Management consulting firms are hired to help their clients know how to best manage and operate their business. Management consultants offer their expert advice on operational techniques, strategy, resource allocation, human capital, and marketing within the framework of the client's industry.
Management consulting has been around since the late 19th century. The first consulting firm was founded by MIT professor Arthur Little in 1886. Other top consulting firms have their roots in academia as well. Booz Allen Hamilton was founded by Edwin Booz who had graduated from Northwestern University.
Management consulting experienced exponential growth in the 1940s and 50s as demand for business management and financial advice spurred demand. Firms grow to become more national in their operations, opening offices around the country to better serve their clientele. Growth continued through the 1970s and 80s as industry best practices were developed by powerhouse consulting firms such as McKinsey, Boston Consulting Group, and professors at Harvard Business School. In 1983, six Harvard business school professors founded The Monitor Group, which is now widely regarded as the ultimate management consulting firm in the world.
Eight core focus areas typify the scope of a management consultancy's work:
1. Providing data to the client to make data-driven decisions
2. Solving a client's problem that either they did not know existed, could not address properly without outside assistance, or have the time to properly handle
3. Diagnosis of the problem through in depth analysis
4. Making recommendations to address the organization's problems based upon the consultant's audit
5. Assisting the organization in implementing action items recommended for improving the business
6. Building a sense of commitment and buy-in through the organization for the proposed changes
7. Engaging the client in the learning process of improving their business practices
8. Providing solutions that result in lasting improvement for the client
There are several different approaches that management consulting firms take to help their clients. Some clients prefer the consultant act as an expert by taking a prescriptive approach while other clients prefer to work collaboratively in more of a partnership, with the consultant acting as a facilitator.
There are several reasons why an organization would want to hire an external management consulting firm to assist them. The main reasons include how to increase revenue, reduce costs, provide strategic direction, improve leadership at all levels, and how to mitigate risk. Digging into these reasons, we gain insight into what exactly management consulting is.
1. Staffing Needs – consultants may be called upon to fill part-time staffing needs at a company. This is probably the least impactful way to utilize a management consultant.
2. External Change Agent – it can be very difficult for organizations to carry out necessary changes because of how they might be perceived. The business world is full of "sacred cows" and all kinds of idiosyncrasies that make change unpopular. In many cases, the consultants can come in and "play the heavy" and look like the bad guy.
3. Industry Expertise – experienced management consulting firms have specific industry knowledge and background that can help organizations to streamline and improve. Most business problems organizations face are all very similar. A consulting firm can come in and provide best practice solutions that deliver real results.
4. Fresh Perspective – sometimes organizations are blind to their own problems or do not know how to adequately address them. Management consulting professionals can provide a fresh perspective based on experience, data, and knowledge.
5. Analytical expertise – some organizations may not have the sufficient skill sets needed to solve their own problems. Management consulting is a solution-oriented industry, with consultants expected to be expert problem solvers.
The key to a successful career in management consulting is to learn how to effectively manage and operate the business you are working at. Top consulting firms look for the leaders of the pack, who are willing to move at a fast pace while creating a succinct and successful team. Largely because of this career path's challenges, you will be busy, stimulated and challenged.