Future of Big 4 in strategy consulting
Given their relatively new entry in the strategy consulting market, what are your thoughts about Big 4 strategy consulting teams (Monitor, S&, PEY), both at current level and in the future?
I've heard a lot of things about it, like Big 4 are investing a lot in strategy consulting with the ambition to compete with MBB. Do you think they have the ability to achieve this? In how many years?
Thanks :)
From what I understand, pure strategy work has become less popular in general, with an increase in work that combines strategy with implementation/follow-up work you can upsell with.
This provides a natural advantage to the Big4 because implementation consulting is kind of what they do, so by heavily investing in strategy work they get some decent economies of scope. This is something I think you can clearly see with how S&O recently realigned their business into 6 offering portfolios that offer opportunities to tie in non-strategy work, and with how S& advertises their "Strategy, made real" thing.
I don't think EY-P is really integrating into the rest of EY, from what it sounds like they're kind of doing their own thing in PE DD and doing it well. Others with more knowledge please correct me.
Will they be able to compete with MBB? They already do in plenty of spaces. Remember that "strategy" isn't like one type of consulting but rather applies to a ton of different industries/verticals and competences. Will it ever be MBBDEYKPMGPwC? Doubt it, just because the big4 are first and foremost audit companies, and there's some slight frictions from that (e.g. regulatory risk, like when most of big5 split their audit and consulting after Arthur Anderson's Enron scandal created independence risks).
Advisory / Consulting at the Big 4 appears to be the major growth channel for each of them. Their global footprint and vast service offerings are appealing to create a one stop shop approach (although regulatory issues prevent some of that). But having audit, tax, DD / M&A, performance improvement, and industry experts all within the brand is powerful. And they do do strategy work, just not on the scale of their other services. Interesting to note that MBB has moved into ops / implementation (not away from strategy) to provide more end to end service.
Older brother is a Mck alum (back in the mid / late 80s - spent 5 yrs and left as engagement mgr), and he told me the firm has changed considerably. Back then they were much smaller (just a few thousand , or smaller), only did post MBA and experience hires, only did strategy essentially in the C- Suite, etc. Today they have several times as many consultants and have added service lines.
I can confirm from networking. MBB is moving into ops and implementation.
It is lower margin, but larger volume. It’s cross sell opportunities for them and they also have the funnel.
Big4 is investing into strategy. Idk if they have the same strat but Pwc and KPMG are using their strat group to win their implementation team jobs. KPMG is obviously behind due to organic growth but they are actively poaching from MB(not into Bain for some reason)
Edit. I would also note that the reputation of the Big 4 consulting has been on the rise. Go to Vault(even Poets and Quants articles are mostly sourced from them.)
Curious if you think KPMG will acquire a strategy boutique such as OC&C or Roland Berger to speed up its (relatively new) Strategy group's growth? I've heard similar things as you regarding the Strategy group poaching from all the other top firms.
I am a former consultant, now client at a F100. We hire all firms, from MBB to Big 4, to Accenture / other T2s, for a variety of projects across the company. No single firm is the "go-to", but rather, each firm is evaluated on a combination of (in order of importance):
Sometimes, the relationship might just win out (particularly if its the CEO, etc.), but more often than not the choice needs to be justified as part of proper financial management.
I have managed consulting teams from different firms at the same time, just on different projects. It's always interesting as a former consultant to watch this happen and the different cultures even teams within the same firm have.
At the end of the day though, MBB do not command the biggest accounts at my company. It's always the ones doing the implementation work, given the higher volume and size of the contracts.
I've bounced through a couple of the Big 4 firms over the years + went to an MBA business schools">M7 MBA, so I've got a lot of friends in all types of consulting, and it seems that in recent years the market has definitely been moving towards homogeneity.
The large consulting shops (Big 4 + Accenture) have all been getting into the strategy space, with organically-driven outfits like Accenture Strategy and KPMG Strategy popping up, plus of course the splashy acquisitions of Monitor, Booz etc. At the same time, the Big 3 traditional strategy houses have created implementation and non-strategy groups - see McKinsey Operations and McKinsey Digital, BCG Platinion. Even at the smaller strategy boutiques a la LEK, ATK, OW, pure strategy is becoming less and less common (or so I hear from the friends I have at these shops).
Makes sense to me. Having one shop be responsible for both strategy and implementation means a more seamless transition from one into the other, and means that the consultants have more skin in the game, leading to better outcomes for the client. Just surprised it took this long to happen.
Very interesting comments, thanks a lot for your inputs.
Although the consulting market has been moving towards homogeneity, in terms of prestige and thus billing, do you think that MBB will still position themselves as more "premium" than Big 4?
Of course they will. And for the next decade or two I imagine they won't have a problem hanging on to that mantle of extra prestige. For the decades following? Who knows.
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