Management Consulting
The godfather of one of professional services’ biggest industries, management consulting can be aptly summarized as advice to senior management that seeks to improve the effectiveness of their business strategy, organization and processes. Management consulting is more than the sum of its parts — strategy, operations and HR —and the root from which the other branches of IT and Financial Advisory services spring.
Like strategy, management consulting is pervasive and diffuses through all sections of the supply chain, across disciplines and functions. It is by no means restricted to the private sector, and calls upon consultants in the field to display perhaps a greater range of personal skills and industry knowledge than any other segment. As it incorporates three of the major services, management consultancy covers more than half of the wider consulting market. It has entered the public lexicon and is responsible for countless volumes of musings on management theory stretching back nearly a century.
What does a management consultant do?
Management consultants are problem solvers charged with finding new and better ways of running a business. While they might be called upon for their strategic vision and deep industry expertise, the majority of management consultants will find themselves operating at the sharp end of the stick — implementing solutions. They may be drafted in to help execute a particular mission and work closely with the client until the necessary internal changes to accomplish the task have been incorporated.
Assignments can vary wildly, from developing a growth strategy, to smart outsourcing, optimizing the supply chain, advising on cost-saving measures, and encouraging innovation. Embracing a ‘teach a man how to fish’ philosophy, management consultants swoop in and out at different stages of a business’ development. As such they cultivate knowledge and expertise that is both deep and broad — spanning industries, supply chain stages, business models and cultures. This is while developing a keen awareness of the personalities, psychologies and philosophies that can make or break a business venture. Management consultants are the consulting industry’s primary asset.
Management consulting market
Management consulting is so broad a market that the term is often to characterize the consulting industry as a whole. This is partially fair as the segments of strategy, HR and operations consulting camp comfortably within the management tent. Operations consulting is by far the largest subset of management services, accounting for around half the revenue generated. Strategy and HR consulting each comprise roughly a quarter of the sector. Conservative estimates of the total market value for management consulting services begin at $100 billion. Proportionally it is estimated to account for just over half of the global consulting industry.
As outlined in the Industry Overview — compared to the client base, management consulting has largely held-off the game-changing disruption that forms the dominant narrative of 21st century business. Rather than forcing management consultancies to revise their entire business model, disruptive innovation and technology have been a crucial source of profit. Clients on the front line pay huge sums for strategic advice on coping with digitalization and insurgent competition in the guise of agile startups and major industry disruptors like Amazon.
Management consultancies are, however, beginning to feel the pinch of disruption and are adapting their own strategies to ensure survival. The democratization of knowledge undermines the consulting economy’s greatest asset - human capital. Labor-intensive industries, like management consulting, are in retreat as technology advances. The high margins traditionally enjoyed by consultancies, and the time-based billing model employed, stand out as anomalies in a fiercely competitive and innovation-driven space.
The necessity of self-analysis, adaptation and evolution has galvanized leading management consultancies to explore new strategies that differ considerably from the sector’s traditional business model. This means that the solutions offered to clients may no longer come from human capital alone, but instead be generated by advanced technology, diagnostics and analytics.
Management consulting firms
A substantial proportion of the management consultancies active across the US and worldwide today are freelance operators who are drafted in by clients as independent advisors. Specialized management consultancy firms continue to enjoy prestige and count on their reputations to bring in new business. Firms with a management consulting practice might include IT specialists, who offer strategic or operational expertise to help implement their technology, and generalist consultancies.
Most of consulting’s big names fall under the management umbrella. These include McKinsey, BCG, Bain, Deloitte Consulting, Accenture, PwC, and KPMG among other heavy hitters. A.T. Kearney, Oliver Wyman, Roland Berger, FTI Consulting and others are generally considered to occupy the second tier of management consultancies. Single-market, or boutique, consulting firms with a management service include Alix Partners, North Highland and Alvarez & Marshall.
