The big three management consulting organizations tend to consistently stick around despite costing exorbitant sums of money, and arguably primarily creating spreadsheets to tell people things they already know.
There’s several competing explanations for why this seems to be the case, and I want to take a bit of time to assess them.
The most straightforward explanation behind management consulting is that the big firms train the best and brightest to root out and solve corporate problems. Because they’re so good, firms are willing to shell out big money to see things get achieved.
And, because most of the world isn’t scoring super highly on logical reasoning, it would make sense that consultants could add value as an objective, smart, party.
I think the initial plausibility to this story serves as a better backdrop for what I think actually happens. I know several consultants, and their primary directive is to look and sound smart to people who aren’t the subject matter experts. Consulting training teaches people a framework for assessing and solving problems, which in turn is used to solve problems that the firm otherwise would have to devote operational resources to.
Cracks in the veneer start when you compare domain expert knowledge of a specific topic, such as healthcare or AI with an MBB interpretation of the facts. Tacit knowledge is not absorbed when consultants have weeks to prepare information, and it shows. Despite work of varying quality, big consultancies continue to have prestige because of their track record. Also, it begs the question why the frameworks being used can’t be inculcated into the workplace on a non-temporary basis, say a problem-solver in chief.
Having firsthand seen the risk aversion of those on top, I think a clearer explanation for widespread consulting is that it’s seen as the “safe” option, regardless of merit. Abstracting away, I think Epic systems is good at a lot of things, but some of the solutions they offer are half-baked. In the same way, consultancies may have a strong specific area, but are adding on in areas they know less about.
This serves as a useful backdrop for executives who want to do something “transformative “ but don’t want the risk of it blowing up in their face. If it is the executive who’s coming up with the recommendations, he can either win or lose. But, if it’s McKinsey for instance, the executive had a great idea to bring them in to solve the problem. Or, if it fails, even the best and brightest couldn’t implement it. It’s not his fault.
Consulting happens to be a great way of justifying yourself to your board of directors. So, I imagine a lot of executives like the “I win or someone else loses” set of options.
There’s also the endowment/ legacy part, where because McKinsey is stamped on so many business leaders, there’s an incentive to keep the corporation’s name good for alumna’s own sake.
Now that I’ve explained a couple of different ways of viewing consultancies and their prominence, now I want to talk about why I think my assessment is broadly correct.
First, MBB are surprisingly non-technical, and hire young. This fits into the prestige is an important value. They certainly didn’t recruit at my college.
Second, MBB training is mostly a set of tactics to extract certain information. Former consultants tend to have a specific toolkit of strategies, and they lend themselves well to short-term relationships. I read a book about McKinsey’s structure, and while I’m sure there’s more info at the camps, I can’t help but get the feeling once you see one, you start to see it all.
Finally, MBB offers whatever people are willing to pay for, suggesting that the arrangement between execs who want to create transformation is probably at least understood as a subtext.
I’d be curious to hear where I’m wrong, if any MBB alum would like to engage with me.
Isadore Johnson's Website 