2  Overview of Management Consulting

2.1 The History and Landscape of Management Consulting

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)