Future of MBB

Hey all,

Looking for some thoughts on how you guys, looking at those actually in the industry, think the strategy consulting market is changing or will change in the upcoming 5-10 years. If you're in college but would like to chip in a few thoughts that's cool, but the usual 'MBB is superior to anything'-opinions I've seen quite often are not very helpful.

I think there are a few things happening in the strategy consultancy industry right now

  1. McK is struggling with its scale, as we can see in rigorous price cuts on projects and the amount of implementation work that's going on there. They now have an implementation arm to keep the operational and strategy work separate, but I think this will end up hurting their brand in the long-run. Most people choose McK over the B's on prestige, and having an implementation arm will detract value from the McK brand, and thus from the talent it attracts.
  2. In Europe, Roland Berger will either join top pack or fail. But I'm predicting a fail considering it's struggle in their main markets (DACH) and the offers they have to bring to take away talent from MBB
  3. Strategy& will abolish within five years as clients do not want to pay a premium for people upgraded from PwC consulting all of a sudden, also, a lot of talent has moved away since the merger in Europe

These are questions I have no clue on and would love your thoughts:

  1. Do you think BCG will catch up to McK either in revenues or prestige?
  2. Will Bain catch up to BCG in either revenues or prestige/brand recognition?
  3. Is Bain likely to be bought in future years?
  4. Do BCG or Bain have to specialise in a few areas to keep it's elite status in the long-run? (e.g. PEG, corporate turnaround) If not, do you expect them to move onto a Big4 consultancy model with both implementation and strategy?
  5. Are the Big4 likely to acquire one of the MBB players, 10 year horizon?

Comments (67)

Sep 20, 2016

Trends :

(1) McKinsey is actually playing it smart by building up its operations practice. Traditionally strategy work is becoming less and less of a revenue generator for management consulting firms. I'd be more worried for BCG and Bain with their lack of operations solutions compared to McKinsey. McKinsey has reaffirmed it's commitments to its core values under Dominic Barton's leadership and has chosen to grow less aggressively as a result. I believe that Deloitte S & O and McKinsey & Company will be the major players in management consulting 10 years down the line.

I do believe that McKinsey has lost some of its appeal recently though. When going through recruiting, many of my friends did not like McKinsey's culture or people as much as the other B's. This is just anecdotal evidence though.

(2) I don't know enough about the European market to make a comment here.

(3) Agreed. Strategy& has been on the decline since the merger. On the other hand, Monitor's merger with Deloitte has gone the other way. Partners at Monitor were generally happy and accepted the merger. Booz & Company lost a lot of talent and many partners were poached by MBB post merger.

Questions :

(1) BCG has been growing faster than McKinsey recently but that's also easier if you're smaller to begin with. I think BCG is a fantastic company but they seem to follow suit on a lot of what McKinsey does recently. From branding, to Perspectives to office openings. They need to be more innovative and not follow/be under McKinsey's shadow.

McKinsey also has a very strong presence in Asia which BCG still seems to be catching up on.

(2) When going through recruiting, I always felt a slight difference between McKinsey & BCG vs. Bain. In my opinion, Bain has actually been losing some of its prestige and quality recently. Maybe that's a function of size and scope. Bain doesn't have as strong thought leadership as McKinsey & BCG. In terms of revenues, they have been growing really fast and they are hiring their biggest class to date. Though Bain's Partners have always been after superior growth while not focusing much on ethics and financial stability. Not sure if this will cause them trouble in the future too.

(3) Maybe but most likely not. They're growing well, have an abundance of projects and still attract top talent. Maybe things will change when the next economic recession hits. I do believe that Bain needs to scale up fast if it wants to stay around for the long term though.

(4) BCG and Bain should move into that model if they want to maintain their status and prestige. All the boutique and specialized players are being bought out by Big 4 and other firms.

(5) Not sure but it's an interesting thought. I do think Deloitte S&O will cause some concerns to MBB if they can fix their global partnership, improve their thought leadership and carry on improving their prestige to justify larger fees. PwC could potentially become a leader too but they have a tough ask ahead of them in terms of attracting the right talent and rebuilding prestige.

My prediction is that the top players will be MBD in a few years (McKinsey, BCG and Deloitte).

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Sep 21, 2016

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.

Sep 22, 2016
Koloniaal:

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 completely agree that the scaled approach to consulting delivery is the wave of the future (which honestly makes me nervous considering my firm only has ~4,000 employees globally), but why is only Deloitte ever mentioned in this context? Am I missing something? I'll probably get yet more monkey shit from the Deloitte fanboys, but if Deloitte can challenge MBB in 5-10 years, then what's stopping the other Big 4 + Accenture from doing the same? They all have consulting services on a huge scale, albeit at difference levels of maturity. I believe Deloitte was the only Big 4 to keep it's consulting arm in the wake of SOX and therefore had a head start on the other Big 4, plus Accenture had to rise from the ashes of Arthur Andersen dissolution.

EDIT: Added some more info below

In terms of Strategy, Monitor was a top-notch firm so I understand why Deloitte can tout this is a key performer. However, when I started in consulting my second-choice firm was Parthenon and, from what I understand, the Parthenon-EY merger has been pretty successful. They have a huge carve out in the CDD and M&A space and I believe a very strong healthcare practice (although I could be wrong). Sure, Strategy& has been a bit of a flop, but it's still a major player doing extremely impactful work. Anyone know their revenues? KPMG Strategy seems to an underrated group on this forum, perhaps because they are new and small and therefore not getting the brand-name recognition but, as I mentioned in another post, my former roommate worked there and said it was an excellent shop. I don't know much about Accenture Strategy but ACN seems to be investing a lot in the unit.

If all of the Big 4 have solid strategy arms at this point, what's stopping them from closing the gap with MBB like it is being posited that Deloitte is doing? I'm talking about a 5-10 year horizon, not today. Please enlighten me.

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Sep 22, 2016

Parthenon merger has been successful, but the size of the practice is incredibly small, they for the most part only do work for smaller companies, and they only play in a handful of industries. It's not close to being synonymous with Deloitte's strategy division.

Sep 22, 2016

Your assumption that all big 4 has a solid strategy arm is wrong. Only Deloitte is somewhere up to scale on strategy work. The rest of them we, my firm and geography, really never see. Strategy& will not survive probably, see reasons above. Could have been a challenge if the merger did succeed.

Also, not sure where you're getting Accenture from? They're really considered an IT firm. I'd place Big 4, especially Deloitte really a level higher.

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Sep 22, 2016

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.

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Best Response
Sep 20, 2016

I think BCG will establish itself as the top strategy player, Bain gets absorbed by another company, and McKinsey has a slow but steady decrease in prestige. Of the MBB, McKinsey has been - by far - the worst at getting up to date with work life balance issues and cultural issues. The minute McKinsey doesn't have an objective prestige advantage over BCG/Bain, I can see them losing nearly all cross-offers. Bain I think doesn't have the scale to survive, and I also think that when the PE industry has another bubble burst, Bain will be in A LOT of trouble due to their over-reliance on PE DD. BCG has the best culture of the three and from what I see, submits the best work.

I also am very bullish on Deloitte, but that's a bit homerism. I think they will actually become McKinsey's biggest competitor, as McKinsey builds out Ops, Tech, and implementation, and Deloitte continues to expand strategy/Monitor-Deloitte. You're already seeing Deloitte beat McKinsey A LOT on bids, and they aren't winning by cutting prices.

I agree with ops assessment of Strategy&.

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Sep 21, 2016

For the most part, I agree with the comments above. However, no firm is going to catch up to McKinsey, BCG or Bain for quite some time for a few reasons:

  1. Although we glorify strategy consulting to be the engine of cutting-edge corporate analysis and philosophy, that's often not the case. Frequently firms are brought in to rubber-stamp executive decisions and in fact are incentivized to provide a supporting recommendation - I've seen this at my firm (top boutique strategy firm.... think LEK, OW, ATK, Mars, etc.) and even more so at MBB because reputation is the warmest affirmation a CEO can receive (hence the term, "no one ever got fired for hiring McKinsey"). Firm reputational rankings take years to change so, for the foreseeable future, the lions share of this work will continue to go the top firms.
  2. Bain will not be bought out anytime soon, I'm not sure why people keep thinking this. Booz & Co. was nearly too expensive and many Big 4 firms eyeing the acquisition dropped out because the price was too high. Bain's revenue is over double what Booz's was when it was acquired so given a conservative P/S of 1.5, we're looking at a $3-3.5b buyout. That's big for a company with no physical assets or IP.
  3. Maybe I'm too hard on the Big 4, but I don't see "MBD" ever happening, at least not for a long time. I agree that the industry is trending towards end-to-end consulting initiatives (Strategy > Implementation > Risk) where the Big 4 and Accenture (let's face it, those five are kind of all the same) will see tremendous increase in responsibility but, at the end of the day, I just don't see the high-end work being ceded from the top firms. I've actually had very little experience with the big D (I never see them on our proposals.... I see lots of MBB and top boutiques and, for some reason, tons of Strategy& / PwC), perhaps because of my vertical, so maybe I'm being to hard on them. The Big 4 business model just seems too commoditized to lend itself to high-end work. The only way this could happen is if the rest of the top boutiques are squeezed out of the market and purchased by larger Big 4 + Accenture firms AND THEN gain significant ground.

Don't know what's happening in Europe, I'm a patriot and don't care about those socialists across the pond. As for BCG vs. McKinsey, I think they will continue to focus on their core competencies (McK on organizational design, BCG on product strategy) and Bain will continue to dominate PE, but I'm too tired to write anymore so I'm going to stop.

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Sep 22, 2016

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.

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Sep 24, 2016
itsalwayssunnyinflorida:

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.

It gets MonkeyShit because half the board here work at Deloitte (eg. Hilary2016 aka opsdude1 aka Deloitte employee), so if anything gets said that doesn't align with what HR feeds them, some shit is thrown. Shit like "you see Deloitte beating McKinsey in a lot of bids" and not via price cuts just isn't in line with what any insider with privy knowledge of the industry would say.

The hate for Deloitte comes from exactly the price cutting nature of how they do win things - which by the way is often to do an entire "relationship" project invested for free in the hopes of winning future business. Of course these sorts of investment "projects" aren't unique to Deloitte (they happen at MBB too) - it's just that Deloitte is notorious for coming in with these tactics, and much more so than some of it's peers like Oliver Wyman, who are genuinely taking deals off MBB via their relationships and specialties in specific practice areas. Deloitte isn't known for any particular specialty on the strategy side.

But good on the internal marketing team for selling that Kool-Aid. And go ahead, throw more shit - it's not going to stop the fact that the behavior I'm seeing above isn't coming from some internal brochure but an apt description of exactly what C-Level execs babble about when trying to negotiate prices down while using Deloitte as leverage.

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Sep 21, 2016

I think MCK is playing it smart - it's operational practice is going to help the firm weather some storms, although it has been pretty exposed to having its strategy work eaten up by BCG, who I'd reckon are also privately shoring up their own operational capabilities on a much smaller scale and keeping it hush so they can play the prestige card. BCG has made some acquisitions but largely run them independently instead of leveraging the BCG umbrella which probably has negative impact on the short run, but may preserve the brand name long term.

The real open questions are:

What's going to happen to Asia? McKinsey does have the dominant investment in this area (BCG second, Bain practically a non-player) but even with the growth it's a pretty risky low margin area; I think we'll find out within 5 years what's going to happen and if the investment was timed correctly

What's going to happen to Bain / boutique consultancies? McK & BCG have made the top end of this space really hard to compete in - every 3 years I reckon the two combined are expanding at a rate equal to the size of the rest of high end strategy industry (including Bain). Actually don't think Bain is a good acquisition target but could see poachings start to happen if paychecks from PEG stop flowing in

Deloitte? Probably going to get monkey shit for this anyways, but even Bain views McKinsey/BCG with much more concern than Deloitte. Deloitte ultimately competes with MBB on a cost basis alone, and sells a different version of that Kool-aid to its employees. What's more likely to happen is that there going to brush up against MBB more and more frequently, but only because Mckinsey is pushing downwards, and not because Deloitte has actually made significant headway into the high-margin strategy space. With that said, I've got pretty good feelings about Deloitte's long term future (which is backed by a tremendous balance sheet) - but I see that future as a powerhouse with a lot of revenue at significantly lower margins.

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Sep 22, 2016

Biased here as I'm part of the strategy arm of a Big 4 - definitely see MBBD happening in 5-10 years, for two simultaneous reasons:
1- The entry of McKinsey, BCG and Bain in more operations-focused projects;
2 - Big 4's ability to provide advice on strategic, but minor works for departments, opposed to the whole Client

No reason to see why Bain should be acquired. I am betting much more on ATK/RB/Startegy& mergers or stand-alone acquisitions, which will still take about 5 years or so. On top of that, Bain has definitely growing (new offices at least) and cimenting itself as the consulting firm for PE.

So, OP, in that time horizon we'll see in my oppinion the MBB&M (for Monitor Deloitte) in the top strategy niche, then some boutiques and for the rest of consulting, Big4+Accenture.

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Sep 22, 2016

Accenture bought Kurt Salmon today

Sep 24, 2016

After Strategy& I think the era of the big buyouts is over. As Canadien16 mentioned, paying $3.5B for Bain is insane, particularly if a buyer is a Big 4 firm. In a post SarbOx world Big 4 firms can't have the same clients as audit and consulting, so depending on number of mutual clients not only is a firm with no real physical assets or IP being bought for billions, but you quickly see multiple partners leaving since their clients overlap with audit. That's part of the reason Strategy& merger has been such a sh**show, lots of partners have jumped ship to competitors because under SarbOx they can't sell to their clients anymore. So why in their right mind would a Big 4 firm buy a company like Bain, or even LEK, and immediately see 10-25% of partners jump ship. The merger logic doesn't work here from either the buyer or seller side.

I could see Accenture, or even IBM, being a player for a firm like Bain, but in those cases I think integration would be an actual nightmare, from a cultural standpoint if nothing else. Hard to see what either company would gain.

The Monitor & Parthenon acquisitions worked b/c the firms are small, Kurt Salmon may work for the same reason.

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Nov 19, 2017

Deloitte is definitely a class apart from the rest of the Big 4 in Strategy Consulting

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Nov 22, 2017

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.

Nov 22, 2017

In the European market it is the same story. In Germany Deloitte is not even comparable to S&, OW, ATK, Roland Berger (Salary, work, reputation). I think this MBBD meme might only apply to the USA.

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Nov 22, 2017

Not even there in the opinion of everyone except Deloitte employees, hence why it's a meme

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Nov 22, 2017

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

Nov 22, 2017

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.

Nov 22, 2017
DevelopmentMonkey:

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.

Could you expand a bit more on example differences (development, type of work) between Bain and McK/BCG?

Proboscis

Nov 22, 2017

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

Nov 22, 2017
DevelopmentMonkey:

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

agreed.

Nov 22, 2017
DevelopmentMonkey:

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

This isn't nearly as serious, but keep in mind Arthur Andersen with Enron. I don't think anyone imagined that that whole thing could have happened, given AA being highly regarded as an accounting firm.

Nov 22, 2017
Otter.:
DevelopmentMonkey:

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

This isn't nearly as serious, but keep in mind Arthur Andersen with Enron. I don't think anyone imagined that that whole thing could have happened, given AA being highly regarded as an accounting firm.

The AA situation was way different and AA was way more involved in what Enron was doing.

Nov 22, 2017

Good blog on the topic: http://www.nakedcapitalism.com/2011/03/McKinsey-th...
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.

fdba Emory Blaine and BBA or otherwise trying to find the perfect pseudonym.

    • 1
Nov 22, 2017

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.

Nov 22, 2017

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.

Nov 22, 2017

McKinsey will remain McKinsey. As a previous poster said.

Nov 22, 2017

.

Nov 22, 2017

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.

Nov 22, 2017

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.

Nov 22, 2017

The flipside of this is that as a third-year at Bain (SAC), you not only have complete ownership of a workstream, but have a new first-year associate consultant reporting to you. You are a leader and get to focus on a lot of higher-order parts of the answer, while mentoring and building someone more junior. At McK and BCG, you will not have someone reporting to you until you hit engagement manager/project leader, and it is EXTREMELY marketable to recruiters and business schools that you were a supervisor at 24-25 years old.

Nov 22, 2017

"ACs support post-MBAs, while BAs handle a full discrete work stream."

I work at Bain, and this was true for my first 6 months or so at Bain. Since that point, I had my own discrete workstream and reported directly to the manager.

" If you sit down a BA and an AC and discuss this it would be crystal clear."

I don't know man, I've got a lot of friends at McK, and when I sit down with them, it sure seems like they're doing the same stuff as me. On the margins, sure, maybe they get to send a few more things to India to get done for them, but it's definitely not "crystal clear".

As I always say to people when trying to compare between MBB firms, there's far more variation between different cases within the same firm than there is variation between MBB firms. Two years at McK can look very different for two different BAs, and the same holds true for BCG and Bain. As such, it's very hard to compare the experiences apples-to-apples. I do think there are far more similarities than differences.

Nov 22, 2017

Agree that two BAs ecperiences can be wildly different. Still, the differences between BAs and ACs also exist. It's not only a few more slides sent to india. It is 24/7 slide support. You can draw them and they make them while at Bain ACs have to make first version of slide.

Same goes for research. McK has many multiples the number of researchers than Bain does. This translates into less research done by BAs and the company having more expertise etc. Also Bain ACs do cold calls in some countries, while McK doesn't do that anywhere in the world.

I think ACs get amazing opportunities for development and Bain is a great company, but there is a reason a McK team is smaller than a Bain team for a comparable study: A lot of the work that an AC would to at Bain is done by various back offices at McK. That's not all bad. ACs get more familiarity using databases and other more hands of work. That's not without value. Bain, I think also has better training than McK, for example through ACT, etc. That training is also much more hands on than McKinsey's where you often don't even open your laptop.

Bottom line, if anyone has both offers make sure you talk to 3rd year analysts in both company, so you get a sense on how their roles evolved. Try to get into the detail of their roles, so that the differences really come out

    • 2
Nov 22, 2017

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.

Nov 22, 2017

If Anil Kumar's scandal didn't kill McKinsey, Gupta's certainly won't. Kumar sold information that he picked up in the course of his consulting work, while Gupta allegedly passed along info that he got as a Goldman board member, a position that is only tangentially related to his McKinsey career.

Nov 22, 2017

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

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Nov 22, 2017

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.

Nov 22, 2017
Illinoisprogrammerisajoke:

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.

Interesting!

Nov 22, 2017
Illinoisprogrammerisajoke:

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.

That argument can be used for any discretionary spending.

Nov 22, 2017

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.

My drinkin' problem left today, she packed up all her bags and walked away.

Nov 22, 2017
Kenny Powers:

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.

Consultant can mean several things. OP means "management consultants". The title 'consultant' that you're referring to is when companies hire temps and don't want to call them that...

On a side note, you'd be surprised how many kids out there are temps and call themselves 'consultants' and then think they're a "management consultant". I actually had to make it clear to one person I knew that they were either misinformed or lying. It's just like "associate" can mean you're a third year banker, a first year lawyer, or an 'associate' at WalMart.

Nov 22, 2017
UFOinsider:
Kenny Powers:

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.

Consultant can mean several things. OP means "management consultants". The title 'consultant' that you're referring to is when companies hire temps and don't want to call them that...

On a side note, you'd be surprised how many kids out there are temps and call themselves 'consultants' and then think they're a "management consultant". I actually had to make it clear to one person I knew that they were either misinformed or lying. It's just like "associate" can mean you're a third year banker, a first year lawyer, or an 'associate' at WalMart.

http://www.dcvelocity.com/articles/20121022-a-rose...

Nov 22, 2017

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.

Nov 22, 2017

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.

The business of business is business.

Nov 22, 2017

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

Nov 22, 2017

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

Nov 22, 2017

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).

Nov 22, 2017

I think DD has made some insightful arguments, but the questions in the back of my head were:

1) Shouldn't MBB be helping businesses grow even in an economic down term?
2) Are cost-cutting the only thing MBB can do for the business in the current situation?
3) If the industry is going down as a whole, shouldn't there be more companies seeking for help from MBB?

Sorry if these are dumb questions.

DagwoodDeluxe:

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).

Nov 22, 2017

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?

Nov 22, 2017

@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.

  1. 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.
  2. 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.

Nov 22, 2017

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

Nov 22, 2017

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.

Nov 22, 2017

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.

Nov 22, 2017

@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.

Nov 22, 2017

Some good points made here, but I disagree with dagwood's characterization of what clients do during downturns. Most basically, the financial crisis wasn't an average downturn, so it's not a good predictor of what's to come for MBB. During the 2008-09 crisis, big companies weren't sure that the sun would even come up again, so they just cut all the spending that they could, including a ton of consulting stuff. In this downturn, though, the degree of shock that was there in 2008-09 isn't there. Everyone can sort of feel us sliding into really murky waters, and corporate leaders want to know what to do. So instead of pushing the panic button and cutting all their consulting engagements, CEOs who have a strong relationship with a MBB partner are reaching out for help in navigating the next couple of years. MBB had a decent year last year, and that's not likely to change soon.

Nov 22, 2017

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.

Nov 22, 2017

Growing

Nov 22, 2017
Nov 22, 2017