Management Consulting. What is it? What's the history of the industry and how is
it evolving today? Hi, I'm Jenny Rae LeRoux, the Managing
Director of Management Consulted. A group of ex-MBB consultants and we have a lot
of views about the management consulting industry, which I'm excited to share with
you today. First of all, I wanted to define what consulting is because there's a
little bit of confusion about that. Consulting in our definition is when you
scope a specific project, for a specific length of time, with a specific goal.
Contracting in contrast is also an external relationship with an
organization. But it is defined by more time and materials, the length of time
they work with an organization, not a specific goal. And to that effect under
consulting there are a couple of different practice areas. One key one is
management consulting which we're going to talk about in this video. Another
large one is tech consulting. And a third one is boutique consulting, which we
really focus on in boutique consulting a lot of different key things. Like
advisory and other areas of consulting. So going back to management consulting- What is it?
Management consulting is working with
the, you guessed it, management of an organization. Usually the C-suite
or somebody who is managing a P&L of a division, to identify ways that they can
improve the behavior of their organization. And that behavior should
also drive results. Depending on what kind of organization it is, the results
will be different. So if you're a manager of a federal practice, you're gonna have
different definitions of what your results need to be, that if you're a
manager of a publicly traded fortune 500 company. So thinking about the two of
those and separating out those different areas the common theme between them is
that both of them have management. Management, when they don't know what to
do they've got a couple of options. One, is to look internally in their
organization and they can go and ask people questions. What's the problem with
this? How can fix this? What should we do? Management consulting
the history of it really arose when organizations realized that they alone
could become myopic and dangerously focused on being incredibly narrow in
how they approach their business. ie- They knew what a key issue would be and they
were constantly firefighting around legal. And not thinking about companies
that they should acquire for the next five years. And not thinking about how
to conserve cash for something that might be coming. So management
consultants were really entrepreneurial accountants in the early 20th century,
that were focused on providing advice to management that was broader than the
day-to-day scope of their operations. It's thinking on a strategic scale, where do
you want to go, who do you want to be, how much capital or cash do you want to have
in order to get there. And then making a variety of recommendations, usually
tiered in order, so we think this is the best recommendation, but this is an
alternative and here are some other ones. So that you can focus on a couple of those
things thinking about all of that together, management consulting is an
amazing field for someone if you ultimately, at some point in your life,
want to be in management. So if you want to be in federal, or if you want to be in
advisory, or if you want to be in another area of business, then that's a totally
different situation. But if you want to be in management of an organization,
management consulting is gonna be for you. Here's why. It helps you understand
how to think like the people that you will serve, to ultimately become a
manager inside an organization. Managers are usually top performers that think
one level ahead of where they are currently. And so in the field of
management consulting you have big players like McKinsey, Bain, & BCG. You
have other players like the big four, you have a lot of boutique firms that really
focus on one specific industry, or one specific practice area. And ultimately
their goal is to drive more impact. Some firms define impact by
profit, some define it in a multiple bottom-line way. But ultimately the
focus is going to be understanding how to drive more impact by taking a step back,
taking a look at the current state of the organization and their current
processes, layering that against best practices and data, and then making
recommendations for the future. Let me tell me why I think management
consulting is one of the best things around. Becoming a manager is really hard.
You need to manage and motivate and inspire and train and hire people. At a
consulting firm you have the luxury of really just getting a bird's-eye view
into how an organization works without having all of the day to day pressures.
You can think about the what and the how. You can think about the WHO. And you don't
necessarily bear the burden of the clutter, the mind clutter, that comes with
the day-to-day operations of an organization. And also, because you're
able to do that gives you speed of analysis. So working as a management
consultant one of the things that I noticed a huge gap in between my first
year in my second year, when I made the leap to speed, was that in the first year
I got bogged down in all the same details that other outside managers did.
In the second year I really knew how to cut to the chase, how to get to the point,
how to really focus on what the key issues were inside the business. Let me
just conclude by talking a little bit about some of the scope of the
management consulting industry. I think that out of the entire time that I've
known about management consulting, which is, goodness, coming up on about 20 years now!
Management consulting has been fairly stable. So the major disruption that
happened where some firms were unprepared for the global financial
crisis, they had insufficient cash and overextended head counts and they made
corrections, some of them sold and some of them had partner groups that were
dissolved into other areas, but overall we haven't really seen a lot change in the practice.
There's a pitch, there's a delivery, there's
analysts that are assigned to the delivery, and it's on-site or off-site,
and even lifestyles have really not changed inside consulting. But I think
that in the next 20 years if we're going to see some changes. Because one of the
challenges in the increasing competitive landscape of consulting, by the way it's
a pretty high profit margin services area. And so high profit margin areas
naturally inspire new entrants to come and chase after the profit that are in
those areas. So knowing that and understanding that you have almost
maximum utilization of current people that are at firms, an inability to raise
prices going forward ,and therefore a need to deliver things more efficiently.
I think that the rise of machine learning and AI and their usage in data
analytics, it's going to be incredibly important. However, a lot of people will
say that consulting will be dead in 20 years and I can't imagine that that's
true. Because for every piece of data there are multiple interpretations and
so far we do not have the advancement of AI or machine learning, to provide us
with the multiple different interpretations to both select what data
we need to look at, integrate it with the right things, and then enact it in the
current environment. I think what we will see is leaner teams that are relying
more on heavy analytics from an outside or an internally sourced group. And so
we're gonna see you know, rather than teams of six, maybe teams of four that
are delivering the same quality and quantity of analysis and research. I
would love to be proven wrong so in 2040 you come back and ask me about that and
we'll talk a little bit about how this works. But overall, I think consulting and
management consulting in particular is a very exciting place to go start or
integrate a career mid-career. I think it's an incredible service to
the organizations that you work with to provide them with clarity and data that
they otherwise wouldn't have the time or the ability to focus on. And I think it's
also just a really special place to learn and grow whether you decide to
stay for one or two years or for your entire consulting career. Thanks so much
for watching. If you're interested in understanding how consulting firms are
different, ie. how they pay differently, with their different practice areas are
and how you interview to get in, we would love to provide more information for you
on our website at www.managementconsulted.com