To do that ... I happen to write!

Saturday, 19 February 2011

What is management consulting?

This picture, taken from Wikipedia has nothing to do with the post

I don't have a complete and clear idea yet, but so far I've been able to understand that the main value add of high end management-consulting
are as such 3 things:

  1. Client has a lot of loosely bounds thoughts in his mind about what he wants to do/achieve - but he doesn't understand coherently how they all tie up or connect with each other. For e.g. has thoughts around setting up a steel plant, or doubling his share in market etc.

    Consulting is about giving a structure to such thoughts. It (the structure) enables people to work towards achieving them. It helps set up goals, and assign responsibilities to each person in the organization to achieve those goals etc.

    It also helps client clearly understand what are the risks, gains, opportunities and difficulties in achieving their thoughts...

    This somehow reminds me of what Winston thought while reading Goldstein's book in the novel "1984":
    It said what he would have said, if it had been possible for him to set his scattered thoughts in order. The best books, he perceived, are those that tell you what you know already.
  2. Client being a CxO level person is aware of what his competition is doing. But he isn't aware of all the details, for all the competitors, or players not limiting to his own industry but of industries which serve as close equals. Over and above that client is only loosely aware of broad changes that are happening in market and not their Nth level details.

    For e.g. what is typical ROCE in apparel industry, or IRR in setting up a steel plant etc.

    Consulting helps bringing relevant benchmarks to help client better understand what should he be aiming at. The wide range of industry exposure of consulting companies helps them get such benchmarks.

    Moreover, consulting gives more detailed insights into the strategy of competitors, changing market scenario and future scenarios...

    Someone (who was not Einstein) said:
    Everything is relative
  3. Finally, client knows what he wants to do - like set up a steel plant. We're already over with points 1. and 2. Now client wants a deep dive to do what he wants to do. He wants to know everything possible under the sun what is there to know about say setting up a steel plant.

    Consulting is about providing a complete deep dive into the subject. It helps client clearly identify a go-to action plan, gather necessary resources and act upon it.

There is also valuation work which comes into picture, but I've ignored that as it forms a minority of work.

p.s. this is gotta be the most boring posts I've come up with after the this IT post!

p.p.s. p.s. explains why have I put up a complete irrelevant picture right at the start!


  1. Very interesting post!

    I always thought about this question: What can a 21 year consultant do that a 51 yr old CEO cannot? I asked it in PPTs too.

    I was always told that
    a) We at *** are all smart. (aah.. crap again)
    b) We bring outside perspective. (makes sense)

    Friends in consults told me another interesting point:
    c) We leverage our experience in similar situations in other industries, and so we use knowledge from one industry to another. (this is totally awesome!)

    I saw a fourth point a few days back at Reuters (which is very similar to your point No. 2):
    d) Consults "exploit the moral grey zone surrounding confidential information" (source: )

    Now, this is not a random Anti-Consult comment. I really want to understand. What's your take on d). True/False?

  2. Thanks Poddar for raising this! Let me explain the way I see it:

    Any person on this planet who is at a very senior level in any firm can decide to leverage his position at the cost of his integrity. We have seen innumerous examples of this!

    For management consultant the risk might be slightly higher as they are regularly exposed to so called 'sensitive information' (Obviously it is only a very senior level that you have sufficient 'sensitive' information to make any use of it!)

    But let's remember - breaching integrity in any procession has bleak implications not only for the individual but for the entire profession. And thus everyone in the profession is aware of the harsh penalties one might have to pay for doing so!

    Not surprisingly therefore in consulting a lot of emphasis is paid on maintaining confidentiality of the client information (including client name).

    When I mentioned about competitor information I was not coming from the 'grey' angle as described in the very narrow minded article. The way to gather competitor information is through news articles, secondary research conducted by other companies (like Crisil, investment banks), studying the annual reports and available financials of the companies etc, benchmarks collected by summing up data for a lot of companies etc.

    Things available in such places are not game-changing information. For e.g. Total no. of stores of a competitor in Mumbai is a good measure to for a company to compare themselves against but it in no way can change the entire game for that company!

    Everyone wants to keep comparing themselves against what their competitors are doing, what are the 'best players' in the world doing etc...which is perfectly fine!

    The 'sensitive' information about competitor is usually things like who are they going to acquire etc. And no-one except very senior people have any clue about this. And if they decide to sell that information, be it some investment banker, someone from the competitor or some consultant - it is not what his profession is!

    If you re-read the article in that light, it will make more sense!