Report: “Consultancy”

The nature and value of consultancy

The roots:

Definition:

A consultancy by definition is a company that gives expert advice on a particular subject, in

other terms, an expert advice on a particular subject which a person or group is paid to
provide to a company or organization.

It can also be said that, consultancy is the providing of expert knowledge to a third party for a
fee. Consulting is most often used when a company needs an outside, expert opinion
regarding a business decision. For example, a company seeking to sell its products abroad
may look for a consultant familiar with the business practices of the target country. The
consultant will tell the company what best practices should be followed, what to expect from
customers, and how to deal with foreign regulations.

History:

Founded in 1926, McKinsey & Company was the world’s first pure management and strategy
consulting company. McKinsey is arguably the world’s most prestigious consulting firm. The
culture of the firm was heavily influenced by a man named Marvin Bower, who served as
managing director from 1950 to 1967. Bower believed that management consultancies should
adhere to the same high professional standards as lawyers and doctors. To this day, the core
guiding principle at McKinsey is professionalism.

Boston Consulting Group, arguably the world’s second most prestigious consulting firm, was
founded in 1963 by Bruce Henderson. It all began when Henderson left Arthur D. Little to
accept a challenge from the CEO of the Boston Safe Deposit and Trust Company to start a
consulting arm for the bank.

Ten years later, in 1973, Bill Bain and others left the Boston Consulting Group to form Bain
& Company, which is also one of the world’s leading consulting firms.
According to the UK Management Consultancies Association, the consulting industry in the
UK began to grow quickly in the 1950s, fuelled by the arrival of the US consulting firms, a
wave of new management techniques, and increased demand from clients for specialized
consulting skills.

In the late 90s, firms came to dominate the consulting industry tables, occupying five of the
top six places (Kipping 2002). They have tens of thousands of consultants all over the world,
and have had multi-billion-dollars revenues. These firms were: The Big Five: Arthur
Andersen, Deloitte & Touche, Young, KPMG, and PricewaterhouseCoopers PWC.

Assets and drawbacks:

Engaging a consultant to accomplish a specified job or provide expert advice can subsidy the
organization. Typically, it'll engage such a consultant on a contractual basis so he delivers
within a given time for some agreed-upon compensation. There are assets and drawbacks of
consultants – the outcome of the engagement may not always be as fruitful as expected,
leaving the enterprise disappointed.

Competence and exterior insight:

Hiring an autonomous consultant has the advantage of hosting new skills, aptitudes, and
expertise not available in the organization. Whether the company hires a consultant for
training or to set up a project, it relies on his expertise to get results within a specified time,
which can enhance productivity, help prevent the organization from becoming too isolated in
its thinking.

Pay and general expense savings:

Regularly, it's economically wise to employ the facilities of a consultant when an enterprise is
commencing a new project, such as implementing a marketing strategy or changing its
business methods. Their experience cuts training time and ensures to avoid expensive pitfalls.
Unlike regular employees, the company doesn't have to keep consultants on the payroll once
the project they’ve been hired for, is complete.

Limited society acquaintance:

A disadvantage of consulting is that consultants often lack knowledge of in-house procedures.

This can create work conflict, as their mode of operation may affect workflow for the regular
employees. The company typically has limited control over independent contractors; they are
guided only by what is spelled out in the contract. If it operates a multinational corporation,
one of the disadvantages of consulting is that hiring consultants in foreign countries can be a
challenge due to language difficulties and cultural differences, requiring extra resources to
ensure a productive engagement.

Communication and quality matters:

Most times, consultants are constricted to plug a perilous gap. The enterprise may have no in-
house expertise to check whether a consultant's methods will provide the quality deliverable it
expects. If they are not actively looking for feedback or a status report but accord him the
leeway to operate independently, they risk getting low quality results. It's vital that a member
of the employment team keeps labels on the consultant's activities, dragging status
informations and promises made.

Consultancy’s context, nature, and academic interest:

Organization development and critical approach:

There are many reasons for the proliferation of the academic interest concerning
consultancy’s growth and economic significance, therefore, two approaches can be mentioned
if talked about these reasons, in this case, the OD and Critical approach.

These two approaches are very different one another and one came to complement and correct
the other’s beliefs and theories, for instance, the OD literature gained much of its purchase
and value from the fact that many leading commentators were at one time successful
practicing consultants themselves, in the more recent literature this has been viewed as a key
weakness. Instead, it has been argued that a narrow concern with prescriptive and formulaic
advice to clients and practitioners is, at the very least, limited in its contribution to a thorough
conceptualization and understanding of the nature of consultancy work. This arises because
the OD literature is located, as it were, inside the activity itself. It assumes that management
consultants have already convinced clients as to their value and "know-how."

A second major difference between the OD literature and the more recent critical literature
has been the status of consultancy knowledge and, consequently, the problematization of any
claims to being a professional occupation.

The OD literature was grounded in a root metaphor of the consultant as professional helper.
Consultants were therefore presented as drawing on an expert body of knowledge based on
advances in behavioral sciences in order to solve client problems. Their activities were seen as
synonymous with the role of professional helpers remedying illnesses in client organizations.

Consultancy: What added value?

Management consulting’s future in adding value lies in big data, predictive analytics and
technology. First, management consultants must increasingly demonstrate that they are able to
bring a rare insight to the clients by gaining access to robust databases to undertake data
mining, industry-specific benchmarking, advanced analysis and data linkage. Clients will see
this proprietary data ownership of management consulting firms immensely valuable as this is
what they’re lacking. Further, data is moving towards more dynamic and real-time to be
relevant with the ever-increasing change.

Second, senior leaders are very keen to understand what the future holds for their products,
services and industries due to the rapidly changing environment. So, management consultants
will add value to their clients if they are able to reliably bring their point of view about what
the megatrends are, by bringing a multitude of data together, to equip them for the future. This
predictive analytics will help the clients to spot future trends that will help them better
manage the risk of disruption.
Finally, technology will increasingly play a big role in how management consultants engage
with their clients. This includes the way how data is collected, projects are managed and
reports are presented. Management consulting if no exception as it’s to embrace digitization,
and technology to stay ahead in the game.

The culture:
'Consultancy culture' is not an autonomous force for change but a symptom of wider
influences affecting modern corporate management styles. While fashionable management
gurus catch the headlines, consultancies are instrumental in implementing the principles they
promote. This has been a gradual process. Even large companies with considerable resources
of in-house expertise have taken time to develop the effective use of consultancies over the
past fifteen years. Some have still not yet done so. Consultancy influence should not, of
course, be overstated. The nature of this study made it impossible to distinguish
systematically between their effective and ineffective use. Nor could judgment be passed on
non-use by some respondents. Companies with effective in-house management or which
operate in areas of relative commercial stability may not need to employ consultancies.
Nevertheless, positive attitudes to consultancies and good practice in their use appear
particularly to be associated with rapidly changing corporations. It appears that, within the
context of growing competition, the use of consultancies is a symptom of a much broader sea-
change in modern management approaches which underlies growing instability in regional
and local economies.

Important consultancy firms:

1. McKinsey & Company:
McKinsey & Company is a world-renowned management consultant firm. The company
is based in America and was founded 92 years ago in 1926 by James O McKinsey and
Marvin Bower. The company provides its service worldwide. Its headquarters is located in
New York City with 127 offices spread across the world. It has a network of more than
27,000 employees making it a billion dollar company with a revenue of more than 10
Billion!
 It follows a strict culture of work and ethics with highly motivated and zealous employees.
The company values traits like loyalty, integrity, and dynamism.

2. The Boston Consulting Group, Inc.

Boston Consulting Group, Inc., also known as BCG is a privately incorporated management
consulting firm. It was founded by Bruce Henderson in the year 1963. The company has a
revenue of $6.3 million as of 2017 with more than 90 offices at different locations across the
world. It has more than 16,000 employees working worldwide. BCG was ranked 4th in
Fortune’s list of “100 Best Companies to Work For” in 2018.

3. Bain & Company :

Bain and Company is a top consulting firm specialized in the area of management
consultancy. It was founded in the year 1973 and its headquarters are located in Boston,
Massachusetts.

The company is an incorporated partnership with William W. Bain and Patrick F as its
founders. The company showed rapid growth in the early ’80s and was successful in
generating a revenue of $3.7-$4.5 Billion in the year 2017.The company has its network
spread in 59 locations worldwide with a force of 8,000 employees.

It has a number of awards in its name such as Consulting Magazine’s 2016 “Best Firms to
Work for” and was ranked in the Fortune magazine as the “100 best companies to work for”
in the year 2018.

4. Booz Allen Hamilton:

Booz Allen Hamilton is a management and information technology consulting firm based in

America. Its headquarters is located at Virginia in Greater Washington. It was founded in

1914 by Edwin G. Booz, James L. Allen, and Carl L. Hamilton. It has a revenue of US$5.48

Billion with an employee network of 22,000.

Conclusion:
New pressures have made companies change their strategic approaches, however the new
strategies executed, have given ways to question the competence of these tactics, and the way
they manage different organizational operations. Consultancy has been one of these forms,
that has evolved on many and different levels, and has also been one of the practices which
has grown in size.