What exactly is "pure" strategy?
As I'm reading through these forums, I see a lot of people arguing that firms like Deloitte, Accenture, etc. do not do "pure strategy work" and instead do ops and implementations. What exactly does "pure strategy work" entail? And do firms like MBB focus heavily on that?
They are just different types of work and people value different types of experiences differently.
Strategy consulting - focus on defining direction and guiding management through some existential crisis. Very high-level and typically viewed as "glamorous" since consultants rarely need to roll up their sleeves. Very expensive. Large budgets. Limited "rules". Virtually everyone has an MBA from a prestigious institution. These are people who will identify high-level business opportunities, for example: client wants to increase profit $100M in a short period of time, they hire MBB to figure out how they can make this happen. MBB would identify the course(s) of action/strategic decisions they can make. MBB would find ways to make this happen with varying levels of risk and return. In this case I'll make it simple: one which this client's management loves is to cut costs by $100M (simple example: reducing heads), increasing profitability by $100M. They would then hand off that plan once management thinks they are brilliant before riding off into the sunset.
Operational consulting - operates at a lower level. Consultants must be willing to roll up their sleeves and work in the trenches since they will be looking at the actual operations of their clients. Still expensive but budgets are smaller. Mix of post-MBA staff and seasoned professionals, usually have some sort of directly applicable experience. These consultants are handed a problem and tasked with finding a solution, for example: management knows they must reduce staff expenses by $100M, they hire the operational consulting firm to figure out what to do. The operational consulting firm looks at the processes, identifies synergies, considers how operations can be consolidated, highlights opportunities for technology/systems to shoulder some of the burden, assesses potential for offshoring, and may define who is laid off. They are tasked with somehow finding a way to reduce staff costs by $100M from an operational perspective. They are also tasked with being hands-on enough to make sure it actually happens.
Some people join "operational" consulting groups expecting to do strategy work. If it's not what they were looking for it would be frustrating to operate at that level of detail. Here you're going to have a lot of people who want to do strategy. Part of this is because operational seasoned professionals aren't a target for these forums. Part is because people going into MBB are a similar audience to those seeking out IBD, PE, etc.
Hopefully this clarifies a bit.
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My extremely simplified example was structured that way because OP did not understand the difference and why people would say "it's not MBB, make sure you know what you're getting into". This was also loosely based on a real "business problem" (not my company but one I am very familiar with from a prior life) and how the work was performed: MBB doing the strategy component and a Big 4 Advisory/Consulting group doing the operational work. My company would approach consulting projects the same way, but we also are very similarly situated to the company I took the example from.
Obviously there is crossover, there also were several types of consulting (and subtypes) which I left out. The nuances of the entire consulting industry would be too difficult to cover in a single post with someone who is still learning the landscape. You are correct though, all firms do have more services than what is in the example - I simply chose how people typically think of them on these forums.
Point of clarification, there is no rule of thumb price differential between MBB firms. The main determinant of which firm charges more on a certain project is who has the better existing relationship with the client (though most times the firms hold firm on $$ and count on their rep and offering to win deals). On the occasions where $$ has been shifted I've seen projects where Mck has priced lower BCG and vice versa.
I'm at an MBB firm. It is definitely true that we do ops and other work.
But it's also true that one can still build a career here on strategy projects. I'm in year 5 and have done exclusively strategy work (both BU and corporate) since year 2. If you want to do strategy, MBB is still the best place to do it.
Hi Managerette,
Thanks for sharing such useful piece of information with us. I agree with you that similar audience is also a reason.
https://en.wikipedia.org/wiki/Strategic_management
When people talk about "pure strategy", they generally are referring to corporate strategy. Corporate strategy, in a nutshell, refers to 2 things, what industries to compete in and how to compete in those industries.
Whether Walmart should sell online in addition to B&M or open up smaller stores in urban neighborhoods, whether Apple should start manufacturing and selling mobile phones, and whether Google should make its own hardware for phones or license its software to other manufacturers are all strategic questions because you're talking about decisions that fundamentally alter these companies' business models. Figuring out how to decrease your manufacturing costs from $1.00/widget to $0.80 and or which IT vendor is the lowest cost in the long run are operational issues that exist regardless of a company's core strategy.
Now here's where the lines get blurred. Let's say you're comparing IT vendors and Vendor A is lower cost but offers worse customer service functionality and Vendor B is the opposite. In this case, your corporate strategy may govern your decision. If you're Walmart and you compete on cost, going with Vendor A probably makes more sense. If you're Zappo's, it probably makes more sense to go with B since you compete on service. Accenture might call this strategy, others might not.
Pure Strategy = Pure Bullshit
The posts on this thread are pretty accurate, including the one by YouCantHandleTheTruth.
If you're really interested in "pure strategy" and especially why and how it was created, I suggest reading the book "Lords of Strategy," which reviews the history of the Corporate Strategy revolution in the latter half of the 20th century, including the theories and trial-and-error behind such strategy functions as the BCG Matrix. Warning: it's a pretty dry book written by an author who really thought they sounded intellectual and can be a bit boring to read sometimes.... valuable information all the same plus, if you're in the interviewing stage, whipping a few quotes out from this book will make you sound supda dupa smaht.
Heh, so managementconsulted.com does have estimates of fees. (https://managementconsulted.com/consulting-interviews/deloitte-intervie…)
MBB are all at $500K and Deloitte's at $400K per the source. I can tell you from personal experience that $500K is on the low end for MBB, but that might be because their numbers were quoted from 3 years ago. $400K is a little bit higher than I would've thought for Deloitte to be honest. I would've thought they would be more like $350K, which is what Strategy& is quoted at (and that figure lines up with what I've heard about them).
I used to have external consultants hitting my budget but it's been a couple of years. At the time we were paying an MBB firm roughly twice what we were paying a Big 4's Consulting/Advisory function for equivalent amounts and leveling of staff. I have no visibility into billing vs. collection - only know what would get pushed to me during the close. We never utilized any staff from boutique strategy firms (LEK, etc.) so I have no exposure to their rates.
We only used the MBB for pure strategy work, but we would give the Big 4 pretty much anything technical or specialized that we didn't want to do/couldn't do ourselves without training or reallocating staff. Before people start squawking, these staff WERE from that Big 4 firm's management consulting practice area - we would just be overpaying to have them do stupid shit (the company still does to a large extent).
Even if I don't know what projects were billed out at, I can definitely tell you we PAID the Big 4 group about half.
.PwC.
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