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The good, the bad, and the ugly of management consulting

August 20th, 2009 · 6 Comments

After I published How My Friend Caleb Became A Legend Among Wall Street Junior Analysts, a reader asked me what my thoughts were on management consulting firms such as McKinsey & Company since these firms also have a "reverse pyramid" organizational structure that are similar to investment banks.

Like many things in life, Management Consulting is not as good as some people think, and it is not as bad as some people think. 🙂 Overall, my view on Management Consulting is more positive than my view on investment banking.

I tend to discourage people from getting into investment banking, but occasionally I would encourage people get into management consulting if I think they can benefit from the training and industry exposure brought by management consulting.

Management Consulting is a very loosely defined term. It could mean many different things. For the purpose of this article, I’m going to narrowly focus on "strategic consulting firms" such as McKinsey, Boston Consulting Group, and Bain Company. These are the three most well-known firms in this space. Other well-known firms include Monitor, Mercer, Mars, LEK, etc. There is also a growing number of "boutique strategic consulting firms". "Big 4" consulting firms such as Deloitte, PWC, Accenture also have strategic consulting practices.

The Good

I know many former and current management consultants. I can say that overwhelming majority of them are bright, intellectually curious, and communicative. It’s fun and easy to carry a conversation with them.

Management Consulting firms have very competitive selection process. They tend to hire analysts from only the top undergraduate programs, and hire associates from only the top business/law/graduate programs. So, almost all of the consultants are "academically smart". If you’re the type of person who enjoys an academic, intellectual discussion with your colleague, I think management consulting provides a better environment than most other industries.

Over the year I have also developed a very health respect for the professionalism of management consulting professionals. When I was working at one of the aforementioned management consulting firms, whenever I called a colleague, he or she would always return my call. Whenever I asked a question in the firm’s knowledge base, I could always expect someone answering my question. Whenever I set up a meeting, my colleagues would show up on time. I’ve never experienced this kind of professionalism since I left management consulting.

I joined a management consulting firm fresh out college. I was a computer science major in college. I was not as "polished" and "business ready" as some of my classmates. Management Consulting provided me great training. I learned how to interact with clients. I was exposed to several industries, which really helped me figure out what industries I wanted to work in the future. I also traveled a little bit since I had to work for different clients at different locations. I was young and single, so I really enjoyed the travelling experience.

However, I do want to say that business travel gets tired after a while. I was fortunate that I only worked in management consulting for a little bit over a  year, so traveling never wore out on me. 🙂

The Bad

Have you wondered why management consulting exists? A mentor of mine once told me that "management consulting firms exist largely for political reasons".

This is a very profound statement and it is very true.

When large companies need to make controversial decisions such as cost cutting, layoffs, or strategic changes", instead of taking on all of the responsibilities (and potentially blames), it’s "wise" for the senior management team to bring in outside "expert management consultant" to provide 3rd-party opinions/recommendations. It makes the decision more "legitimate", and help reduce senior management team’s risk (i.e. you cannot put all of the blame on me — it was recommended by McKinsey.)

Of course this is not the only reason that management consulting firm exists. But, it’s a very important reason. And that’s why I quitted management consulting.

I worked at several client projects. At each client site, I’d spend a few months there. But, I was never really part of the company. I was simply going in, doing some research, making a few presentations, and giving some recommendations. I never saw my recommendation being implemented. I didn’t feel that I was making any impact — I didn’t see tangible results.

I started questioning myself — how did I know my recommendation was correct? It was my first job out of college. Many of my seniors in the project team had been in consulting for their whole career. They didn’t have the from-the-trenches operational experience. They were all very smart and quick-study. They could learn a lot about a company in a very short period of time. But, sometime I felt that we were like a group of medical school students who had studied medicine for two years but had never operated on any patient. But, we were making recommendation about how to do surgeries. There were a lot of assumptions, modeling, and intellectual thought experiments.

The Ugly

Similar to investment banking, management consulting firms have a reverse pyramid organization structure. Analysts and associates are at the bottom of the pyramids. They’re asked to work long hours. In term of career progression, you’re either "up or out". Certain number of people will become managers, principals, partners, etc. If your time is up and you don’t make to the next level, you’re out.

It’s less an issue for entry-level analysts since you’re expected to go back to business school to get your MBA after working at the firm for a couple of years. But, once you’re an associate, your career path is "up or out". That’s a lot of pressure. It could get quite political and demoralizing.

Also, I’ve found that some management consulting professionals have developed an "elitist mentality" over the years. They tend to be really good student throughout their lives. They attended really good universities. They then went through a very competitive process to get into McKinsey, Bain, BCG, etc. After working in those firms for a year or two, although they might not like the intensity and pressure of management consulting, they felt that their employers were the most prestigious companies in the worlds. They simply felt that there wasn’t much option outside of the management consulting firms. Basically, they stuck. They didn’t like their jobs, but they felt that it’d be "a step down" to switch to a non management-consulting company.

My advice for those folks is simple: Management Consulting is just a job. It’s no more or less prestigious than other corporate jobs. Focus on your true career interest. If your heart tells you that you no longer like your management consulting job, then look around. Don’t let the "prestige factor" prevent you from trying something new and different.

What do you think?

I’m interesting to hear from all of you – do you agree or disagree with my view on the good, bad, and ugly of management consulting?

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Tags: Career Fast Track · MBA · Recruiting & Job Hunting

6 responses so far ↓

  • 1 aiko // Aug 20, 2009 at 10:54 pm

    I remember Gerstner talked about why he left McKinsey and joined American Express in his book “who says elephants can't dance”. that's the same reason as you wrote in the “The Bad” section.

  • 2 GeekMBA360 // Aug 20, 2009 at 11:35 pm

    Thanks for the comments.

    I actually read Gerstner's book as a required reading for one of my MBA leadership class. I think Gerstner is a great example of former strategic consultant who did well outside consulting. But, I think he is a rare case. A couple other examples are Meg Whitman at eBay and Scott Cook of Intuit.

    Most partners from consulting firms don't do well outside their own firms due to lack of operational experience/skills. George Sheheen, who were the managing partner at Andersen Consulting (now Accenture), left the firm to run Webvan. 🙂

  • 3 Rahul // Aug 21, 2009 at 4:41 am

    very nice article. i have a lot of disdain for consultancy companies. I recently joined in the shop floor of a manufacturing plant and can tell you that I will need to spend atleast 1-3 years over here to be able to do inhouse consulting over here. If a management consultant tells me that he is gonna look around for a month and tell me how to improve the plant, I'm NOT buying it.

  • 4 konfused // Aug 27, 2009 at 1:08 pm

    Great article.

    I have worked in Consulting as well as Industry. I left Consulting because I was bothered by the question that why can consultants just walk in, conduct interviews, create frameworks, present decks and propose a brighter future. Why cant the management guys, who are equally bright Harvard pedigree, think the way consultants do.

    The fact is, its easy to talk but lot more difficult to achieve. And this is where consulting has been taking a beating since the dot com bust. The way the consulting firms are structured, it causes a major disconnect between on-the-ground reality and powerpoint decks.

    After MBA I want to move back to industry. And if a consultant comes my way, I will make him a simple offer – “Achieve what your deck promises and I pay you 10 times the agreed fee”!

  • 5 konfused // Aug 27, 2009 at 5:08 pm

    Great article.

    I have worked in Consulting as well as Industry. I left Consulting because I was bothered by the question that why can consultants just walk in, conduct interviews, create frameworks, present decks and propose a brighter future. Why cant the management guys, who are equally bright Harvard pedigree, think the way consultants do.

    The fact is, its easy to talk but lot more difficult to achieve. And this is where consulting has been taking a beating since the dot com bust. The way the consulting firms are structured, it causes a major disconnect between on-the-ground reality and powerpoint decks.

    After MBA I want to move back to industry. And if a consultant comes my way, I will make him a simple offer – “Achieve what your deck promises and I pay you 10 times the agreed fee”!

  • 6 10AM Co.,Ltd // Nov 22, 2012 at 12:02 am

    I come across this article as I am now deciding between offers. I am an MBA student, fortunate enough to have been extended offers from two of the largest tech firms and one of the top 3 management consulting firms, after spending the summer with the firm. 

    I am gravitating towards taking the offer from one of the tech firms but wondering whether I am making the right decision. I really enjoyed my summer experience with the consulting firm and see how it will continue to keep all the doors open for me, but having worked in the industry before business school, I did not feel like I was adding a lot of value to my summer client even when that was already the case that everyone in the office would like to be staffed on (a pure strategic growth case). 

    I am torn between the prestige/opportunities presented by working in top consulting firm and creating real value to the business/having ownership/executing ideas… 

    Your article has helped me a lot but I am still in limbo. I need to make a decision in a less than a week time before the consulting offer expires.

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