Why Do Management Consulting Firms Hire MBAs?

Prior to my current role, I spent many years in the traditional management consulting space. As I see it, the traditional segment of the management consulting industry values MBAs primarily because it facilitates a plug-and-play kind of model where people are interchangeable and can start working on a broad swathe of business problems. Management consulting projects can span diverse areas from operational to finance to marketing to strategy to IT management, etc. An MBA training provide consultants with some minimum common business language, culture, methodologies, and skills that they can use in the field. The traditional management consulting firms need a lot of these plug-and-play type resources since the whole consulting business model is based around selling more and more projects to solve unique business problems. This requires some level of scalability and both MBA training and the business school hiring venues directly support a volume-based model.

While its been a proven model that these consulting firms can successfully scale by hiring lots of MBAs, will the model sustain forever? Are there other models? There are other modern, consultative models emerging. And the models don’t need to be exclusive. For example, you can see this in some of the digital agency like efforts (e.g.,investigate careers at Digital McKinsey or BCG Digital Ventures). There you will see that these firms add a lot of other roles that don’t have to be MBA-types (in some cases might not even be culturally desirable, such as in the case one sometimes gets a vibe with the branding and traditional ad agencies). Roles in these newer consulting firms are positions analogous to product manager, UX design, digital marketing, data scientist, etc. plus traditional consulting roles. We are even starting to see some initiatives relative to adding in behavioral science experts, an area that I mostly play in these days.

While the MBA population is very large within the management consulting space, there are many other backgrounds both present and emerging.

This answer is reproduced from a question that I was asked on Quora.

How Management Consultants Are Evaluated At Different Levels

I’ve been asked on a number of occasions to describe how consultants are evaluated in terms of performance, so I thought that I’d finally write these thoughts down publicly. Here’s a whirlwind overview of an illustrative consulting firm evaluation framework for single career tracks. In a nutshell:

  1. Analyst / Associate – Performance on project activities and workstreams for a project as evaluated by the manager and partner/principal for the project plus any client feedback, minimum threshold for billable hours, support for internal firm activities and some professional development.
  2. Manager – All of the items for Analysts/Associate, plus performance for managing entire workstreams and entire engagements with feedback from principals/partners and clients, evidence of mentoring new consultants, potentially some support for proposal development for existing clients, and potentially some evidence of starting to develop an expertise.
  3. Principal (pre-partner type) – All of items for the previous levels but some slanting toward more evidence of specialization, thought leadership, business development at current clients, and potentially evidence of business development at new clients (may be more true of smaller firms). Compensation can have a more substantial component related to sales for some firms. Minimum billable hours starts to drop a bit, but this level (if pre-partner) can be a real gaunlet because the principal is stretched between sales, delivery, while trying to build their case for becoming partner.
  4. Partner/Managing Partner – Here we get into sustaining a business to support teams, multiple consultants, and potential practices. At the managing partner level it is about P&L and developing the business, including from strategic areas (e.g., new initiative, focus areas, offices). Also manages the higher level strategic relationships. Minimum billable hours can fall quite dramatically depending on the firm (e.g., cut in half plus/minus or even more at managing level).

Do Consulting Firms Rely On Hiring Salespeople to Sell Work?

Many consulting firms (especially management consulting firms) rely on prior consultants in terms of selling work. Why? Mostly it is because people are the product. In consulting sales, you are selling yourself and your team. More specifically, you are affirming the problem statement, the problem-solving approach, and your team’s experience with solving similar (or comparable) problems in comparable situations. It is hard for external, non-consultant salespeople to do this.

Suppose the problem statement is to develop a new product. People who have experience in the relevant consulting area will know how to refine unstructured problem statements like this, design an engagement to solve the problem, and get the right people staffed on the project. Hiring people from the outside to sell unstructured consulting work (say professional salespeople who do not have consulting experience) may not work very well, although success of this type of approach usually depends on the type of work. For example, some large professional services firms do have more dedicated business development people in cases when the realm of consulting is more focused (e.g., HR consulting, accounting) and solutions are more regular, common, or repeatable.

In summary, to sell many types of consulting services (not all), one often needs to know how to actually do consulting work. That tends to be the primary reason why consultants sell work and not salespeople brought in from the outside. A corollary to this is that partners in consulting firm will often have to do some minimum amount of consulting work and not just sell services; consultants need some continuing involvement with field work to stay fresh and be able to sell.

Tips on How Consultants Can Balance Working Long Hours and Managing a Healthy Life

Consultants do work long hours. Not as bad as investment bankers though. In my opinion, it takes a conscious effort to have a healthy lifestyle in consulting. Presuming that the focus on health is mostly on physical exercise and diet (versus mental health or social relationships), here are some things I’ve used to try to strike a balance:

  • On the job, really focus on what is strategically important; try to cut bait or minimize involvement with small stuff that you shouldn’t sweat. An end goal might be to target roughly 60 hours of work per week on average, and that requires prioritization and efficiency.
  • Try to use facilitative consulting methods where possible versus having to deliver content directly. There are two benefits to this (but it depends on the engagement). Facilitative consulting tends to leave a client organization in a better state where things stick (tends to decrease long-term dependency on the consulting firm). The consulting firm can also get better leverage. The thing to watch out for the facilitativre approach is that sometimes the client organization expects the consulting firm to do things for them, even though this might not be in the client’s best interest (e.g., imagine hiring an exercise coach where the coach spends all the time demonstrating exercises; yes you’ve paid them, but eventually it is you that needs to exercise).
  • Learn how to execute on an effective, reasonably rounded, exercise program in 30–45 minutes (e.g., cardio, abs, legs, arms workout areas). Could be 3 sets of 2–3 exercises per workout area with some rotation of programs. Perhaps get a physical trainer to come to your house on the weekends to get you in the flow. And cover cases where you need to use minimal equipment (in case gym access is limited). Get a buddy, such as running with a colleague or client. Although this one might add weight to your rollerboard, here’s an example of a workout that can be done with two, five-pound dumbells:
  • Since you often have to eat out a lot, consider eating lunch at healthier places, even at salad bars with grocery stores (like Whole Foods). Figure out how to reduce carbs and meat intake if possible (perhaps by getting client recommendations for places to eat). Drink plenty of water.

Edit (February 1, 2019): Based on Kevin Johannes Wörner’s experiences in the industry and at Roland Berger, he shared with me a video that provides his perspectives of work-life balance in consulting. He specifically talks about the roles of industry choice and the consulting team.

Tips on How to Sell Consulting Services Without Giving Away Everything During Pre-Sales

A lot of consultants fear that they will give away too much in terms of advice during the pre-sales process. Here are some thoughts on how I’ve tried to keep sales processes on track:

  1. As you are engaging the client prospect, try to envision the big picture for the solution approach to the prospect’s business problem. For example, you may see that the client needs to a) better articulate the problem statement and the key priorities (vision), b) decide on an approach (strategy), and c) execute on all the tactical operational things to carry out the strategy (tactics).
  2. Communicate the big picture approach to the client.
  3. Try to add some value by helping them to articulate and refine the problem statement and perhaps also add a detailed item or two that they should consider as part of the more detailed solution approach workstreams. Yes you might consider this giving something away, but you will need to be able to add value and show the client how you are thinking to be able to sell to them consulting services. The client prospect needs to be able to trust you.
  4. Keep your pre-sales activities pretty tight. For example you might limit your pre-sales sessions to 2 to 3 meetings of 1–1.5 hours each. This will also help to provide some separation between planning and doing the work. If you are doing a good job selling your services, you should be able to tell within say the first 1-3 sessions whether you have a serious sales prospect and what the high-level requirements are to close the deal. Note you might be able to get to a high-level proposal or conceptual approach after the first 1–2 meetings.
  5. For many deals, you should be making it clear to the prospect that you are trying to better understand the problem statement so that you can propose the right approach to solving the problem; you are not solving the problem right there as solving the problem will take days, weeks, or months of collaboration and work.

To recap, make sure that both parties understand the problem statement. Both parties should understand the approach and should appreciate that solving the problem will take both time and work. Offer some value to the client in advance of sale; this does not necessarily have to be much, but you need to establish credibility and trust. Finally, set some expectations on the cadence and timeline to get to a proposal or no-go decision.

Reflecting on Innovative Methods That Management Consultants Can Use to Pitch Clients

I wrote the following post in response to someone on Quora who asked me about innovative methods that management consultants use to pitch clients instead of using PowerPoint presentations.


Surprisingly, one can go a long way with Powerpoint presentations. Outside of that, to sell to clients I have used these methods in more rare to less common circumstances (generally only in cases when I was an independent consultant):

  1. Facilitating an imagination exercise – Essentially having a person imagine that we’re at the end of the project, we’re looking backward, and we’ve gotten good results working together. I have them explain the kinds of things that happened to make the project go well, and I help co-construct the path that we used to get there.
  2. Writing a job description that is needed and that I could fulfill – In some cases it might be easier to outline general problem areas, desired outcomes, and probable activities as opposed to using a very linear project approach with engagement workstreams. So I created a new role within the company by writing a job description, and I filled that role on an interim basis via contract.
  3. Helping advise another person to get an executive role – As an example, I essentially provided coaching feedback to a person that was interviewing and pitching to lead a new business within another company. That person brought to the table specialized experience within a field. I brought perspectives on starting up new business initiatives. When they got the job, I was in the perfect position to continue to advise more formally.
  4. Using product exhibits – Essentially using software products or mock-ups as a centerpiece to describe the end goal of where we could potentially go together and then verbally describing how we would get there. This approach can make outcomes more tangible and vivid.

 

Coping With the Transition from Management Consulting to a Startup

I wrote the following post (edited slightly here) in response to someone on Quora who indicated that they were having a hard time coping with the transition from management consulting to a startup in terms of the more experimental nature of the startup world and feeling like they were not using their past skills and knowledge.


When I first left a traditional management consulting firm, I went to a startup. The modes of working are quite different. Here are some things to consider for making the transition to the startup world from consulting:

  1. As opposed to focusing exclusively on the 80/20 principle and working on things that will work, use your experience to try to avoid the things that won’t work. Often this can be of significant help in a startup because startups cannot afford to make too many errors of large significance.
  2. In consulting, one has usually built up a lot of endurance to work hard. Use this trait to your advantage for working within a startup.
  3. Consulting teaches one to be systematic and to measure results. One often needs to do the same thing in startups in terms of measuring sales processes and figuring out what is working and not working (e.g., in operations or product management). If you haven’t read The Lean Startup by Eric Ries, dovetail the concepts of cohort measurements and startup accounting in that book with the stuff you probably learned in consulting.
  4. Often in traditional consulting, one has been trained to put in lot of processes in place for mature companies. Don’t overapply these concepts to a startup. Rather, think about how the startup is discovering its business model and how the organization might mature over time to include more formal processes often implemented by consulting firms (the “startup learning curve”).

 

How to Become a Go-To Person Within a Consulting Firm

I was asked to answer a question about how to become a go-to person when employed within a consulting firm. Here are some thoughts based on my past experience:

  1. Be known as a consultant that gets things done on projects in general. This goes a long way in consulting circles.
  2. Play a key role in developing new intellectual property or approaches for the firm. For one firm I worked for, I came up with “standard” framework approach for doing business plan analyses for municipal wireless deployments. My team also created an approach for doing wireless spectrum valuation.
  3. Pursue mastery in business development if you can (aka sales). If you can sell business (even if in a lead, supportive role) this will also help develop your name in partner circles or at least align you with a key partner in the firm that may sponsor you down the road.
  4. Publish articles in a focused area or practice (aka marketing). Although it depends on your firm, consider writing articles, whitepapers, or books. I should have done this more in my career, but when I did eventually publish a book on implementing behavioral science initiatives, it helped solidify a specialty in people’s minds.

Reflecting on Your Consulting War Stories Builds Character

I don’t claim this to be a good war story, but it is a war story has had a deep impression on me.

Early on in my career, I was asked by the managing partner on the project to help a struggling manager to help develop their plan for the business. When I got into the weeds, the problem was essentially an operations strategy and planning project. I brought a little rigor to the analysis, and I worked with the manager to break down scenarios and workflows and applying Little’s Law (i.e., average inventory equals average cycle time times average throughput) to validate the strategy, offer operational improvement suggestions, and calibrate the model. When the results were presented to the executives, they were pretty impressed. I was later privately told that I had helped to save the manager’s job. Take that for what it’s worth, but in any case, that made me feel really good. A key was that I helped to facilitate the strategy and analysis process, not completely do the work on my own.

Years later and in a totally different industry, I was asked to help with an operational assessment where the company had lost a tremendous amount of institutional business in the past year due to sales and operations processing issues. The executive team wanted me to take a look at the total business and dissect where things went wrong. There was some subtext that they believed that the one of the division managers had crashed the ship. Though it was never stated explicitly, I think the executives wanted me to find the implicating evidence. I ended up using similar techniques to the first project; first I tried to determine why people churned out as customers, and then once I attributed it to cycle times, I essentially used Little’s Law to determine why cycle times went up so drastically. In the end, what I found was that cycle time increases drove severe customer churn and that cycle time increases were not due to the manager in question. It was an issue caused by and owned at a broader level. I was done. Along with process recommendations, I presented the analysis results to the executive team. They were happy, but a bit surprised that I had not found implicating evidence for the manager. Once the project was complete, I was happy. I was happy that the client was happy, and I was happy with my approach and sticking to science as opposed to being swayed by biases or internal politics of the client company. Months later, I found out that the executive team ended up firing the manager. I’ve had mixed feelings ever since, ones that have never been fully resolved.

I ask questions like, do management consultants have impacts on people’s jobs? Or do management consultants feel that they are so important that they have impacts on people’s lives? Who owns the results? Is it the management team? Who owns the implications if people’s jobs are lost? What if jobs are gained? The answers to these questions are both debateable and situational. All said, to this day certain project types and situations trigger bad vibes for me, and I try to avoid them where possible.

 

Does a Person Need Passion or Expertise to Start a Consulting Firm?

Here are the situations regarding two people I know:

  1. Person 1 is terribly bored by the work he does in radiology, but he’s extremely good at it, and organizations like product companies, health systems, and providers seek out his consulting services.
  2. Person 2 is extremely excited and passionate about behavioral economics and wants to start a consulting firm. Unfortunately, this person has no experience in the area and can’t figure out ways to both find and close deals with clients.

To start a consulting firm, what matters is being able find clients and close contracts with clients. To stay in consulting for a sustained period, one also needs to be able to deliver the services. Passion (and expertise for that matter) can play a supportive role in all of these areas; it can make it easier for you to find clients, close contracts, and keep delivering quality services. I don’t believe passion is needed to get the ball rolling though. It might be something one should think about before starting to roll the ball, but business development is a must-know-thing for running one’s own consulting firm.