positive along with the negative.
Conclusion: Knowledge is Power
The discussion so far has provided a birds eye view of what management consulting is all about. For those of you aspiring to be a management consultant, our advice is that you should develop a perspective on not only how the business and the corporate world works but also a perspective on life itself so that your insights backed with research into the firms that hire you as well as hard work and due diligence into the minutiae would come in handy.
Most importantly, knowledge is power as far as management consulting is concerned and therefore, you must keep abreast of the changing trends in business and society in addition to approaching each piece of analysis as well as reading material with the attitude of how it would help you succeed in making it to the management consulting firms.
Authorship/Referencing - About the Author(s)
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