In 2013, The Economist published an article on the increasing demand for management consulting in various sectors of society. This article, titled, “To the Brainy, the Spoils”, was headed up with the following tagline:
“As the world grows more confusing, demand for clever consultants is booming”
We hear confirmation of this from every corner of the globe – as business grows more complex, consultants are increasingly called upon to help make sense of the confusion. In many instances, consultants have even been blamed for causing the initial confusion – which really gives the industry a bit too much credit.
How do consultants break down problems into manageable parts? In reality, they use what is commonly called the 80/20 approach – and we’ll break that down into some of its vital components today.
Rather, consultants are and have always been opportunists. From the beginning of the industry – as a natural next step to the rise in public accounting – consultants have been filled with glee when a client runs into a seemingly unsolvable problem.
In the second of our Consulting 101 videos, “What is Consulting/Management Consulting?” we gave a very simple outline of a consultant’s role. Recapped here, a consultant will conduct research and give business advice so that one of the 3 following outcomes will be achieved, depending on the work you have been commissioned for:
1) Increased sales
2) Decreased costs
3) Enhanced organizational design
To glean a common thread from these three objectives, consultants get paid to increase productivity. If the CEOs are the race car drivers, consultants are the backroom engineers. We increase fuel efficiency, prevent oil leaks and redesign engine parts. Perhaps it’s a dodgy analogy, but stick with us.
I listened to a podcast recently when a leader of a global non-profit shared about life in his earlier years, when he was a mechanic. He said there were other businesses in town who were jokingly referred to as “part replacers” by him and his colleagues. Part replacers would replace whatever part of your car was broken, in this instance let’s call it Part C. Real technicians, instead of just fixing it, would ask why exactly Part C got broken and in the course of their investigations, they would realize Part A isn’t lubricating properly, which means Part B is overheating which means Part C is now broken.
As a consultant, you have to see things both in the whole and in their pieces – and this is why many aspiring business people come to work with Management Consulted after having spent some time in Risk Advisory or Tech Consulting wanting to move upstream. At firms like MBB or Deloitte S&O, consulting teams need the ability to know how all the pieces fit together and how they all affect each other.
As an analyst or project manager, you need to see things – often using data – that others would not, diagnose them and offer workable solutions in relation to your findings. All this will often have to be done in high pressure environments, under the imposition of clearly defined time limits. It sounds both exciting and daunting, doesn’t it?
If you find yourself feeling excited, keep on reading. If you find yourself feeling daunted, definitely keep on reading! In this series, we’ll be exploring some thinking patterns that are vital to success as a management consultant. Here, we’ll address the first 2.
1 – Quantitative Reasoning Is All About Outcomes
After attending a top firm’s on-campus presentation, you may come away thinking that consultants solve problems by simply putting on their thinking caps, grabbing an expensive latte and having a stroke of brilliance while staring intelligently off into space.
Before we get carried away with ourselves, it is important to remember that qualitative reasoning does have a place in management consulting. But all things considered, quantitative reasoning rules the roost. Quantitative reasoning is all about outcomes. Quantitative reasoning is an objective form of reasoning. Quantitative reasoning relates to numbers.
Quite simply, the business that’s paying your firm for your brain’s processing power would like some cold hard facts to run with before making major course changes with millions on the line. To them, your ideas might sound like this: “If you do X,Y & Z, you will reach another 4 million potential buyers. If, based on your current market share of 8%, you reach 8% of these previously unreached 320,000 buyers, you will make another $100trillion billion in the next five minutes.”
In fact, consultants – especially consultants at the top firms – use numbers to provide not just pie-in-the-sky ideas, but to present scenarios to the client company. These are more often on the safe side, and the consultants share not only the projections but the reasoning behind them.
If you feel like this type of reasoning does not come naturally to you, we have good news! First of all, you’re normal. Second, we have a huge database of online case studies, our Case Bank, designed to mirror the type of problems management consultants face on a daily basis.
Even if you don’t feel predisposed to this way of operating, we would encourage you to read and practice solving these cases. Just like you probably fell more than a few times when you were learning to ride a bike, don’t be surprised if it takes you a little bit of time to get to grips with the case studies. This is a skill that can and should be honed and developed over time, even if you come to understand the basics like a natural.
2 – Have A Priority First Mindset
As we alluded to before with the example of the parts replacers, perspectives can be the difference between an average consultant and an outstanding consultant. A large part of consulting is actually problem solving. But in strategy consulting, before you can solve a problem, you have to identify it, and as I have already said, it may be so that solving the problem in front of you may not help solve the underlying one.
MC was invited to speak at Yale earlier this year, and one guy came up to us after the class. This was his query: “I worked all summer for a tech consulting firm. BCG was also working at the client. I worked at least twice as much as the BCG consultants. Why was that?”
Our reply: “The partner on the BCG project probably had identified the most important issue and promised to solve it for the client. The partner on your case had probably promised to solve the whole issue – and was working his/her team to the bone to get the job done.”
If you’ve exhausted every single option, possibility and factor to no avail, the ability to look at things with a priority first is going to be what breaks a project wide open. Here’s the kind of dialogue you might find inside the head of someone from McKinsey –
“I know we’ve been looking at what features they could add to the product to make it more appealing, but could it just be that that their current packaging isn’t appealing enough? If you look at the market leader in this field they offer 18 different colors, but our guys only offer 2. The market leader’s one biggest selling color, red, sold 500,000 units alone last quarter. That’s 75% of our guys’ total sales across their 2 colours and if you look at what they offer, they’re both comparable in terms of quality. They just need to look first at the packaging.”
Again, we strongly recommend looking at our Case Bank and the model answers we provide. They’re a wonderful tool for the pre-consultant who is eager to see how we decide to approach problems with both quantitative reasoning and perspective. We often address issues creatively but also analytically – as you see different, prioritized approaches, it will open your mind up to looking at things differently in the future.