It’s not the first time I got this question, but, now that I’m done (at least for now) – what do I really think of management consulting?
Great first job: I believe this is one of the best first jobs that you can get coming out of college or business school. It challenges you to think about issues which most people don’t get a chance to until they’re at the middle/senior manager level (e.g., the clients you work with). It also gives great practice in handling tough situations (e.g., hostile clients/customers, rapid deadlines, changing requirements, etc.) and forces you to learn how to work with many different types of people and thinking styles. It also introduces a mental discipline around finding and structuring solutions to tough problems, no matter the political situation or the perceived difficulties. Beyond the “boot camp” aspect, its also tends to pay a pretty decent salary and offer a very young and “work hard, play hard” culture which large companies tend to be unable to replicate.
Opens many doors: Consulting doesn’t end up fulfilling the 4 criteria for job satisfaction for everyone. But, not to fear – the skills I alluded to in the first point make new consultants very attractive to employers (some job openings primarily target consultants, like some private equity and corporate strategy roles) given the broad set of experiences and ability to perform in difficult situations. Furthermore, the abundance of MBAs and the networks of the more senior members of the firm provide consultants with a great network to use to help position themselves in new jobs. It’s a benefit that should not be discounted.
Very cyclical: There is no business which isn’t, to some extent, vulnerable to the business cycle, but as a fairly expensive client-services business with long lead-times in both hiring and getting new clients, management consulting is especially vulnerable. I can tell you that during a recession, things can get pretty tough. Clients are rarely willing to pay full price and demand much higher levels of quality. This, in turn, makes everyone’s lives harder and makes the firm reluctant to pay bonuses, hire additional workers, provide perks, or give promotions. This has no effect in the short-term, because there are no other job opportunities available in a recession, but when the economy begins to recover, it pushes more people to look elsewhere for jobs. The result of this is that during the ensuing recoveries/booms, firms can’t seem to do enough to hold on to their people. Compensation/bonuses go up and more promotions are granted as the firm becomes both forced to and more willing to do more to keep its people and hire new employees to handle the increased quantity of client work it wants to service – which itself becomes the over-capacity which leads to problems when a recession hits (and the cycle repeats). Now, this cycle is not unique to consulting, but it’s important to keep this in mind when considering consulting as a career because the very nature of the consulting business (long hiring/project lead times, expensive client-service) strongly amplifies the bad aspects of the consulting experience in recession and the good aspects during booms.
Changing model making it harder for junior people: Like the previous bullet point, this is not unique to consulting, but it is a growing trend which I have observed. In the “Dark Ages” of business when the internet was not around and electronic data/contact lists were not so readily available, successful consultants did not require deep industry or operational area expertise to be effective – they could quickly come up to speed by finding the right data/experts and conducting the select set of analyses needed. But, as more data and “industry experts” became more readily available via the internet (and the market understanding there was demand for such things), clients began to demand more and more industry/operation-specific expertise from their consultants. This has forced the more senior members of a consulting firm to become industry/operational area experts. While this is a natural progression of the consulting model, an under-appreciated result of this is that junior members of the team now start new projects with a significant knowledge disadvantage from the senior members of the team. The result of which is that junior members may get less of an opportunity to work deeply with “the higher ups” and with the client (who expect junior consultants to be as well-versed as the senior members of the team). While strong teams and cultures find ways to mitigate these problems (with team norms, strong mentorship, and/or by allowing junior members to specialize, etc.), the change in the consulting model (and their adverse impacts) will likely continue. This is definitely something to think about if considering consulting.
What’s next? I now move from the world of advising large companies on big business issues to advising and, now also, investing in small, early-stage startups as someone in the venture capital space. This move won’t surprise many of my friends who have, for years, known me as someone with a lot of interest in startups and new technologies and who has dabbled on and off with my own little projects like Xhibitr. For me, a stint in VC was a great opportunity to get a chance to do many things, including:
Learn more about what makes new business ideas/technologies succeed: Working at a VC gives you a unique chance to truly take in numerous business plans and ideas at all stages in the startup lifecycle and see what helps drive success and failure.
Build an interesting network of thinkers and do-ers: While Dilbert is probably an over-exaggeration of corporate life, there is something to be said about large companies being less able to respond to disruptive innovations and business models. By immersing myself in a world of startups, I’m hoping to get to meet and converse with some of the thinkers behind the big ideas which will change the world.
See a different side of the business world: Consulting is a great introduction to understanding how businesses think and work, but it operates mainly at the big business level, where gameboarding and strategy matter a great deal more than boldness and execution. I didn’t feel comfortable making a commitment to a particular industry or specialty (or to a MBA/masters/PhD/other degree) without seeing this other side as well.
I’m very excited and am looking forward to the next chapter of my professional life!
One of the dangers of a consultant looking at tech is that he can get lost in jargon. A few weeks ago, I did a little research on some of the most cutting-edge software startups in the cloud computing space (the idea that you can use a computer feature/service without actually knowing anything about what sort of technology infrastructure was used to provide you with that feature/service – i.e., Gmail and Yahoo Mail on the consumer side, services like Amazon Web Services and Microsoft Azure on the business side). As a result, I’ve looked at the product offerings from guys like Nimbula, Cloudera, Clustrix, Appistry, Elastra, and MaxiScale, to name a few. And, while I know enough about cloud computing to understand, at a high level, what these companies do, the use of unclear terminology sometimes makes it very difficult to pierce the “fog of marketing” and really get a good understanding of the various product strengths and weaknesses.
One of the first things you learn early on as a consultant is that it is impossible to have a precise answer to every question. There simply is not enough time in your busy schedule, and rarely is there good enough data, to get at the precision and accuracy that is needed for a “perfect answer”.
Consequently, you have to choose where you focus your time on getting precision and where you spend only the time needed to get a “good enough” answer, and the best consultants are very good at determining that balance.
I had never heard this balance described so eloquently as when a partner said (about prioritizing different components of some analysis we were doing): “It’s like horseshoes and hand grenades.”
I had no idea what he meant, and he must have sensed that.
“You know, with one [the horseshoe], you have to really get on target. And with the other, you don’t really need to be super-close to still have an impact [the grenade, obviously].”
A lovely image to explain a very basic concept in consulting. Spend your time getting the horseshoes right on target, and just chuck the freakin’ grenade kind of close and you’ll make plenty of impact and still make it home in time for dinner.
“Suck Up—Kiss ass, Kiss ass, Kiss ass. “Suck up to your own superiors, and their superiors, and theirs.” It’s just that simple. A brown nose could give you a minute edge on your fellow layoff-eligibles.
Practice Subtle Backstabbing—You don’t want to be seen as a desperate bastard ready to sell out any and all of your colleagues to save your own job (even though you are). You just want to plant the seed. Take it from someone who’s been there: ” Don’t talk shit about individuals, talk shit about DIVISIONS in a passive-aggressive way. Saying things like: ‘Those fellows that work in [blank] division are really nice guys, but I’ve worked here for five years and I still don’t know what they do’ is a winner.” Corporate espionage at its finest, ladies and gentlemen.”
And they even made a suggestion that you practice some form of sexual quid pro quo as a means to escape the hatchet…
While the read was entertaining, albeit a little ridiculous with some of the suggestions, this consultant wanted to clear the air and offer three thoughts:
A consulting firm is not necessarily there to fire people. Yes, that is what they are often called on to do because many firms are staffed very inefficiently (too many people in some divisions, too many managers with no reports in other divisions, too many layers of management/bureaucracy) and management oftentimes lacks the competence or the courage to trim headcount on their own. That being said, management consulting firms are also frequently brought in to do other things like:
Business strategy – what markets or market strategies should the company or business unit pursue
Supply chain strategy – how can a business reduce its cost structure by re-negotiating its contracts with suppliers
Workforce re-deployment – how can a business re-organize its salesforce (not necessarily downsize) to optimize its results (e.g. move X people from West coast to Europe, etc)
Operations support – how can a business optimize its decision-making process (e.g. how many people need to approve a decision before its made) or operations (e.g. how can I make a factory process work more smoothly)
If the consulting firm is here to help your company fire people, there’s probably not much you can do. Any consulting firm worth their salt will come to their final recommendation based on objective fact-finding and analysis where they poll many experts both from within the company and externally. It is relatively unlikely that Gawker’s suggestions that you subtly backstab another division or suck up to the consultants will change any of that, unless you have an amazing ability to prove the value of your division or group in such a way that even your senior management and external experts cannot (in which case you should have been doing that already…).
You should see if you can join the joint-working sessions. Although this won’t change the outcome, regardless of if you’re going to be canned or not, it probably makes sense to join the consulting firm-internal team joint working group if you can, if only to help raise your awareness about (a) how senior managers think and rationalize large business decisions, something with which can help your career, and (b) come up with a sensible way for how to spin whatever decision the consulting firm comes up with.
My consulting experience has been pretty atypical so far. Most consultants rotate between cases and roles every couple of months. Me? Up until about a few weeks ago, I had been doing corporate strategy work for the same technology client for 18 months (which is a long time – hence the picture of the old man – I know, I’m clever).
And, although many consultants (yours truly included) entered the field to experience as many industries/functional roles as possible within a short period of time, I’ve found that spending this much time on a single client in a single functional role has benefited me greatly by letting me build:
Depth of expertise – Simply put, there’s no way that a consultant who’s constantly changing functional roles and clients to develop a deep expertise on the same level as a client’s employees. I can’t say I have the same level of expertise as someone who lives and breathes the stuff, but given the technical knowledge and understanding of the broader industry that I’ve picked up over the past 18 months, I’ve become knowledgeable enough to see connections/moves which people with less experience have yet to be able to see.
Deep relationship with management – Having worked 18 months on a case, I’ve built up a level of rapport and trust with the technology industry partners/managers at my firm. They now routinely include me on emails about tech industry developments, and don’t hesitate to put me on special projects. It is a position which grants me greater input and exposure than most people of my tenure, and it is one I am very grateful for. It is also good from a professional development standpoint, as I now have partners/managers whom I respect who will be in my corner.
Perspective on corporate strategy – I think very few people (even those in the technology industry) understand how corporate strategy at large companies is done. 18 months of watching a firm chew over the same issues again and again gives one a unique perspective on the pace and process of major strategic discussions, something that a consultant who’s rapidly rotated in and out of cases is unlikely to develop.
Several of my coworkers have asked if I’ve felt like I’ve missed out because of being on only one client. My answer is a no for three reasons. First, I am deeply interested in technology so being on a tech strategy case was like a dream come true. Secondly, as corporate strategy is an ongoing process which looks at a wide range of topics, I have had a wide range of topics ranging from premium branding (where I actually went to a Safeway’s to see how Procter & Gamble price their products relative to others), to emerging computing trends, to mobile convergence, to manufacturing outsourcing strategy, and even to formulating a process for the client to actively monitor and evaluate acquisition opportunities. Lastly, although I came into this job hoping for one thing (wide range of diverse case experiences), I believe that experiencing the exact opposite of what most consultants do see has given me a unique perspective on the corporate world – one that I would not trade away.
So, to all the new consultants (or even to the old ones), don’t knock the long-term client engagement path. You’ll be surprised at how valuable the experience can be.
I sometimes feel like I’m caught between two worlds.
On the one hand, I feel a strong tug towards the “Silicon Valley dream” of entrepreneurship. Friends of mine like Charles Ju, Founder and CEO of PlayMesh, the maker of one of the top iPhone games out there (iMafia) are living that dream – driven by one’s passions and one’s desire to engineer a product/service/technology to change the world – and heck, maybe get wealthy while you’re at it. It’s that drive which has pushed me to work with my buddies on projects like Xhibitr and Benchside.
On the other hand, I also feel a strong pull towards the corporate strategy world which I currently am involved in at my day job. The work is more stable (in the sense that I’m usually not dependent on the next round of funding for my livelihood), and the issues one explores are more strategic. It’s not desperately asking “will someone PLEASE buy my product?” or “how do I improve my product without spending any money because I’m out of cash?”. It’s literally answering “how do I shape an industry?” and “how do I change our business processes to be more responsive to customer needs?”
What makes the soul-searching all the more difficult is how different the two things are, and how different the people who work in each are. It makes it hard to just take the advice of friends like Charles or Serena who tell me to jump ship and head for startup-infested waters.
For starters, I’ve noticed that there are very different skills involved in the two groups. Big corporate strategy guys are more likely to value things like analysis (e.g., do the models support the proposed strategy? do we have the right numbers? what does that do to our cash and margin position?) and gameboarding (e.g., how will Microsoft or Google or Intel or Cisco react? how do the tech trends affect us/get shaped by us? who are the strategic partners/enemies who will care most about this?). I’ve found startup guys to more value executionover strategy (e.g., can we ship on time? can we get it done?) and boldness over analysis (e.g. is our product cool enough? will people care?)
This is not to say that big business guys don’t value execution or boldness, or that startup guys have no sense for analysis or gameboarding. And this is not even to say that either side is unreasonable. After all, startups need to execute before they worry about a perfect strategy, and big companies need to defend their sizable profit pool before they bet on a new one.
But that dynamic oftentimes frustrates me. When I’m doing the corporate strategy stuff, I grow frustrated at the conservatism and lack of boldness and progress. I am bothered by the bureaucracy and the lack of value placed on my scientific/technical knowledge.
And yet, when I talk with startup guys, I am troubled by what I see as a lack of emphasis on analysis and strategic thinking. I’m concerned that the heavy focus on execution and boldness traps them into bad decision cycles. I see an almost callous disregard of things which all big companies do as a matter-of-practice (e.g. legal, business development, and HR issues). And, to be perfectly honest, the lack of resources to fund anything (let alone the pretty decent salary I’ve come to expect) is not an exciting proposition either.
And so here I am. Stuck between a big company and a startup place, and not quite sure how much longer before I get crushed.
As I’ve mentioned before, a good businessperson makes contingency plans. But to make those plans, its necessary to have some insight into what the future will bring – which explains why agencies like Gartner, IDC, and Forrester make millions of dollars selling market research reports to companies who are seeking either:
insight into the future
a “market-tested” forecast that people are willing to trust
It also explains why many of the clients of my firm are very interested in contingency plans around the current economic downturn. As a result, my firm (and I’m sure many other consulting firms) is investing in producing a coherent point-of-view on the causes, duration, severity, and impact of the current recession, as well as quick perspectives on how companies in different industries may want to change their game to respond.
The trick behind forecasting, though, is to balance accuracy with believability and reasonable action-items… something that Dilbert’s company economist doesn’t seem to do very well at:
Two weeks ago, I sat down and had a long overdue chat with a partner on my case about my career and what I should do to make the most out of my consulting career.
And, like a good MBA/consultant, he put together a framework – although instead of it being a 2 x 2 (as is most common in business/consulting circles), he put together a 3 x 3:
Across the top are the three basic types of consulting projects that most management consulting firms partake in:
Strategy work: Helping a company develop a winning strategy or a successful response to a competitor
Diligence: Helping either a company or a private equity/venture capital/holding company conduct strategic and financial diligence on a potential acquisition target
Operations: Helping a company streamline its decision-making or business processes (e.g. manufacturing, call center, etc)
Across the left-hand side are the three types of tasks that consultants need to master to add value to their clients and their firm:
Analysis: Understanding the analytics and business drivers to allow you to solve the key questions a business needs to answer
Team: Contributing to team by providing leadership and support for one’s teammates
Client: Being able to successfully create a meaningful partnership with the client
My partner’s advice to me, unsurprisingly, was to make sure to touch every aspect of the job. Unwilling to go for a simple “diversity is good” argument (as I’m not especially fond of the long hours of diligence work that my firm performs for private equity clients), I pressed him on the reason for this.
In response, he told me about a conference call he had with several other senior partners to discuss the technology client’s future. On the call, the operations-centric partners and the strategy-centric partners all saw different aspects of the project.
The operations partners saw the client through an operational lens – they felt the client was secure due to its strong market position and profitability. They saw opportunities for rapid improvement (cutting out extra waste, etc) to further fund the company’s ability to develop the technology it needed to stay competitive.
The strategy partners saw a different picture. They saw the client as sub-scale in a scale-driven industry. They saw the client chasing the wrong technology and saw the client’s differentiation eroding as the client’s competitors pursued a path towards greater integration with other technologies.
My partner, on the other hand, because of his involvement in cases along each of these dimensions over his 15 years as a consultant, painted a more holistic picture. What he saw was a company that would be in a strong position in the near team (as the operational partners were saying), but would be in a poor competitive position over the long haul (as the strategic partners pointed out). But, to this, he added the perspective he had received from his numerous diligence projects – instead of chasing a strategic or operational strategy to maximize the client’s chances of winning in its market, he advocated that the company figure out how best to sell itself.
In his mind, the client’s struggles was just a small part of a greater backdrop involving two enormous technology titans who would eventually run straight into each other. And much as many developing countries learned to play both sides of the Cold War to their benefit, my partner’s recommendation was for the client to figure out how to capitalize on this struggle to better position the client to win in a new market or to sell itself to the victor.
Of course there’s no way to tell if he’s right or not, but the ability to see the holistic view is something I would value. And, given my lack of experience thus far in the operations and client-facing side of equation, I’ve currently preferenced that my next staffing assignment be an operations-heavy and more client-facing role.
One of the tasks that any executive (or consultant for that matter) needs to be able to do is to take crazy assumptions and to test them to see what would happen if they were true. What if some upstart competitor develops a technology which makes our product outdated? What if the government decides to heavily regulate our industry? What if someone completely out-of-left-field enters our market by buying our largest competitor?
These scenarios may seem far-fetched, and the assumptions they rely on may seem extreme, but that’s exactly why this exercise needs to be done:
It helps establish a list of test-able hypotheses to verify which of these scenario’s are plausible (What criteria would an out-of-left-field player need to fulfill to be interested in my market? What would cause the government to start regulating my industry?) and which are not. This then informs the executives which are credible threats (both in terms of likelihood of happening and in terms of damage) to actively manage and monitor and which can be put on the back-burner.
It forces executive teams to formulate contingency plans. No firm can afford to be caught off guard. Look at the example of Polaroid or Blockbuster – caught completely off guard by the onslaught of the digital camera revolution and Netflix/broadband video respectively. The companies are now has-beens, as they were not only unready for the destruction of their market, they were slow to react and loss the opportunities to use their strong market positions to their benefit.
It gives management a list of trigger points to monitor for and to move quickly on. If our competitor looks like its interested in acquiring supplier X, we need to take action quickly to make that deal a lot more painful to swallow, or make our own move to counter that threat.
Yesterday, I stopped by a coworker’s desk to grab a quick morning breakfast and then to discuss our various workstreams. Given the endless teasing I get about how dependent I am on being connected via 3G wireless card and Blackberry, I thought I’d mix it up by not bringing either my laptop or my blackberry to the meeting.
Big mistake. The next thing I know, I have 6 emails in my inbox marked urgent: two from the head partner on my case, one from my manager, one from the head partner’s executive assistant, and two from the office receptionist. I have a message left on my cell phone from the partner. And I have the receptionist pinging me over the PA system.
It turns out the one time I choose to go “unconnected”, the client’s CEO suddenly needs some data that I have.
Lesson learned: I will chain myself to my Blackberry.
At my firm, we have a lot of respect for the partners. Not only do they source the deals that keep our paychecks coming, they are oftentimes active members of the community (serving on the boards of various non-profits and charities) and very accomplished and respected members of the business world. I have yet to meet a partner who did not immediately impress me with his or her gravitas and intelligence.
But, just because we respect them doesn’t mean we can’t have a little fun with them at the same time.
Having been consultants for years, Partners are neck deep in consulting-lingo, something which some of the associates have taken advantage of in a game that we like to call partner bingo.
How do you play this incredible(-y nerdy) game, you ask? It’s simple, make a 5 x 5 grid and place in it phrases that you’d expect the partners to say. Things like “outperform the competition”, “focus on the core business”, “expand to China”, or, the most bittersweet, “I know we don’t have the data for this, but…” (bitter because it implies that some one like me will spend the next couple of days finding this data).
Bring it to the next big team meeting, and enjoy as the senior partners of your firm discuss big business ideas while filling up your bingo board. First person to get a row, column, or diagonal wins.
I knew that management consulting was a generalist calling, but I had no idea how generalist.
On Friday, I overheard one of my coworkers talking to his supervisor about the work he was doing. They were conducting some basic strategic diligence for a private equity client (translation: making sure the company the private equity firm is thinking about buying is strategically sound). They spoke of innovations in some sort of new plastic to prevent it from leeching into the liquid it contained. Thinking this was some sort of materials or chemicals company, I asked him what industry the target was in. I was surprised to discover it was breast pumps!
I later learned that, apparently, breast pumps are actually a very well-tracked industry as there are really only three drivers for it:
birth rate (the more births, the more breast pumps)
disposable income (the more income, the more breast pumps)
“innovation” (marketing? new “form factors”?)
And thus I learned what the recruiting team meant when they said that I would learn a lot on this job.
I’ve written before about the phenomena of TLAs in consulting (three-letter acronyms – which is itself a TLA), but sometimes the acronyms go beyond three letters. They can range from widely used acronyms acronyms you can sort of pronounce “EBIAT” (Earnings Before Interest After Tax), and sometimes they’re client-specific acronyms which defy all attempts to decipher or pronounce. My client, in particular, is fond of its acronyms – about as fond as scientists (esp. those dastardly biologists who keep coming up with random names for random proteins) are.
I’ve been asked that question many times — and the only answer I have is that we do whatever is needed to help solve management’s problems. But that’s always felt like a cop-out to me — because realistically speaking, what we’re doing usually ends up in some sort of Powerpoint slide.
This isn’t to be completely dismissive of the job — far from it. A great source of value that consultants add is to help dig through the information that a client already has (or knows exists) and then to repackage it in a way which is actionable to its management.
Of course, you can take a different view (hat tip: Dilbert — who else?)