4 Ways to Develop Practical Business Understanding for Consulting


A prospective management consultant without basic business understanding is like a camera tripod with 2 legs — it just won’t work.

Many History, English, and Art majors, as well as engineers and law students – all of interest to consulting firms, but lacking in business basics – come to us asking how they can develop their business understanding to prepare for consulting interviews.

We’ve tailored 100’s of answers to fit our client’s individual backgrounds and needs, so we finally decided to be super nice and share 4 of the most common techniques we’ve recommended.

Here, we’re not talking about actually developing case interview skills per se – we have a whole bunch of suggested articles at the end that will help you do that. Instead, we’re recommending real-life activities that will help you understand why profit is important to a business, or how to quickly study a new industry.

If you follow through on even 1 of the 4 actions below, you’ll develop your ability to talk about business with depth – and it will indirectly make you stronger at cracking cases.

Enjoy!

1. Start your own business

This can easily be the most time consuming of the 4 options, but it’s not always as hard and scary as some people expect. You can create a side business by working only a few hours a week. We won’t share how to start a business — there are tons of great resources for that already (our friend Ramit Sethi’s Earn1k is a great one, or check out our very own Independent Consultant’s Toolkit!).

What will you learn from starting a business that will help you prepare for consulting? Although there are several things, here are 2 key ones:

First, you will learn different aspects of business — everything from product development to sales to customer relations — and have some experience in each area. You’ll also experience how much time you can waste grasping at straws – and how much more helpful applying a structure and hypothesis to each approach will be.

This leads to our second point — although you will learn on a smaller scale than in a Fortune 500 environment (you’ll use less data, involve fewer people, and have much less at stake), you will start developing the ability to see what really matters (and what doesn’t) to the CEO of a company — profits, operations, etc. – and perhaps more importantly, you will have firsthand experience in business strategy. 

2. Complete our Consultant For a Day exercise

You aren’t hired by a consulting firm (yet) – but so what? What is stopping you from doing a consulting project today? Here’s one approach you can take (we call it Consultant for a Day):

First, pick a business. We recommend a local coffee shop, bookstore, or the like – a business with easy dynamics, easy-to-identify customers, etc. 

Second, go to the business and apply each of the 4 frameworks described in our Consulting Bible. Size its market. Identify how it makes profit. Evaluate its competitors. Determine what its value would be if it were to sell.

Next, analyze the data and develop actionable strategies to improve the business. Come up with at least 3 options in each framework. Back it up with data if you can – even if you have to approximate the data.

Finally, create a concise presentation in PowerPoint with key findings from your notes and key recommendations to improve the business you are analyzing. 

Note: It’s an added bonus if you are able to do this for a business that can help supply you with key data that you can’t obtain from just observing the business. Also, it would be even better if the business will let you deliver your presentation afterwards.

Note on the note: It’s also amazing if you can work with a team on this project. Connect with your on-campus Consulting Club, or gather a group of 3-4 people together to help you. Voila! Extra team stories and extra impact for the client – all in one.

3. Read books or listen to audiobooks on business and consulting

While there are 100’s of great (and tons of crappy) options to choose from, we’ve hand-selected several must-reads for prospective consultants. If we had 1 week to learn about business basics and consulting, we would read:

1. The McKinsey Way by Ethan Rasiel — In this book, Rasiel uses case studies and anecdotes to describe how McKinsey thinks about and solves business problems. While reading this, you can expect to learn key business principles as well as get a feel for what life at an MBB firm, specifically McKinsey, is like. To learn more about this book, read our McKinsey Way Book Review.

2. Competitive Strategy by Michael Porter — Check out this core book on business strategy, capturing the complexity of industry competition and explaining Porter’s well-known “5 forces”. It’s heavy, so skim it. To learn more about Michael Porter, read our Michael Porter on Competition Book Review.

3. Good to Great by Jim Collins — In this book, Collins identifies the universal distinguishing characteristics that cause a company to go from good to great, basing his research on a comparison between companies that went from good to great and those who failed to make the leap.

4. Lords of Strategy by Walter Kiechel III — This book is the story of the 4 men who invented corporate strategy as we know it today, setting in motion the modern, multibillion-dollar consulting industry. The 4 are Bruce Henderson, founder of Boston Consulting Group, Bill Bain, creator of Bain & Company, Fred Gluck, longtime Managing Director of McKinsey & Company, and Michael Porter, Harvard Business School professor and former director at Monitor Group (now part of Deloitte). For more on this book, see our Lords of Strategy Book Review.

If you are applying to a specific MBB firm, we’d definitely recommend you read the following firm specific books respectively:

McKinsey

  1. The McKinsey Way
  2. The McKinsey Mind
  3. The McKinsey Engagement

Bain

  1. Profit from the Core
  2. The Ultimate Question 2.0
  3. Answering the Ultimate Question

BCG

  1. The Boston Consulting Group on Strategy

And for those who are real overachievers, here are a couple more books you could read:

  1. The 80/20 Principle by Richard Koch
  2. Competitive Advantage by Michael Porter
  3. On Competition by Michael Porter

Side note: Aside from reading books, we highly recommend following the latest online news publications. Here are a few we recommend: The Wall Street Journal, Harvard Business Review, Business WeekFortune, and The Economist.

4. Take business classes

If you are currently in school and aren’t studying for a business-related major, take a few business classes on the side. Not only will this help increase your business understanding, but it will also demonstrate your interest in business to the consulting firms you apply to.

If you aren’t in school or if you are unable to take any business-related classes at your school, consider online classes. Although unaccredited, websites like Coursera offer basic business classes for free. Looking for an accredited option? Many universities allow you to take online classes (you’ll want to grab one from a Top 10 global program if at all possible). Here’s a list of online classes available from Harvard.

Our favorite option? Strategy Simplified – MC’s very own monthly class, where we break down real world business decisions to examine their core drivers. What separates Strategy Simplified from business classes is that you are expected to contribute to the discussion. You don’t only learn from us, but from high-performing peers from all over the world. You can learn more here.

While acting as an observer to business classes themselves don’t necessarily help you crack cases, they can deepen your understanding of key business topics or enable you to come up with more robust recommendations.

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As already mentioned, there are many ways to develop the business understanding needed for consulting – we’ve just mentioned 4 key options here.

Wondering which options will be best for you to take to improve your chances of landing jobs at your dream consulting firm? Contact usWe work with clients in a Power Half Hour – a 30-minute head start that will help you maximize your chances of landing jobs at consulting firms.

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