Category: Management Consulting

Between different consulting firms and practices, the job responsibilities and experience levels of engagement managers vary widely, but there is one characteristic of the position that I like because it captures the essence of management consulting better than do characteristics of other typical consulting positions (e.g., principal, partner, director, associate, manager). By understanding the central function of "engagement management", one can better understand the essence of management consulting.

Engagement managers own the problem statement from the perspective of the customer, and thus, have the responsibilities to ensure that consulting team both structures the problem solving methodology correctly and executes on the problem solving methodology.

Thus as an example, a problem statement may be to help figure out whether a client should enter a wireless business, identify under what circumstances it makes sense, define the strategy and plan for how it should be done, and get cross-functional buy-in from the management team and Board of Directors. In this case, the engagement manager may need to work with the consulting team to synthesize primary and secondary marketing research from end users and distributors, construct financial analyses, develop technology scenarios and architectures, conduct client workshops on various subjects to gain insights and share best practice perspectives, perform gap analyses between present methods of operations and desired future states, or perform competitive analyses and forecasting.

Another problem statement might be, "figure out the root cause of declining customer satisfaction and fix it because my internal management team is giving me mixed messages". Yet another one might be, "how do I transform my business from doing lots of low margin X to doing more high margin Y". (As a quick digression, one should note that setting up the problem statement properly is very key to selling consulting engagements and solving them – do not take it for granted that the problem statement is articulated properly).

In essence, the role of the engagement manager is to help the client to solving their problems by synthesizing the work of smart people and subject matter experts in different functions and areas from throughout the firm.

In closing, I find that people frequently confuse the role of project managers with that of engagement managers. There are definitely some overlapping functions, but the essence of project management is more to ensure that things are accomplished on time, on budget, and according to customer specifications. On the other hand, the role of the engagement manager is to own the client problem statement as if it were their own. At risk of sounding like I am diminishing the importance of the function, project management becomes more of an execution detail in the greater scheme of things.

I’ve seen a number of posts around the internet that question the value of management consultants and really beg the question of in what situations can consultants add value better than managers within a company. Rather than answer that broad question, I thought that I would take an opportunity to illustrate an area where I have seen a lot of clients get value and where they would have struggled to structure the analysis given the resources they had available. The gap area is quantitative analysis.

Such a gap is often related to organizational structure. Companies often organize themselves to produce products and services efficiently. One company may be organized to produce PCs at the lowest cost while another may provide construction services with high customer satisfaction rates. Such companies may not always be optimized for solving specific problems related to entering new lines of business, making strategic shifts, etc. Additionally, in many companies there is a limited number of either finance people, financially-trained managers in non-financial roles, project-based financial analysts, database analysts, or statistics specialists. And in cases where such skilled people are more numerous, often they are either unavailable or essentially unavailable to focus on solving specific problems raised by the business.

Management consulting firms often have a lot of financial and numerically-trained people – it would not be unusual for every consultant assigned to a project to have in-depth quantitative skills. At risk of sounding like I am drinking my own Kool Aid, some gap-plugging and value-add consulting exampes I have seen include:

• providing not only an qualitative assessment of offering a new set of telecom services but also a quantitative assessment of how much shareholder value is built by offering the services (e.g., NPV analysis) and a quantitative rank ordering of cost areas that affect each service (e.g., NPV waterfall analysis)
• constructing a business plan to enter a new market and also providing full financial statement benchmarking against publically available financial statements of existing pure players and multiplayers within the industry to shed light on the business economics required to succeed (or fail) in the current world
• providing both a qualitative assessment of why backoffice clearinghouse started to slip on their service level agreements with customers and a quantitative analysis of how more than 70% of the problem statistically had to do with Little’s Law in operations where increases in inventory mapped directly into average cycle time (and then showing how the components of operations throughput failed and could be made more fault-tolerant for the future)
• providing a operations process flow for renegotiating commercial real estate properties and also a per property financial analysis template coupled to a real estate database to identify the most important negotiating parameters and the money at stake for each parameter.

So I guess my observation would be that the areas of financial and numerical analysis are commonly recurring patterns where consultants provide value-add (or at least polish and high-touch) to solving client problems. Often the quantitative analysis goes even one step further, e.g., to help the client build committment and resolve to either enter the new business, take on the development project, or move on to something else with no regrets.

I am often asked by new consultants to describe some of the tangible instruments (as separate from methodologies like Five Forces, SWOT, 3-4Cs/STP/4Ps, Growth Share Matrix, etc.) that folks should become familiar with as core to practicing management consulting. Based on my personal experience in professional services, traditional consulting, independent, and vendor consulting environments, here’s a list of must-haves for regular consultants:

1. engagement kickoff deck "heavy" (with full governance structure) and/or kickoff deck "light" (with core team structure) for starting up projects
2. full financial model (complete financial statements) and/or project-level financial analysis (mostly project NPV and revenue/cost modeling)
3. engagement methodology/workbooks and/or project summary charts
4. workshop decks
5. minutes templates
6. business plan, marketing plan, technology strategy, operations strategy, etc. templates
7. case studies
8. interim management review decks
9. final executive presentation decks (example here)
10. consulting interview guides
11. consulting-style CVs
12. contracts
13. sell, pitch, or discussion decks and proposals

Somewhat annecdotally, I have observed that many folks that get into consulting and come from strictly corporate environments (without consulting experience) find it initially unnatural to tie all of these elements together over and over again. They also seem less familiar with the concept #8 relative to other items in the list. In any case, I see the list above as consulting bread and butter.

Independent consulting life can be an enviable position to be in. After leaving the consulting industry for a period of time, I returned to consulting life as an independent (for a little over a year). The pros of independent consulting life include more flexible work schedules (relative to traditional consulting firms), challenging work, and control over both what type of work one does and which clients one works for. But there can be some downsides and pressures that what needs to constantly work when working on one’s own. Below I list some of the pressures of working on one’s own (a subset of these reasons were primary factors for me to return to work within a larger firm):

• Finding new clients while working for existing clients can be tough – There are only so many hours in a day and as an independent, you are marketing yourself. If you are working for a client, you may not have much time for new client development. It is definitely preferrable from an efficiency perspective to sell into existing clients, but logistical reasons may make these options limited (e.g., needs of client change as they move through problem solving lifecycle, and an independent cannot always position themselves as a one-stop shop). Other ways I have seen independent consultants address sales pipeline considerations are by developing a very focused niche (sometimes backed with strong intellectual property), having a extremely strong network of contacts (e.g., with past co-workers and clients in client management positions), using referrals, and lining up clients directly (including timing-wise) from a rolloff from project with the independent’s prior consulting firm. Note that I have never used this last option, but I have seen it used, and I recommend if you choose this path that you both use caution and understand the path’s limitations.
• Although you can "choose" your clients, sometimes you have to eat too – Probably the hardest thing for me as an independent consultant was cutting across vertical industries (e.g., software, manufacturing, insurance). I have spent my work life almost exclusively in the software and telecom industries (note that this is different from many consulting firms which may have consultants working across many industries early in their careers, e.g., first client dog food manufacturer, second client telecom, third client bank, fourth client valve manufacturer). In any case, sometimes as an independent consultant when an opportunity arises that is outside of your target client profile, one needs to take advantage of the situation and really think hard about how one’s background and skillset can be applied to solve the client’s problem at hand.
• Landing the first client can be tough – Often when you move to life as an independent, you may have little to no sales pipeline to start with. On top of that, you may have no past consulting references, which creates additional risk in the eyes of new client prospects. Note that getting that first client can easily take six to nine months and the contracting and qualification processes are often very different than those when getting hired as an employee.

All-in-all, I would say that independent consulting is a tough (albeit rewarding) route. As a general rule, I would probably recommend that only experienced persons and those that have attained the principal-level or higher within a traditional management consulting firm pursue the independent consulting path. The predominant reasons for my perspective here are that these professional milestones can often address or balance out (to some extent) issues related to customer references, size of professional network, and in-depth knowledge of sales processes involving complex services and emotional purchasing behavior.

McKinsey alum Paola Bonomo commented here (thanks, Paola) and points us to a wiki of McKinseyite and McKinsey alum blogs. To set some context, I noticed that she writes in an earlier post:

… many of my eBay colleagues and former colleagues are bloggers. No surprise here: we live and breathe the Web every minute of our lives …

I wonder, though, how many bloggers there are in the community of consultants and alumni from my previous employer, McKinsey. Fewer, I guess, since the Web isn’t the bread and butter of the profession; yet, there are many sharp and opinionated individuals for whom I imagine that hashing out ideas in the public domain would be enormously stimulating …