2  Overview of Management Consulting

2.1 The History and Landscape of Management Consulting

Elijah Test

2.1.1 Early Roots (1880s–1920s): Birth of Scientific Management

  • Frederick Winslow Taylor: Often considered the father of management consulting, Taylor pioneered scientific management or “Taylorism” in the late 19th and early 20th centuries, emphasizing efficiency and productivity through time-and-motion studies.
  • Arthur D. Little (founded 1886): Initially a chemical consulting firm, it became one of the first to advise on broader business strategy and innovation.

2.1.2 Institutionalization (1920s–1950s): The Rise of General Consulting Firms

  • Booz Allen Hamilton (founded 1914): One of the first firms to offer consulting on organization and strategy.
  • McKinsey & Company (founded 1926): James O. McKinsey introduced accounting-based management principles and later, under Marvin Bower’s leadership, pioneered the professional ethos and structured problem-solving approach still used today.

Focus during this period was on organizational structure, cost control, and formal management systems.

2.1.3 Post-War Expansion (1950s–1970s): Strategy Takes Center Stage

  • The post-WWII boom led to globalization and complex operations, creating demand for external strategic advice.
  • Boston Consulting Group (BCG) was founded in 1963 by Bruce Henderson and introduced landmark strategic tools like the Experience Curve and BCG Matrix.
  • Strategic consulting emerged as a distinct domain, emphasizing market positioning, competitive advantage, and long-term planning.

2.1.4 Professionalization and Globalization (1980s–1990s):

  • Bain & Company (founded 1973) differentiated itself by focusing on long-term client relationships and measurable impact.
  • Firms expanded internationally, serving Fortune 500 clients across industries.
  • Consultants became influential in mergers & acquisitions, privatization, and operational restructuring.
  • The 1990s saw the rise of IT consulting (e.g., Accenture, IBM Consulting) alongside traditional strategy firms.

2.1.5 21st Century: Diversification, Digital, and Disruption (2000–present)

  • The Big Three (McKinsey, BCG, Bain) have continued to dominate high-end strategy work.
  • Consulting has expanded into:
    • Digital transformation (e.g., McKinsey Digital, BCG X)
    • Data analytics & AI
    • Sustainability and ESG
  • Boutique firms and freelance platforms (e.g., Toptal, Catalant) challenge traditional models.
  • There is growing scrutiny around ethics, diversity, and impact (e.g., McKinsey’s work with governments and controversial clients).

2.1.6 Key Contributions to Business Thinking

Frameworks like Porter’s Five Forces, the GE-McKinsey matrix, value chain analysis, and zero-based budgeting were either developed or popularized by consulting firms. Management consulting has significantly influenced MBA education, corporate strategy, and even public policy.

2.2 Overview of major firms (MBB, Big Four, boutiques)

2.2.1 MBB (McKinsey, BCG, Bain): The Strategy Elite

The “MBB” firms represent the pinnacle of strategy consulting, known for their prestigious client base, rigorous analytical approaches, and significant influence on global business practices.

2.2.1.1 McKinsey & Company

  • Founded: 1926 by James O. McKinsey
  • Headquarters: New York City
  • Focus Areas: Corporate strategy, organizational transformation, operations, digital, and analytics
  • Distinctive Features:
    • Largest of the MBB firms with over 130 offices globally
    • Known for thought leadership through McKinsey Quarterly and McKinsey Global Institute
    • Alumni network includes numerous CEOs and public sector leaders
    • Pioneered the professional consulting model under Marvin Bower
  • Notable Work: Strategic restructuring for Fortune 500 companies, public sector transformation, healthcare system redesign

2.2.1.2 Boston Consulting Group (BCG)

  • Founded: 1963 by Bruce Henderson
  • Headquarters: Boston, Massachusetts
  • Focus Areas: Strategy, digital ventures, innovation, corporate development
  • Distinctive Features:
    • Created foundational strategy frameworks (BCG Matrix, Experience Curve)
    • BCG X focuses on tech build and digital products
    • Strong emphasis on social impact work
    • Known for collaborative, intellectually rigorous culture
  • Notable Work: Market entry strategies, portfolio optimization, transformation programs

2.2.1.3 Bain & Company

  • Founded: 1973 by Bill Bain
  • Headquarters: Boston, Massachusetts
  • Focus Areas: Strategy, private equity consulting, customer strategy, M&A
  • Distinctive Features:
    • Pioneered results-based consulting with focus on measurable outcomes
    • Dominant player in private equity consulting
    • Smaller and more selective than McKinsey
    • Strong emphasis on long-term client relationships
  • Notable Work: Due diligence for PE firms, performance improvement, customer loyalty strategies

2.2.2 The Big Four: Audit Origins, Consulting Power

Originally accounting firms, the Big Four have evolved into massive professional services organizations offering consulting alongside audit, tax, and advisory services.

2.2.2.1 Deloitte

  • Consulting Arm: Deloitte Consulting
  • Focus Areas: Technology implementation, digital transformation, human capital, strategy, operations
  • Distinctive Features:
    • Largest of the Big Four consulting practices
    • Strong in government and public sector work
    • Comprehensive end-to-end implementation capabilities
    • Deloitte Digital competes directly with tech consultancies

2.2.2.2 PwC (PricewaterhouseCoopers)

  • Consulting Arm: PwC Advisory/Strategy&
  • Focus Areas: Deals, technology consulting, risk advisory, digital transformation
  • Distinctive Features:
    • Strategy& (formerly Booz & Company) acquired in 2014 for high-end strategy work
    • Strong regulatory and compliance consulting
    • Emphasis on trust and quality in client relationships
    • Significant presence in financial services

2.2.2.3 EY (Ernst & Young)

  • Consulting Arm: EY-Parthenon (Strategy), EY Consulting
  • Focus Areas: Strategy, transactions, business transformation, technology
  • Distinctive Features:
    • EY-Parthenon acquired in 2014 to strengthen strategy capabilities
    • Strong in corporate finance and restructuring
    • Growing digital and analytics practices
    • Focus on entrepreneurship and innovation ecosystems

2.2.2.4 KPMG

  • Consulting Arm: KPMG Advisory
  • Focus Areas: Risk consulting, management consulting, deal advisory, technology
  • Distinctive Features:
    • Smaller consulting practice compared to other Big Four
    • Strong in risk, compliance, and regulatory work
    • Healthcare and financial services expertise
    • Focus on functional consulting (IT, supply chain, finance)

2.2.3 Boutique Firms: Specialized Excellence

Boutique consultancies offer deep expertise in specific industries or functional areas, often with more personalized service and specialized methodologies.

2.2.3.1 Strategy Boutiques

Oliver Wyman - Focus: Financial services, aviation, healthcare strategy - Distinctive: Quantitative modeling expertise, industry-specific practices

L.E.K. Consulting - Focus: Corporate strategy, M&A, shareholder value - Distinctive: Strong analytical foundation, private equity orientation

Simon-Kucher & Partners - Focus: Pricing strategy, marketing, sales optimization - Distinctive: World leader in pricing consulting

Roland Berger - Focus: Strategy, particularly in Europe and automotive sector - Distinctive: European heritage, restructuring expertise

2.2.3.2 Technology and Digital Boutiques

ThoughtWorks - Focus: Software development, digital transformation, agile practices - Distinctive: Social justice mission, developer-centric approach

West Monroe - Focus: Technology implementation, business operations, financial services - Distinctive: Strong in technology strategy and execution

2.2.3.3 Operations and Implementation Specialists

AlixPartners - Focus: Turnaround, restructuring, performance improvement - Distinctive: Results-driven, interim management services

FTI Consulting - Focus: Corporate finance, restructuring, economic consulting - Distinctive: Expert testimony, forensic analysis

Kearney (A.T. Kearney) - Focus: Operations, procurement, supply chain strategy - Distinctive: Strong in manufacturing and automotive industries

2.2.3.4 Industry-Specific Boutiques

ZS Associates - Focus: Healthcare, pharmaceuticals, sales force effectiveness - Distinctive: Data and analytics heritage, life sciences focus

Huron Consulting - Focus: Healthcare, higher education, commercial sectors - Distinctive: Deep expertise in healthcare operations and strategy

NERA Economic Consulting - Focus: Economic and financial analysis, antitrust, regulation - Distinctive: PhD economists, litigation support

2.2.4 Key Differences Across Firm Types

Prestige and Brand: MBB firms command highest prestige, Big Four offer scale and breadth, boutiques offer specialization

Compensation: Generally MBB > Boutiques (top-tier) > Big Four, though significant variation exists

Work-Life Balance: Typically better at Big Four, varies widely at boutiques, most challenging at MBB

Exit Opportunities: MBB alumni networks strongest for C-suite and PE roles, Big Four strong for corporate functions, boutiques excellent for industry-specific roles

Project Types: MBB focuses on CEO-level strategy, Big Four on implementation and technology, boutiques on specialized domains

Client Interaction: Smaller boutiques often provide more partner-level attention and specialized expertise