Consulting is a broad term which encapsulates the practice of advising companies on how they can improve their business. Traditionally, consulting firms fall into one of two camps: they either advise clients on how to increase revenues or decrease costs. The first type are commonly known as 'Strategy Consultants'; the second as 'Operational' or 'Management Consultants'. However, it is worth bearing in mind that companies are also able to pay for a range of other advisory services offered by firms with particular expertise in other areas of the business cycle. Even without going into a Consultancy therefore, a career in a profession such as Accountancy, Law, Public Relations or Engineering can offer the chance to learn a particular expertise which can then be sold on to clients.
Strategy consultants will typically work on a short-term basis, perhaps for 6 or 8 weeks at a time on distinct projects. A current example may be working with a leading global bank such as HSBC to work out whether to siphon off their retail arm to protect it from losses in their investment banking division. Or alternatively, Marks and Spencer may now be hiring consultants to advise on readjustment of their five year store expansion and redevelopment plan given news of a 33% profit decrease last week. On the other hand, operational consultants can work consistently on the same project for years at a time; perhaps providing an ongoing project management service to a pharmaceutical firm such as GlaxoSmithKline to ensure that their supply chain and drug distribution system remains efficient and keeps up to date with new technologies. Alternatively an operational consultant may work onsite with a client for a few months before advising on whether to implement a cost-cutting regime or perhaps staff cuts.
Meanwhile staff in other advisory professions will consult to their clients on issues outside of immediate revenue raising / cost cutting. Accountants will use their expertise to advise companies on the financial sense of investment decisions whilst PR gurus will be the sounding board for companies keen to know how a commercial decision will be portrayed in the press.
Overall, if you want to begin a career which will see you become a specialist in a certain area, developing an expertise which (one day) other businesses will pay you significant amounts of money for, numerous options are available. However, year after year, the milkround lure is typically towards the world of Strategy Consulting: this article aims to explain more about the industry, outlining the day-to-day of the job, future career options and the differences between joining large and small companies.
Hiring top quality consultants is expensive; a short-term strategy project will cost at least a five figure sum, whilst the world's leading operational consultancy, Accenture, charged the NHS $3.5bn for a huge I.T shake-up project which took place between 2004 and 2006.
Before embarking on a consulting career it is of paramount importance to understand why institutions pay such mind-boggling sums to take business advice from those in the formative years of their career (even senior staff at consultancies will rarely be beyond their mid-30s). Companies will hire consultancies for one of the following reasons:
To save time - Probably the first and foremost reason - for companies that view coming to a conclusion about a business decision as more science than art, there will be reams of data to evaluate and analyse in deciding whether to build new stores, sell new products, decrease output or cut staff etc. Hiring consultants avoids the need to employ full-time staff who may be underused once the project is finished; or part-time staff who need to be trained.
Specific insight - experienced consultants may be able to bring qualified judgement to the problem, perhaps through having worked at one or more of the company's competitors, or by being able to draw on experience of similar business issues in a previous project in a different sector.
Technical expertise - Similarly, the company may require particular knowledge or skills which they have no access to internally; whether the ability to master a certain technology, or thorough understanding of a point of regulation or law.
Neutral point of view - By virtue of coming to the company from the outside, consultants have an independent perspective and so can be useful in advising on issues where the senior decision makers have a particular prejudice / opinion and so find themselves unable to take a step back and analyse the scenario objectively.
Only in light of the above can the day-to-day of an entry level consultant can be fully understood. Whilst juniors may attend important meetings with senior and well-renowned business leaders at the start and end of the project, a far greater part of their time will be spent conducting the research and analysis required to deliver a comprehensive report on the project situation. For example, if hired by French supermarket chain Carrefour to advise on whether they should expand into the UK market, the following questions are amongst the many that will need to be answered to work out whether the idea is, in essence, a good one:
- What is the market size for supermarkets in the U.K?
- How is the market split between large and small companies?
How have new entrants fared in recent years?
- How much will Carrefour need to invest to get the project off the ground?
- Should the answers to these questions lead to the conclusion that expansion would be successful, the consultants would then advise on what type of store would need to be opened, each of which requires its own detailed level of research and analysis:
- Should they concentrate on just food or sell an array of products?
- Would city centre stores or out-of-town hypermarkets be prioritised?
- How would Carrefour position themselves in terms of quality of their products in the U.K market?
Getting the information needed to answer these questions requires significant amounts of primary research to be done by the consultancy firm. Therefore, the day after the initial project meeting, entry level analysts may find themselves in a supermarket looking at price points of toilet rolls or phoning up lists of consumers who have volunteered to discuss their shopping habits. However, the initial research is unlikely to take more than a week at the beginning of a project, as consultancies are generally very strong at sharing knowledge throughout the firm to avoid repetition, whilst - in order to save time - research reports can be purchased from specialist firms such as Datamonitor and TNS.
The next step is for the consultancy to analyse the research they've done. This is often the most time consuming aspect of the project, as databases full of figures (perhaps sales statistics or financial accounts) need to be reconciled with qualitative research. Here the consultants will look to find answers to issues of business strategy through the rigorous understanding of evaluation of the numbers. Getting this right is crucial; for example if anecdotal evidence and statistics from previous recessions suggests that consumers will prefer to buy 'own-brand' products over the coming years, the consulting firm may then advise Carrefour to save initial costs in setting up their UK supermarkets by not importing their complete range from their French suppliers. However, the data could just as easily show that the consumer has a loyalty to brand names and may not trust an own-brand from a foreign supermarket they have not previously shopped at - resulting in entirely different advice from the consultants. In getting the right solution, the difference in revenues for the client firm could be astronomical - and in a case regarding overseas expansion - the make or break between success and failure in the venture abroad.
The day-to-day job of a consultant therefore requires a range of skills: you need to have a quantitative, logical mindset for interpreting data; an inquisitive nature and passion for digging deep into the commercial issues at hand; a professional demeanour for speaking and presenting information to clients and a capacity for hard work and potentially long hours - as the university 'essay crisis' is replaced by the consulting 'project crisis' with deadlines looming large and significant chunks of work still to be done.
Overall, the day-to-day of consulting is less glamorous than it may be made to sound by the soundbites so often heard in milkround sales pitches. 'Solving the problems of the world's leading firms' does not necessarily lead to an exciting day job. Indeed, many people enter the profession with a keen eye on the doors it opens later on in life, whilst those entering the professional with a view to being career consultants rarely maintain this sentiment after a few years in the job. This is because the lifestyle can be bruising; in the larger firms the day will rarely end before 9pm and, having continuously worked as an advisor, many consultants move on hoping to find a role which will allow them to see through their project and capitalise on its success.
Consultancy is nonetheless a great place in which to begin a career as it teaches a range of commercial skills required to succeed in business, namely the ability to analyse data, understand and react to business problems, work with high-level people and manage projects and teams of staff. People leaving a consultancy will typically take one of the following paths:
1. Move to work in a business capacity for one of their clients. Probably the most common route out of consulting; moving to a company has benefits in terms of work-life balance and ability to see through your project work - many times consultants will have already proven their skills by virtue of having consulted to the company that they end up working for.
2. Start a business or work in a small venture. Consultants with an entrepreneurial flair will use their skills and contact network to create their own business (including, occasionally, their own consultancy).
3. Move to another consultancy. This occurs quite rarely, as most people who leave consultancies do so in order to work fewer hours and/or more closely within a company as opposed to being their advisor. However, consultants seeking more responsibility and exposure may move from a large to a small firm, whilst those seeking an established brand name on their CV and access to formal training programs may move in the opposite direction.
4. Go into the world of finance - most commonly into areas directly relating to the consultant's ability to understand companies' strengths and weaknesses and advise on their improvement. A common route is into venture capital, however, transitions into corporate finance, private equity and hedge funds can also take place.
Big vs. small firms
Those interested in a career in consulting will find themselves with two options - they can join either a large or small firm. Most large firms will be running milkround programs, receiving applications around now and going through the interview process by Christmas with a view to making offers in January 2009 for a September start.
Joining a large firm has a number of advantages: a reputed brand name on your C.V, access to formal training schemes and knowledge that you'll be working with top quality clients and colleagues. Especially in the current climate, having a job offer now for when you leave university is also a great plus.
However, there is also a plethora of smaller firms who work on high quality projects; indeed these companies have often been founded by senior consultants out of the big strategy houses. With anywhere between 5 and 30 staff they will typically specialise in a particular sector and work with high profile clients often brought over by the founder of the firm from his previous company. These smaller consultancies can be quite hard to come by and will rarely recruit on the milkround, instead choosing whether to hire a new graduate or two as the academic year comes to a close. Whilst these firms may not have the global brand name of leading institutions, they do have their good points as places to begin a career. The feeling of internal hierarchy is often less noticeable and new staff can find themselves getting high levels of exposure at an early stage of their career to the more interesting, client orientated parts of consulting such as meetings and presentations. The work-life balance can also be better as founders out of the big firms prefer not to put their staff through the same pain they endured as fresh graduates. Finally, progression opportunities within the firm can be dramatic; within just two or three years top quality staff members can find themselves managing teams, projects and selling of work - responsibilities typically bestowed at bigger firms only once you have five or six years of experience under your belt.
In conclusion, consultancy is rarely the glamorous career it is made out to be in the careers presentations and expensive cocktail parties you may find yourself attending over the coming weeks. However - for those with the right temperament, passion for business and mathematical abilities - there can be few better places in which to start a commercial career.