Future of MBB

Think we all have the same tendency on (1). As soon as McK loses prestige over the B's they're in for a rough time, and I think BCG is definitely closing in on it in the US and EMEA markets, although still far out. I'm just not sure what the change to end-to-end solutions brings as the 'pure strategy' work is what draws the talent to the MBBs. This is only the perception though, as we all know how much implementation in terms of PMIs, PMOs, and orgs is being done lately at all three.

For the others:

(1) Agreed, McK has first mover advantage in Asia, might also be culture wise as McK is stronger on branding in my opinion, not only recruiting-wise but also selling-wise.

(2) Agreed partially. Bain has problems as soon as Allen and Zook disappear from the stage. They're really the center of the organization. Bechek seems to be doing a good job though, and the industry seems to start to favor Bain over McK on a lot of projects, causing McK to do rigid price cuts to keep or win long-term engagements. Nevertheless, Bain lacks thought leadership and innovative ideas. They're operating within the framework, and doing that really well, but not really re-defining the framework itself it feels like. They're more about optimisation than innovation it sometimes feelsl like.

PE DD is really attractive though for a lot of starters I think, but as soon as PE goes down the drain (see Hillary2016) they might lose both a lot of appeal and revenue.

(3, 4, 5) BCG seems to have had quite a rough summer but are building up their ops arm as far as I know. I think they're even hiring people for the ops and strat arm specifically. But once again, not sure what this will do for branding. Boutique players might become more interesting for talent if they can match prestige and PD opportunities in a few years. Perhaps the boutique firms within the Big 4 might have a second coming (e.g. Parthenon) as they are backed by the scale of the big 4 but are separated enough to be seen as an entity in itself.

Agree on Deloitte closing in, but not within 5 years. They need time to change their partnership model and build prestige as you mentioned. Then again, they do have the brand recognition, and as soon as they can bundle that with exclusivity/prestige they'll be a heavy hitter. Bain needs to scale up fast or go into a niche.

MBD or MBBD might indeed be a prospect.

I second this. McKinsey Solutions has acquired dozens of technology start-ups and is offering a lot of capabilities centered around data sciences and analytics. It's a good way to diversify and prepare for the future. The Solutions arm is a subsidiary and the traditional McKinsey consultants are a separate practice so I don't think it will hurt their brand. I spoke to a family friend of mine who is an Engagement Manager when I was interviewing for McKinsey's analytics arm and she mentioned that the Organizational Health Index that McKinsey Solutions came up with is critical in her performing her job. I imagine it is difficult to come up with sound strategic advice without taking into account technology and analytics. I would say watch out for Accenture/IBM as well because both are investing a lot into Artificial Intelligence. IBM Watson is going to change the way a lot of organizations do business.

I'm not sure why this got so much monkey shit thrown at it. There is a lot of truth on this comment. The bigger trend is "pure strategy" - whatever that means now - dying out. It's extremely rare that my MBB/Tier 2 friends and I get company-defining work - most of the time it's operational strategy, op model design, etc.

From someone in the APAC region, most interns would opt for Strategy& here as opposed to Deloitte S&O. The presence and exclusivity is very limited, not to mention that the compensation is terrible (think 60% of what MBB pays). I've heard that D S&O is strong in the US, but its presence in my region is, at best, mediocre.

I doubt it will have much, if any, effect.

Bain kids out of undergrad don't do the same job as McK/BCG folk. Great firm, great for things like PE work, but it's no BCG/McK when it comes to development of juniors and the type of work you get to do.

But to answer your question, I doubt this changes much. McKinsey will remain McKinsey, much as Goldman remained Goldman

Good blog on the topic: http://www.nakedcapitalism.com/2011/03/McKinsey-the-insider-trading-sca…

McKinsey, the Insider Trading Scandal, and the Problems With Consulting I’m not easily shocked these days, but I have to confess I gasped out loud when I read that the former managing director of McKinsey, and until recently board member of Goldman and Procter & Gamble, Rajat Gupta, had been charged by the SEC for insider trading. Why would someone with one of the most blue chip reputations in Corporate America, who has clearly done very well financially, risk it all to make a bit more? Not only is the downside considerable, but it also isn’t as if these moves would have made a meaningful difference in his lifestyle. He already had status others would kill for. And passing profitable tips to Raj Rajaratnam was never going to be a ticket to Hedgistan levels of wealth.

But the next interesting bit was to watch the reaction in terms of what this scandal meant for McKinsey. This event was a Rorschach tests on the firm, often with a bit of schadenfreude at another elite name being shown to have feet of clay. And even though I worked for McKinsey over 20 years ago and think the firm has a lot to answer for, some of the charges are a bit barmy.

So let’s dispatch with the uninformed inflammatory stuff first and get to the real dirt. Barry Ritholtz (who I normally like) tried a drive by shooting that went wide of the mark: “Is McKinsey & Co. the Root of All Evil?’ His list of seriously bad ideas that McKinsey recommended to clients, including a strategy that led to SwissAir’s bankruptcy, its involvement in some of Enron’s creative accounting ideas, and its encouraging Allstate not to pay legitimate insurance claims, manages to miss their single biggest value destroyer: the AOL-Time Warner merger, the worst M&A deal of all time. (As much as McKinsey had some fingerprints on Enron, it was central in the AOL-Time Warner deal. It pushed the board to consider it five separate times).

But does it add up to Barry’s charge, “where ever there has been a financial disaster in the world, if you look around, somewhere in the background, McKinsey & Co. is nearby.” Um, no. McKinsey had nothing to do with the 1987 crash or the even bigger value destroying (but less widely publicized) 1994-1995 derivatives wipeout. And I have not seen anything to suggest it played an even secondary role in the global financial crisis. Big dealer firms tend to bring in McKinsey only in the down times; they are strongly of the view that they fact that they make so much more than consultants means they are clearly vastly smarter too, ergo there isn’t anything they could tell them that would be useful. The one exception is private equity, where McKinsey and Bain, to a lesser degree BCG, do a lot of work for the biggest buyout shops, such as KKR and TPG.

Andrew Haldane of the Bank of England has estimated that the global financial crisis cost between 1 and 5 times global GDP. Divide that across, say, 20 banks. McKinsey in its wildest dreams never had the clout to do that kind of damage. (Barry suggests a Taibbi type investigation, but journalists have been trying for as long as I have known anything about McKinsey to do a hit piece, and no one has succeeded).

So why the strong reactions now that McKinsey is in the spotlight? Some of it is no doubt that consultants in general and McKinsey in particular have managed to sail through this period of obvious widespread corruption among the governing and business classes looking clean by virtue of comparison. Bankers have suffered a well deserve plunge in their reputation; everyone knows all the Four accountants help big companies cheat but get away with it because the authorities see them as too big to fail; lawyers are generally not that highly respected, and even the white shoe types have taken a hit as Corporate America has become more mercenary. And McKinsey, by being preeminent but with many people mystified as to why, can quickly become a lighting rod. And that’s the real message of Barry’s list of really bad McKinsey recommendations: not that the firm is “the root of all evil” but a probable phony.

Now is that fair? Yes and no. It’s going to be easy to charge that I am so long out of the firm that I can’t possibly know. All I do is see some fellow ‘zoids at McKinsey alumni parties and get gossip once in a while from other sources. But much of what has happened over time to McKinsey is pretty easy to infer between the inherent problems with big strategy firm consulting and the way McKinsey has responded to economic and cultural changes.

To make a very long story very short, McKinsey was one the successors to a firm started by James O. McKinsey, an accountant, in the 1920s. The original consulting firms were industrial process specialists (time and motion studies were a big deal in those days). Marvin Bower, who more than anyone is responsible for McKinsey’s rise, who had a law degree and had worked at Jones & Day, thought the model was a law firm, to become a trusted counselor and adhere to professional standards. Bower stood for ideas like doing fact based analysis, providing objective advice, and telling the client the truth even if they might not like it. He would sometime sell studies by telling clients that if they didn’t think the work was worth it, they didn’t have to pay the bill. But this was in the day when no one “sold”; you’d build relationships, be visible in the community, publish articles and hold small group meetings to demonstrate intellectual leadership, and wait for the phone to ring. When I was there (the 1980s) that model was intact. The partners kept an “inquiry log” not a “calling list”.

Elite consulting firms had a clear value proposition back then. There were only a very few MBA programs seen as any good; there were not all that many MBAs in big corporations. And McKinsey and its peers were all much smaller then, and hired only from the top 10% of top schools. So even if they met a prospect that did have some MBAs, the firm was presumed to have an intellectual edge, plus its staff usually had a practical advantage by having experience in a broad range of industries on different types of problems and thus had a lot of tools and reference points that would be outside the client’s scope.

But let’s look at the conflicts and perverse incentives in this industry. Remember the lofty goal is giving fact based, objective advice, which by implication means without fear or favor. But the problem with consulting is you are hired by the problem. The relationship (not at junior levels, but between the partner and the client executive) has some elements in common with being a shrink. My impression was that most partners did not tell the unvarnished truth, but instead decided to dole out as much as they thought the client could handle. And some would be much more conservative on how much they doled out than others. As a consequence, the path of least resistance is to dispense what I like to call “leading edge conventional wisdom”.

And that leads to second-order problems. How do you know, to use that ambiguous expression so favored at McKinsey, that you are “adding value”? The truth is, as with therapy, most clients don’t get any better. Now the consultant can rationalize that by telling himself that in the absence of his involvement that the client would have done even worse. That might even be true. But within a year or so of being at McKinsey, I concluded you had to be cynical or deluded to be a partner there (being a engagement manager was actually a great job, but your end product was doing good studies, not trying to change client behavior).

And the business model is actually pretty crappy. Big consulting firms, like big law firms, make their profits by marking up staff time, and non-partner time can be marked up at higher premiums. So that means you have an incentive to carry overhead. And if you have overhead, you need to keep the fees coming in to keep the machine going. But consulting is project based. And capable clients, the sort that might use a consultant only if they faced a special challenge or change of circumstance, can bring a consultant in, be very happy with the work, and not have them back for a very long time. (Not being much of a baby sitter, I like capable clients and am not very good at selling, so I am acutely aware of this conundrum). So if you like working with on the ball managements, you will probably suffer from a lot of churn.

So that brings us to another big implication: The most profitable clients are the most diseased. And the corollary, as stated by a former colleague: McKinsey is in the business of propping up diseased managements. Now that will no doubt offend readers who think their companies are savvy and have still used McKinsey (and the private equity model isn’t terrible: the consulting firms serve as rental staff that gets no carried interest, plus is a marketing plus with investors, so there the concern that the consultant is an enabler isn’t operative). And if an industry is undergoing major change, you might see a good management team want help over a very long period of time. But when I was there, the firm was deep into General Motors (a huge team by the standards of that day), the old AT&T, for instance. I was on the Citibank team, where the client was smart and aggressive but often didn’t apply its energies to the best ends: the joke was that it was a “fire, aim, ready” organization.

There is an additional problem with the law firm model: its controls didn’t scale well. In a law firm, you don’t invite people to join the partnership unless you are pretty certain of their professional competence, their ability to bring in business, and their character. There is usually no supervision of partner work. The problem with that in a large consulting firm is you have a brand and need to have brand consistency. McKinsey achieved that to some degree via a lot of across firm staff training and “firm format” (secretaries were prohibited from producing documents that did not conform). But Goldman exercised far more supervision over partners than McKinsey did.

So, for instance, on a Treasury study in London, the partner announced that we were going to find a way to beat the foreign exchange market. And by the way, all we had was four months of end of day trading data in four currencies versus the dollar. When I proceeded to tell the partner this was not gonna fly (I didn’t even mention efficient markets, merely told him there were too few data point and it was the wrong data too, we’d need intraday prices from everyone in the market, not just our client, there was no way were were going to get that), I was deeded to have Bad Attitude. I concluded I had no interest in being a partner in a place that would allow partners to engage in obvious stupidity at client expense.

On a different axis of lack of supervision of partners, one of my buddies attended an alumni meeting for former partners not long after Enron went bankrupt. One of the participants asked, “How many of you worked with Jeff Skilling?” About a third of the hands in the room went up. Next question: “How many of your are surprised he was involved in something that did not pass the smell test?” No hands went up.

The firm was lax on some other fronts. One partner in my day completely made up data for a very splashy report published jointly with a Wall Street firm. And it was an obvious falsification to anyone in that field; the information was simply not obtainable. Yet nothing bad happened to him. Similarly, a guy on the verge of making partner was found to have charged personal tickets to Asia to the firm. At Goldman, a guy committing a similar scale offense (charging a closing dinner that never took place) was fired immediately. This fellow, who offered the dog-ate-my-homework excuse that his secretary has made a mistake, merely made partner a year later than he would have otherwise. He left the firm to work for a hedge fund….and paid the SEC $3 million to settle insider trading charges.

In the later 1980s, as pay on Wall Street escalated, the firm got into a panic as it began to have trouble recruiting from the top 10% of MBA programs and lot of mid level people left (I doubled my pay by quitting). It responded by figuring out ways to increase partner compensation (so the argument was that the lifestyle was not as awful as Wall Street, the work was more interesting, and directors, which was the tenured partner group, made a very nice living). The biggest was to raise the fees. The other was to get more serious about partner utilization rates (in the old days, less productive partners were simply paid less). Rajat Gupta was apparently a big mover on pushing the firm for more growth.

Over the next decade, I heard complaints about the quality of McKinsey work. I’m not certain it was any worse, but if you sell basically the same product for two or three times as much as it cost five years ago, customers will have higher quality expectations. But McKinsey has long had a big internal PR department; it was the sixth largest in the US in the 1990s, so that probably offset some of the image concerns.

The firm has also become very aggressive about selling work (Marvin Bower would be spinning in his grave). I’ve had executives give me long form accounts that I found appalling. Very much shortened version: McKinsey guy says; “Here is what we think you need and how we can help you.” Potential client: “Thanks, that’s useful input but we really think our challenge is Y and we are in the process of dealing with that internally.” McKinsey guy: “No, you really need us and here’s why.” Ahem, has no one told them the customer is always right?

A final tidbit: for many clients, the reason they hire McKinsey is not mainly to get the analytical work, but to get the advice of a director with whom they have a relationship. CEOs are isolated, and they don’t have many business savvy sounding boards they can confer with. But the deal at McKinsey is you can’t just get the director, you need to have an engagement (yes directors might have an occasional lunch with a CEO prospect, but there are limits to what you can get on the cheap and a counselor can’t be very useful unless he has a sufficiently in depth grasp of the situation). So the “consultant as therapist” can be the main driver for the relationship.

And that the real reason the Rajat impropriety has struck at the heart of the McKiney brand. He wasn’t just the head of a firm that did a lot of fancy studies; he was the counselor/confessor for a lot of CEOs. How would you react if you learned your therapist was a wifebeater or dealt drugs? You’d feel betrayed. That’s the same sort of visceral reaction that a lot of top brass had when they read about the charges against Rajat.

But this outcome is the inevitable result of the decay in morals that has taken place in a remarkably short time, via the mobility-induced erosion of relationships in workplaces and communities, and the promotion of values that place monetary success over standards of conduct. The people at the top of the food chain are now seeing that if loyalty to you is merely bought, you can always be outbid by someone else.

I would agree that it will not make or break McKinsey, since it is not the actual Managing Partner.

Companies demise happen very fast though, in 2005, all of us would have thought that Lehmann and Merrill would have still been traded actively in the market right now.

Lehmen/Merrill was an issue with the books....as was Bear. That's very specific to financial institutions.

Without any nuance: From Bain's website, AC's role: -Structuring and performing analysis, and conducting primary research, to uncover insights that drive our recommendations to clients -Presenting at team and client meetings, and determining the most practical way to drive lasting results based on your insights From McK, BA's role: Business analysts (or fellows, as they're called in some offices) take responsibility for a discrete part of the problem solving in each client engagement. They play an important role in data gathering, actively contribute to the team's final recommendations, and present their work to senior client executives. They also have a voice in determining the team's style and pace of work. Business analysts find different ways to continue their personal and professional development From BCG, Associate's Role: As an associate, you will be challenged to develop firsthand knowledge of clients’ critical business issues, building client-management, problem-solving, and communications skills. You will be given ownership of significant segments of client projects, as well as responsibility for supporting the broader problem-solving effort. You will conduct interviews with key market players and industry specialists and analyze clients’ performance. Your findings, and contributions to team discussions, will help deliver impact for clients.

While that might sound similar, Baines tend to work with post-MBA level consultants on all projects as support. The teams are larger that way and there is a clear difference in the roles - i.e. lots of data crunching, much like an LEK. McK/BCG grant ownership of workstreams and your doing the same work as the MBA level folk on the team - there is almost no difference in job function between those roles.

All the stuff about growth and development can be found on the websites of each firm. Hope that helps.

McKinsey will remain McKinsey. As a previous poster said.

.

Alright I have to put this BCG/McK v. Bain undergrad nonsense to rest.

1) Anyone who gives any credence to anything a web site says is betraying a level of naivete. If I believed everything I saw on an HR website, I'd think Goldman Sachs was full of bright eyed, healthy looking analysts getting their 8 hours every night and that KKR actually employs non-White/Asian people

2) McKinsey and BCG analysts straight out of college are neck deep in excel and powerpoint and are hardly bouncing their genius off the walls in the clients' board rooms. Let's be serious: there's actual work to be done for the clients and, yeah, you're going to do some of it.

3) "Ownership" is a concept that holds steady across all of the MBB.

It is a fact that Bain ACs have different level of autonomy and responsibility than McK BAs. This is not because of what a website says, but because of the way teams are structured as someone else said. ACs support post-MBAs, while BAs handle a full discrete work stream.

This difference is supported by the very different structures/ scales of the companies: McK has a massive graphics and research team among other support (1:1 front vs back office) while Bain's graphics and research support is much more limited and some of that work is done by the ACs. So McK teams are smaller for a comparable project, but they have more back office support.

Now they both do power point an Excel, but the BA will do more story lining, and independent engagement with seniors internally and with clients externally. If you sit down a BA and an AC and discuss this it would be crystal clear.

Now this doesn't mean that Bain is worse (the standard of excellence is no different across these firms), but it is different and the fact has to be acknowledged. Also, ACs can sometimes have an independent work stream, especially in their third year (SAC), but it is not the norm as in McK.

So, when I said 'without any nuance' what I meant was Bain even advertises their undergrad role a bit differently than McK/BCG. No one said McK/BCG kids don't sit around crunching data as well and making slides - the point is, the teams are structured differently which affords a higher level of responsibility to kids right out of college. From what I understand, you still have a workstream at Bain but there are different expectations in regards to what your role on the team is that slightly vary from McK/BCG which ultimately impacts how you develop over those 2/3 years.

My guess is you work at Bain - that's obviously an excellent place to be, I have/had a few friends there in one of their major offices. Just because these forums have lumped MBB together doesn't mean there is no difference between them and their respective job functions.

.

Maybe off-topic, but it's interesting what's happening with Valeant...

just as bad if not worse. consultants are the first to go if companies dont want to spend money. consultants are mostly useless, at least some banking services are needed (restructuring, equity raises, debt issuances) but consulting fees are the first things cut when things are bad.

The first guy in this thread is wrong. Consulting is growing, hiring, etc. When money gets tight, companies fire full time people and hire consultants.

Consulting is doing no better. Its not only I banks who have bear the burnt but also businesses. And when businesses suffer they also would cut down on the consulting they source.

I'm pretty sure both MBB and most 2nd tier consultancies grew or remained stable in terms of staff and revenue during the financial crisis. Personally, I have been hired well in advance because the office I'm going to work from is completely sold out.

'Keeping up an image is a full-time job'

Its unlikely that MBB will grow at a faster than current rate anytime soon, but there could be more growth in the middle to lower middle markets just as there has been growth in the lower markets for IB

I think MBB are in for a tough time over the next few years in EU and US. All three firms (and mgmt consulting in general) got hammered in the 2008-09 recession (first thing to go when cutting costs is often the consultants).

Then, in 2010, as things began to improve, lots of clients hired MBB for cost-cutting engagements (those that were still struggling) or growth strategy engagements (those that weathered the recession more favorably and wanted to capitalize on the recovery).

There are two likely outcomes for overall economic growth over the next 12-24 months. One is a double-dip recession (I think less likely). The other is "muddled growth," which is basically very low growth that doesn't decrease unemployment or really improve markets, but isn't a recession (more likely).

The problem is that both of these scenarios are bad for MBB. In the first scenario, consultants get cut again during the double-dip. But because everyone did so much cost-cutting in 2009-10, there isn't much more to do. So during a potential recovery in 2012-13, there won't be many cost-cutting engagements available.

In the second scenario, no one is growing, so they don't need expensive consultants to develop growth strategies for them.

That said, I do not expect MBB to downsize at all. I expect that they will simply grow at 0-3% per year for the next several years. Now, from a hiring perspective, this isn't that bad of news, because MBB turn over something like 15% of their workforce every year. So there will still be significant hiring taking place from top undergrad and MBA programs, even if the firms are not really growing.

Btw, I also predict that MBB will continue to steal share from smaller competitors. MBB will continue to invest heavily to steal share (their only option to grow), and MBB can afford to invest much more than smaller competitors. I think this will mostly happen for operational engagements (because MBB already dominate the strategy space).

Lots of interesting points. One thought though - do you not think that if there is 'muddled growth', which I agree is probably the most likely situation for the next few years, then big companies (MBB clients) will not be even more desparate to get an edge on the competition that they will look to MBB to come up with ideas on how to steal market share or at the least maintain their position in a tough economic climate?

@Astros: I agree with you - this is what I think companies should do. However, in my experience at MBB during the 2008-09 downturn, companies retrench when times are tough. In a downturn, most companies focus on defending current share, rather than stealing share. They concentrate on reducing costs, and take fewer risks to grow their business. Paying MBB $x million to generate a new strategy would definitely be considered an aggressive/risky move during a downturn, and would be tough for a CEO to sell to the board. Of course, well-run, strongly-positioned companies can invest heavily to steal share during a downturn (indeed, like MBB did vs. other consulting firms).

@Bombit: 1. See above. Most companies are focused on not shrinking during a downturn. If the size of the pie (i.e., total industry revenue) is decreasing, most companies in competitive markets cannot focus on growing. They have to focus on maintaining their current business in order to weather the storm. Like I said above, though, a few strong companies can capitalize on the market weakness.

2. No, cost cutting is not the only thing MBB can do during a downturn. But the mix of "growth" oriented projects vs. "cost cutting" oriented projects shifts more towards the cost side during/immediately after a downturn. Your question makes it seem binary, like there are only two options: only cost cutting, or only growth. Not true.

3. You're basically asking whether consulting is counter-cyclical. The answer is, a little bit at first, then not at all. Meaning, when the market first starts to become uncertain, many firms will engage MBB for expert input/guidance. But once everyone agrees we're in a recession, consulting expenses are one of the first things to get cut. After all, it is easier to cut them than fire your employees.

Would love other opinions though. I'm by no means an expert on this industry haha.

Okay my take. Largely agree with most of your points. In an economic downturn consulting spend drops like crazy, which is basically why Parthenon rescinded offers and monitor closed offices. Also in a downturn there is a huge focus on cost cutting measures such as supply chain optimization or HR reorgs. MBB is starting to focus more on these areas and that is likely the areas where it will grow at least in the more established markets. This will likely squeeze certain firms in these established niches for example Deloitte, PRTM, PWC, Accenture who previously did not have to deal with MBB as a true direct competitor on most engagements.

It is very difficult for me to believe MBB will take considerable share from other strategy houses especially given their prestige pricing and the established niches of their competitors. I can see MBB assuming share from say Monitor if they are forced to close offices due to a cash flow issue, but I don't think it will just be MBB taking the share in that scenario. Granted this is a somewhat biased statement, but I know personally my firm has been growing its share of strategy work and I think a decent chunk of that is coming from former MBB clients

U.S. recruiting of top consulting firms will largely stay pretty flat given the classes are already large and will see an uptick when the economy starts to pick up steam in a couple of years. In markets like India and China growth will be ridiculous. I know at least one story of a Shanghai office that is actually having to turn away business and has a ~3 month waiting list on certain projects. I can see consulting firms lowering there hiring of MBAs in favor of undergrads and other advanced degree holders. I truthfully believe it is a much more cost effective move especially for McKinsey and BCG and I see no reason for them to continue with their current hiring practices. Also given the focus on operations work it could be attractive to look for PHD or masters students in hire numbers as well.

Also curious to hear opinions.

Run

The last report I read coincides nicely with run4run's thoughts on the market. High growth areas going forward were: - Change Management (highest) - HR Consulting - Operational Efficiency (supply chain, lean etc.)

I'm imagining the first as it ties very closely to M&A, Divestitures, large process changes, ERP implementations etc.

As for MBB moving into those spaces, in the larger centres that makes sense. In the regional/smaller areas, they already are competing with PwC/Deloitte/Accenture for those jobs. The problem for them is implementation, at least in the centres we work in they will often break a project into a couple components: - Assess / Design - Implement - Review

I know for certain we went in against McKinsey for a project priced similarly, but got it because we have the manpower to do implementations in this centre and they didn't. A lot of strategy firms focus on the first part, but clients are looking for people who can create a plan, and help get it done - particularly in the "hard" times when they can't just staff up to do the project.

There are also some other trends I've noticed here, and it is likely a "Western" bias, but they prefer consultants with industry experience over MBA's. Even McKinsey here (supposedly). The MBA isn't as important as 2 years consulting experience or good industry experience. Maybe it's the hard work / entreprenurial nature of the business owners here.

Realistically...I think it is probably a good idea. Get a consultant from Accenture/DTT/PwC with 2-3 years consulting experience, and 5-8 years in the industry doing supply chain for the price of an MBB fresh graduate.

Just some of the differences I've noticed here, and from reading the board they seem to be a bit different from the large centres out East, and I'm not sure if it is the market, the culture or why.

I am eternally skeptical of the value added by management consultants. A few guys from MBB are rarely going to be able to generate an idea that the company's internal strategy department (itself mostly ex-MBB) could not think of.

I think there will always be a place for them as a security blanket for management. If an executive want has a risky idea, they can use the MBB stamp of approval as justification the board. The MBB brand itself warrants their pay, at least in these cases.

I'm more concerned about the future of firms without the brand that charge similar fees, like Monitor and Booz.

@West Coast I would certainly agree that the talent is likely within a lot of the larger companies to do that.

However, MBB and others will always have an external view which can be quite helpful. And just as importantly, they are given the time to focus on that issue alone rather then getting tied up in the daily grind and putting out fires.

It will also depend on the company, the value role for a lot of the Partners/Directors at consulting firms to their clients is being a trusted advisor. Just someone they can talk over their issues with who has knowledge and experience at that level to help with it. A lot of work can come from this.

Lastly is that a lot of growing or less mature companies don't yet have the talent built up in their organizations, and don't know what they are missing until someone points out they have a disconnect in their processes (or none). Those are a bit more internal focusing, but I'm sure MBB consultants have seen the same thing at the strategy side.

Either way, the consulting market is always changing and follows the business cycles. The product mix / skills offered will change to match it.

.

At my MBB, we are hiring the largest class ever, about 15-20% over last year on a worldwide basis. This is because of the growth being seen and expected over the next few years.

While recessions are bad, this current downturn is a little different. Corporate earnings are very good, generating a lot of cash. Companies are very uncertain of the future so unlikely to invest in large capital (i.e. a $1B plant). As a result, most companies have huge amounts of cash. MBB for a few million dollars is a good "investment" in the business and doesn't have the huge outlays other investments may.

Growing

rf:

I am trying to get a sense for how well several of the smaller 2nd tier consulting groups have been doing, i.e. what their growth has been like over say the past 5 years or so. What is the best way to do this through publicly available information? New office expansions? Number of employees?

Sometimes it's a fine line between consulting and outsourcing. Big4, Capgemini, Accenture... the companies you mentioned are mostly competing on price.

Yes, that sort of consulting is on the rise. But that's not necessarily great news.