Why Do Board Members Care about MBB's Input?
In forums, I frequently read the idea that CEO's hire strategy firms like McKinsey for (i) intelligence on what competitors are doing and (ii) for perfecting their narrative / justifying their decisions to the board.
(*I'm referring purely to growth strategy, and not technology advisory or like commercial due diligences by Bain, or operations by Kearney.)
The first function at least seems kind of self-explanatory, so I can imagine that is very useful.
But I'm confused about the second function. Why is it that board members would care about M/B's opinion on justifying management's decisions? Wouldn't they see through the fact that the CEO hired them to find the data that aligns with their own opinion? And even if they didn't cherry pick for a preconceived thesis, wouldn't the "political insurance/cover your ass" function cease to work? I imagine the board members have the emotional intelligence to detect this, as many of them probably see accountability deflection tactics often. And if none of this is the case, why would a CEO be incapable of perfecting their narrative to the board by themselves? I know most CEO's have to do a board presentation for their job interview so I'd imagine they should already be good at this.
Promise I'm not trying to belittle the field or picking a side. Purely coming from a place of curiosity. I see this second point being refuted often but have never comprehended the logic, as I'm sure it's a gray area. I've also never worked in consulting and I would appreciate if you could please correct any false assumptions I'm making.
pardon my ignorance and many thanks,
your friendly neighborhood dumbass
Board members care about MBB's input for several nuanced reasons, particularly when it comes to justifying management's decisions. Here's the breakdown based on the most helpful WSO content:
Credibility and Expertise: MBB firms carry a reputation for rigorous analysis and strategic insight. Even if board members suspect some alignment with the CEO's agenda, the involvement of a prestigious third party like McKinsey lends credibility to the recommendations. This is especially valuable when decisions involve high stakes or ambiguity, as MBB's brand acts as a "seal of approval."
Objective Validation: While CEOs are skilled at presenting to boards, their narratives can be perceived as biased. MBB's involvement provides an external, seemingly impartial perspective. This helps boards feel reassured that the decision-making process was thorough and not solely driven by internal biases or politics.
Data-Driven Storytelling: MBB excels at structuring complex problems and presenting them in a clear, compelling way. Boards often consist of individuals with diverse expertise, and MBB's ability to distill intricate strategies into digestible insights ensures alignment and understanding across the group.
Political Insurance (CYA): Boards and CEOs alike face scrutiny for major decisions. By involving MBB, CEOs can demonstrate that their strategies were informed by top-tier external advisors. This provides a layer of protection if the decision is later questioned or fails, as the blame can be partially deflected to the "best in the business."
Strategic Alignment: Boards often include members who are not deeply involved in the day-to-day operations of the company. MBB's input helps bridge the gap between management's vision and the board's oversight role, ensuring that everyone is aligned on the rationale and expected outcomes of a strategy.
Perception Management: Beyond the boardroom, MBB's involvement can influence external stakeholders, such as investors or analysts. The perception that a leading strategy firm endorsed a decision can bolster confidence in the company's direction.
While board members are indeed savvy and may recognize the potential for bias, the combination of MBB's reputation, analytical rigor, and ability to craft a compelling narrative often outweighs these concerns. It's not just about the data or the recommendations—it's about the optics, credibility, and alignment that MBB brings to the table.
Sources: Why Consulting - Answering the Interview Question, Strategy& Ex Employee - Q&A, Why Consulting - Answering the Interview Question, Why is MBB so sought after vs. Deloitte, PwC, Accenture, S&?
bump, may someone please share their perspective
Dude its idiots all the way up. Hiring MBB shields both the Csuite and the board (McK said this was good so no blame can be placed on me). The board isn't trying to gotcha the CEO nor do they acutally know what the best direction is for the company, so if MBB says its good enough then its probably good enough. If any board member were actually more competent and knew what to do they would be CEO instead.
And with big companies, initiatives are so hard to push through that you kinda need consultants bugging the staff every few hours for data in order for the project to actually succeed.
Thanks for your perspective. If the Board and the CEO dont know what the right direction is, then does that mean no one knows, and its just a guessing game?
I had a three paragraph response typed up, I misclicked and the page changed, now it's gone...
Sorry about that
if you have the time, may you please summarize your three paragraphs
An outside view, as a sanity check. Also, if the company is moving into a new field, having someone with different and broader experience helps identify more risks and propose better mitigations that the board might ask about
At MBB working on this kind of pure growth strategy right now…
The main answer is that despite what many like to say, the primary purpose of these type of projects is actually to work out what the strategy should be , and not just verify what the CEO thinks. On my current case, the CEO has no idea what they should do. The business has changed over the years, needs a new direction and they’d like some support on figuring out what it should be.
The “McKinsey told me to do it” excuse just doesn’t really work. As you said, Boards should have the intelligence to see through this. On top of this, the typically MBB model is to work with the client stakeholder and have them own the work. It’s rarely MBB presenting directly to the CEO/Board, it should be owned by the main client stakeholder and they will present and lead. It’s hard to not have the outcome rest on your shoulders with this kind of setup.
MBB are actually pretty good at figuring out these kind of growth strategy project; it’s what they built their entire business on. They won’t always get it right, but they do a large amount of the time.
I’m not saying the amount of bullshit work in MBB is 0% (I know, because I’ve seen it), but it’s not the entire business model like some seem to think.
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