Management consulting in pills

My point of view for young graduates and (some) clients

Dear all,

I thank all of you for the opportunity you have given me to hold a lecture on Management Consulting at the University of Turin. You are now close to your final degree and in few months you will be out in the labor market looking for interesting opportunities that — hopefully — will train you to become successful entrepreneurs. In this document I will try and summarize my point of view, for the convenience of yourselves as well as of all other students who will have the patience to read these pages. Of course, this is my personal opinion and other colleagues of mine, as well as managers or entrepreneurs might have different ideas depending on their personal experience. To make this paper more usable to everybody I will articulate it along the key questions we have addressed in the lecture, with a final, brief, conclusion. To make the reading more fun I will also add some jokes on consultants I have found on the web…of course I don’t subscribe to them but I have to admit they are fun and they reflect some perception people have about us.

1- What does a management consulting firm do?

In my experience this is one of the most difficult questions to answer. I remember that when I was a junior consultant at Bain (year 2000) and friends were asking me what my job was about they were looking at me puzzled. “How is it possible that this kid advises senior managers on businesses he has little or no experience whatsoever?”. And the more I was trying to explain the more they were puzzled. Then I started following the advice of a colleague, who told me: “Just say you are a doctor for companies and move on to the next topic”. The definition sounds awkward but after 20 years I would say it is perfect. Consultants are doctors, and in particular, they are psychologists:

• They diagnose problems, if any. But, given that top managers know their business better than consultants, all they need is someone to help them accept the “core” issue and progress from there. Consultants do this: perform fact based analysis, run interviews with middle managers, talk to distributors or customers, compare with best practices and — if they are good — identify the root causes of problems and the medicines that need to be taken. This requires strong analytical skills and the ability to present evidence in a compelling way (the famous PPTs). And here comes the psychological part: there is no “one size fits all” in a compelling presentation. A good consultant needs to deeply understand his counterparty, his way of reasoning, his weaknesses (if some of the problems are attributable to the manager you are talking to — it is trivial — you cannot simply say “you have been an idiot”, otherwise you find yourself out of the door in five minutes and you have not been of help) and convey the message accordingly. Also, the way you carry on the work needs to be adapted to the counterparty. For some clients it is easier to bring results and potential solutions to the table quickly, other might need more time to digest the evidence and therefore more time, more steps, more presentations. Not only: the diagnose cannot be only shared by the very top management and then cascaded down to direct reports (C-1) and middle management. It needs to be shared and understood by all managers impacted by the project. All of them need to be convinced that the diagnosis is correct in order to accept the medicine, and complexity grows with the number of people involved and of those who feel threatened by the solution
• After the diagnose comes the treatment. A good diagnosis narrows down the number of options on the table: most diseases have one, maximum two, possible treatments. Nonetheless a company is an organization of people and any solution to a problem hardly makes everybody happy. Hence, we are back into politics. Not only: a solution can be implemented at a faster or slower pace depending on the characteristics of the organization, on resistance to change, on the determination of the top management and of the main shareholders, and of course on several external constraints. In case you cannot implement change fast, pain killers might be required, i.e. temporary changes that reduce the negative impacts of problems. Again, the treatment needs to be shared and agreed by all the parts of the organization that will be involved in its implementation. In a company this means putting in place the right incentives, removing obstacles (that might be even reluctant managers) and making sure that everybody understands in depth the objectives of the change. Of course, this goes back to the point before: the more people understand the root causes of the problem and their connection with the solution, the more likely they are to implement it correctly
• Finally, just like doctors, depending on the complexity of the treatment, consultants can let the patient take the medicine alone or need to administer it. i.e., they can or cannot support the implementation phase. Here discipline is more relevant than psychology, but still, it is important to overcome all sorts of passive resistance and adapt to emerging criticalities.

In summary consultants do three things:

• Help managers make decisions
• Create consensus and support team mobilization
• Work side by side with the management on the implementation

If you have understood the parallel with the doctor you are now also able to answer the question “How can a consultant (maybe even a generalist) step in and advice people who have been in the business for ages?”. All of us probably know ourselves better than a psychologist, but sometimes we need him to tide up our mind, recognize our problems, find solutions together and get around problems. This is the reason why consultants never work behind a desk in their offices. On the contrary, they sit at the client’s premises and team up with him. They do not teach the client what to do, but work out customized solutions that suit his specific reality.

With all this I do not mean that consultants do not have to know the business. There are projects where strong vertical/ technical knowledge is required, and in most consulting firms consultants are organized by practices. What I mean is that the true, unique skills of a good consultants are those described above and the value they bring, even to companies managed by former management consultants, is to act as third parties that are able to provide an external, fresh perspective to complex organizations.

2- Which projects consultancies do?

A categorization of consulting projects is not an easy task, also because they are often complex and have different components. For a matter of simplicity, I will define three macro categories:

a- Strategic projects: they refer to the long term strategy of the firm and entail choices that, once made, define a path that is critical for the success of the business in the years to come. For this reason, such projects are normally mandated by the very top management (CEO, C-1) and are carried on under their supervision. Such projects can be of different nature:

• Strategic/ Industrial plan: companies and groups normally run 3/5 year planning cycles and, especially large entities, recruit management consultants to facilitate the process (e.g. provide benchmarks, define mega trends for the business, ensure a proper and timely involvement of all relevant stakeholders, hold the spreadsheets and run sensitivities, define action plans to achieve the objectives,…)
• Revenue enhancement: these are projects that range from the entry strategy in new markets to the development of new services/ products (expansion from the core)
• Cost optimization: production costs/ procurement optimization (these projects can also be very technical as they can entail a revision of the supply chain and contracts renegotiation), reorganization and rightsizing to achieve lower HR costs, G&A (General and Administrative expenses) reduction. These projects can require also the evaluation of make vs. buy options, i.e. the opportunity to externalize non-core activities to third parties
• Risk Management: typical examples are represented by the revision of credit processes for Banks, but can also go as far as to the implementation of new regulations (e.g. Mifid or Basel in Banking, Solvency in Insurance, etc.). These projects are strategic as the choices made impact risk, revenues, costs and capital requirements at the same time
• Balance sheet and cash flow management (e.g. working capital optimization)
• M&A: target scouting/ identification, commercial due diligence, post merger integration (post merger integrations are complex and may last up to 1/2 years)
• Transformation: normally such projects are related to a significant change in the strategy that has profound impacts in the way business is done (e.g. new products, new service models, new customer segmentations, etc.) and, subsequently, in the organization and in the core processes. A typical example in the last few years is Digital Transformation, that entails new ways to approach customers (omnichannel, redefinition of the role of physical premises vs. online channels by segment, redesign of customer experience/ journeys, design of digital touchpoints), partnerships with third parties (e.g. tech companies), acquisition and integration of new capabilities (e.g. data scientists), deep change management programs to convert people to new ways of thinking and doing business
• Other (e.g. IT strategy, customer segmentation, new products development, etc.)

b- Organization: although we have mentioned organization as part of some strategic projects (a new strategy has always some sort of organizational impact), this is a topic that deserves few words per se. In general, within organization I tend to include three streams of work that can be tackled in sequence or on a stand alone basis as well as at high/ strategic or operational level:

• Organizational structures: at high/ strategic level this includes the design of the organizational units, reporting lines, main roles and rightsizing. At operational level this includes Job Descriptions for each profile, sourcing strategies, compensation policies. Within deep re-organizations resource plans are complex files with names of resources that need to be moved from one unit to another, hiring needs and redundancies (including redundancy costs)
• Governance: along a narrower definition this is more of a legal topic that defines the relations between the governing bodies of the company (Board of Directors, Committees, CEO, Audit). In organizational terms governance represents the core processes and tools that allow the Board of Directors and the CEO to steer the business. These include the Strategic Planning and Budgeting process, incentive schemes, reporting systems and performance management. The topic is highly strategic and entails a design phase, the codification in written rules and the development of the related tools (e.g. automated reporting tools fed by the accounting system)
• Processes: these are the blood flowing through the different organs (organizational structures) to accomplish the tasks of the organization. In the first place, these are designed at a higher level, then, once an overall agreement is achieved among the relevant stakeholders, they are translated in rulebooks and defined in every single detail to allow IT implementation. Consultants can be deployed on both phases but the capabilities required are somehow different because in the first one a thorough understanding of the strategy and of the rationale of the overall organization is key, whereas in the second the knowledge of the IT systems and the ability to interact with developers becomes predominant.

c- Tools, models and systems: such activities require a higher degree of specialization and technical knowledge but are becoming more and more relevant in recent years, especially in most developed markets. Examples are:

• Reporting tools/ performance measurement systems: these projects aim at providing company managers with tools to measure the profitability and the value creation of Divisions, Business Units, Projects and Products. They entail sophisticated criteria of cost allocation (esp. indirect costs) and internal transfer pricing, several simulation rounds and implementation
• Credit scoring or monitoring tools: these projects are mostly run for consumer finance companies or banks, but in some cases also for utilities that have a significant number of individual and small business clients
• Credit rating: some companies (especially Oliver Wyman) have the capabilities to support Banks in the development of their internal models to rate clients in different sectors based on Basel rules
• Digital touchpoints: consulting firms of new generation support their clients not only in the development of their digital strategy but also on the subsequent realization of their digital touchpoints, fully integrated within the overall IT architecture

I think this is enough although I might have forgotten some. What I can say is that I have probably done well over 50% of such projects at least once in my career and I am not special at all…

3- What are the main consultancies in the market?

In the global market there are thousands of management consulting firms. Some of them have a global footprint, others are present in a selected number of markets, but still multinational, finally a lot of them are local boutiques serving clients’ niches. Among multinational ones, some are focused only on management consulting, some provide also other services that are even more valuable to them. The Big Fours are mainly auditing companies, provide tax advisory, M&A transaction advisory (to be clear not the type of activities referred to above, but investment banking type of advisory), SAP implementation, etc. Accenture has strategy capabilities, but its core businesses are IT implementation and outsourcing services. I would say that Accenture has a homogeneous footprint at global level, whereas the Big Fours can be strong on all topics of management consulting in some countries and very weak or with a limited offer in some others.

However, broadly speaking and to provide a somehow schematic view of the world, we can cluster consultancies in five categories:

1. Strategy consultants: this group can be divided into two sub-groups, i.e. the Four Global Powers (my personal definition) which are strong in all markets and are McKinsey, Bain , Boston Consulting Group (BCG) and Oliver Wyman, and the Regional Powers (again my definition), which in certain countries compete in terms of reputation with the Global Powers while in others/ some sectors are negligible. This is the case of AT Kearney, Roland Berger, Arthur D. Little, Strategy&. Due to their price point, these companies tend to focus mostly on strategic projects of all sorts and on high level/ strategic organizational ones. Oliver Wyman has also a strong specialization in the design of risk management tools, especially in the banking sector. Finally, a lot of them are now starting specialized entities able to support digital transformation projects (McKinsey, BCG,…) or turnarounds (BCG). Such experiments are relatively new and it will be interesting to see how successful they will be against Accenture (Digital) or specialized players. On turnarounds (which for me is a subset of Transformation) there are two specialized players that I would rank among the Strategy Consultants: Alix Partners and Alvarez& Marsal. Vis-à-vis other strategy consultants they deploy more senior people and have often an even higher pricing
2. Accenture: this is to me a unique “animal”, not only for its size but because the objective of their strategy “elite” has often been to pave the way for their much more lucrative IT development/ implementation projects. In the last 10 years or so the focus on management consulting has been mostly on what they call “Digital Strategy”, where they have developed internal capabilities and made several acquisitions (e.g. design consultancy, web agency, data analytics). Compared to Strategy consultants their approach is somehow more operational and often their “clients” are first or second reports to the CEO
3. Big Fours: as mentioned above, the origin of the Big Fours is in Auditing and consulting has grown as a natural area of expansion, given the extensive network of clients they have. Even though in some markets/ sectors they compete in the strategic space, they focus more on Project Management and Organisation. In this latter space they are particularly strong on Processes and Process implementation
4. Head Hunters: always as a completion to their core head hunting business, some companies like Korn Ferry have expanded into consulting and in certain markets they start to have a strong reputation. Their focus is in Organizational Design, Rightsizing (they own huge databases for benchmarking purposes) and in the design of Compensation Schemes (given their knowledge of the market, they are in the best position to provide lots of disguised information as well as to structure and test comprehensive remuneration models)
5. Niches/ specialized companies: there are several companies of this type, mainly at single country level. They are specialized by type of project or industry/ sector/ client size. Here I want to mention two examples:

• Alkemy (Italy, Serbia, Spain, Mexico): it was created in 2012 and listed in Milan in 2017. Its founders were former Bain Partners together with eCommerce entrepreneurs and their idea was to become 360° digital enablers. They are able to design the digital strategy, implement the digital touchpoints, have social media capabilities, and a team of data scientists. They did from the beginning, and in a more organic way, what some of the big strategy consultants are doing now by expanding into implementation
• Pambianco (Italy): this company was launched in the 70s with the specific aim of supporting mid-size companies in the Fashion Industry. It is a consultancy as well as a publishing firm and is extremely well regarded in this very specific sector

4- Why consulting is a good opportunity to start a career?

Normally there are two windows to join a consulting firm. The first is right after graduation or a short work experience. At this stage people are 23/27 years old and are hired at the lowest level of the pyramid. The second is after an MBA (Master in Business Administration) or an equivalent post graduate degree. At this stage people are recruited at associate/ consultant level, which normally is the second level of a consulting career. Consulting is one of the various options to start a successful career, whether this means being consultants for the entire life, moving to other types of businesses, or becoming an entrepreneur.

There are several reasons why I would suggest a bright and ambitious young person to try consulting:

1. It is challenging and stimulating: you have the opportunity to work on several cases and, especially in the beginning, with different clients in different sectors. This makes you learn fast and is interesting. You never sit behind a desk, you travel, you meet people, you often change tasks. At the same time projects are often compressed and the pressure is high: this is what makes things challenging
2. You learn how to cope with pressure, i.e. you learn what is truly important for the client, for your boss (and of course for the success of the project) and start prioritizing things accordingly
3. You learn how to work as a consultant and the consulting skills mentioned under question 1). This is fundamental for a further career, be it in a complex organization (e.g. reading the situations, understanding conflicts, managing them/ managing yourself to avoid them) or a start-up. To raise funds from investors and hire people you need to convince them that your project is viable, that the idea is good and unique, that numbers add up, that each part of your roadmap is solid, that you have plan Bs, etc. To acquire the first clients you need to convince them that your service or product is what they really need and that it is worth paying for it
4. You always work with smart people. All consultancies hire people based on the same requirements and, in general, compete to get the best in the market. Hence you will always work in a competitive but stimulating environment
5. You may work in an international environment. Especially with strategy consulting firms, which are normally smaller in terms of employees it is not rare that resources join international teams when the local office has excess capacity and others are under pressure. Also, after some time (usually a couple of years onward), people can ask to be transferred temporarily or on a definitive basis to offices located in other countries. The green light might not be immediate but it normally comes.

5- How does a consulting career look like and how to chose yours?

Under question 3) I have somehow ranked consulting firms. Apart from those who might be specifically attracted by niche firms like Alkemy or Pambianco or by HR and compensation (Head Hunters), the dream of the most talented people is to join the big strategy firms. If they don’t succeed or do not have the prerequisites, they opt for the others and it is not rare from there to move to the top consultancies at a second stage. As mentioned, selection criteria are hard and the offer of talent abundant, hence it is possible that a person with all the characteristics to be a great consultant is so unlucky to be discarded in the first place. Nonetheless consultancies know their business: the Big Fours pay less and are less prestigious than the McKinseys. Hence, they know they will hardly get the best and they also know that after training their best ones for some years the risks of losing them to some competitors is high. Therefore, no doubt: if you have top grades (110 cum laude in Italy) or you come from one of the most relevant MBAs you have to go for the Strategy Consulting Firms first, ideally with the top four.

The pyramid is often very similar across companies: the starting level is analyst, then associate/ consultant, manager, principal, partner. Overall it takes 11–13 years from the lowest analyst level to partner. Most companies have a “up or out” policy, i.e. who is not fit for the promotion to the next role in due time is put on an exit track. This not only ensures quality but also a balanced ratio in terms of seniority and continuous hiring of young talents at the bottom of the pyramid.

In more traditional models, the minimum team sold to clients is M+3, i.e. one Manager plus 3 resources among associates and analysts. Until the level of Manager, resources are staffed full time on one project at a time and the exposure to clients grows with seniority: it is not uncommon for certain companies or managers to limit the exposure of analysts only to very operational people at the client for things like data collection. Nonetheless there are exceptions, depending on the nature of each market. Bain has been very successful in Italy as it developed a different model to serve also smaller clients in a profitable way. As it is commonly known, the Italian economy is dominated in several sectors by Small Businesses and Small Medium Enterprises. The former are out of reach for consulting firms, but the latter represent a giant potential market of companies that often become bigger throughout time. They cannot afford big teams on a stable basis, but they can be engaged in long term, continuous relationships with very tailored offers. This requires that also much smaller teams than M+3 are deployed, that even Associates and Analysts have a much bigger exposure to the client and (also to ensure profitability) they can work on more than one project at a time. Without entering in the details of the economics of a consulting firm, this model allows to serve smaller clients with smaller teams and at lower fees per person, though ensuring strong profitability via high “utilization rates”. Both models help people grow in a sound way. The “Bain” model can be more stressful at the beginning but gives more opportunities to see more things in a shorter period of time.

Consulting firms normally leverage generalists. Given that the core skills required to be a good consultant are more those of the “doctor” (remember: you will never be more expert in the technical details of a business than your clients) and that, normally, consultants are skilled enough to grasp the key value drivers of a business easily, this makes a lot of sense. Nonetheless, the more a market evolves, the more projects tend to become “technical” and require some level of vertical knowledge. This is why almost all consultancies are organized in practices (e.g. Financial Services, Private Equity, Industrial Goods, Fashion, etc.). At the beginning people are fungible, then, at least at Manager level, they join a practice. From there change is always possible, but in general not desirable for their career either.

Another question that I often got from applicants, when I was hiring, was: “how long do I stay on a single project or client?”. This question is motivated by the fact that young consultants have an interest in changing frequently, to grow more and see more things. In my experience, there is no clear answer to that. Clients don’t like to see frequent changes in the teams in general, and on the same project in particular. On top, if a consultant is good, senior guys try to retain him throughout the staffing process (hence being retained by the same Partner is generally a good sign). Anyway, it is not badly perceived if after a while a consultant asks for a change and normally such demands get accepted. Of course, this changes with seniority and exposure. The more a consultant becomes a point of reference for the client (and this should be the objective) the less easily he can be removed and the more he should exploit the opportunity to help nurture this relationship. I never had a positive opinion of managers asking to swap sector or client without a strong motivation: either they had not understood their role or they were actively looking for an “exit customer”.

Finally, the big question: “how is the work-life balance in consulting?”. Consultants are very well paid compared to industry employees and one of the reasons (beyond talent) is that the commitment required is significant. In markets where the economy is very concentrated in few poles (e.g. France with Paris, UK with London, etc.) the “risk” to travel is somehow more contained and you can probably sleep in your bed a reasonable number of days. If on the contrary you work in a country like Italy and in sectors that are a bit more scattered, the chances of being staffed away from home are higher. This means that for months you spend four or five days a week away, you dine with colleagues and you sleep in a hotel. Travelling is nice, but of course you don’t have a chance to meet friends, play tennis in the evening, go to the theatre with your girlfriend. You may also end up working very long hours. In particular, the shorter the project the longer the hours you tend to work (e.g. due diligence). To be clear, you never work less than 10 hours and it can happen to pass midnight in the office. How frequently depends also on the boss you have: if on some projects and for a relatively short period you have to work very long hours, and weekends as well, it is normal. If this is the rule, you have to wonder whether you have picked the right firm or the right manager. I have always tried to sell projects, set clients’ expectations and manage work in a way that my team could maintain a reasonable work-life balance (no weekends, limited late hours). For me this is a value: people need to be fresh to perform and happy to remain loyal to the firm. For this I have to thank my old bosses and the way they taught me. Nonetheless, I have also encountered people for whom it was a matter of pride to say they were working overnight or over the weekend. If this is the company culture you might even bump into people cheating on this, by pretending they work long hours simply because they wait midnight before sending an email that was ready at 7pm. I don’t need to say this is vicious and you have to escape such companies as fast as you can.

6- What is the future of consulting and how it can affect choices?

All businesses are changing fast these days, and consulting is not any different. Up to the 90s management consulting was a niche business, that hired “geniuses” to support companies where vertical competence was strong, but the way of doing things was somehow archaic. Then the consulting market grew exponentially, for different reasons:

• Word of mouth made firms and the business better known, and more and more managers started to buy consulting at least for unconventional projects
• The advent of new technologies posed threats to old business models and opened up new opportunities: an external perspective by people who had a privileged view of how best practices were facing them became valuable
• Globalisation forced companies to redefine their strategies to become more resilient and address new markets. Consolidation in a lot of sectors became unavoidable and this led to demand for due diligence and post merger integration capabilities
• IT innovation created the need for huge teams of consultants, able to redesign processes, implement new systems and complement insufficient client’s workforce

All these elements have led first to an exponential growth of the big strategy consulting names, then to the development of the consulting practices of the Big Fours, and finally to the birth of small consulting ventures (mostly done by people exiting from the former) and of networks of independent consultants.

In recent years we assist to some changes in several directions:

• In more developed markets, where management consulting literally exploded in the 90s and early 2000s, clients have internalized a lot of consulting capabilities (some of them have also created internal consulting arms with varied results). Such clients become more demanding, especially when it comes to strategy consulting. This has two effects: the first is that the number of projects acquired gets smaller and that the competition on price becomes fierce. The second is that, to win, you need to match the traditional, never ending, consulting skills with deep technical strengths. The typical example is Oliver Wyman that has been able to become “THE specialist” in risk management, to the point of being called by EBA and ECB to design the stress tests for the European Banks. The move from a “generalist model” to a “specialized model” in my opinion poses a question consulting firms have never faced in the past: in which capabilities to invest and where? In fact, first of all acquiring, but especially nurturing a vertical capability requires huge investments (the company needs to stay ahead of competitors and in this specific case even clients), second specialization in a sector affects brand awareness and might jeopardize other, more “generalist” business streams
• In more developed markets, where management consulting literally exploded in the 90s and early 2000s, clients have internalized a lot of consulting capabilities (some of them have also created internal consulting arms with varied results). Such clients become more demanding, especially when it comes to strategy consulting. This has two effects: the first is that the number of projects acquired gets smaller and that the competition on price becomes fierce. The second is that, to win, you need to match the traditional, never ending, consulting skills with deep technical strengths. The typical example is Oliver Wyman that has been able to become “THE specialist” in risk management, to the point of being called by EBA and ECB to design the stress tests for the European Banks. The move from a “generalist model” to a “specialized model” in my opinion poses a question consulting firms have never faced in the past: in which capabilities to invest and where? In fact, first of all acquiring, but especially nurturing a vertical capability requires huge investments (the company needs to stay ahead of competitors and in this specific case even clients), second specialization in a sector affects brand awareness and might jeopardise other, more “generalist” business streams
• In less developed markets, clients resemble western ones in the 90s and this is the reason why consultancies are gradually opening new frontier geographies, like Africa, Iraq, Iran before the ban, etc. I don’t know the numbers, but I think these regions provide a lot of valuable opportunities for the “generalist model” and I suspect that they will become more and more important for multinational players. The most promising markets in my opinion are those where the economy is dominated by the public sector and either the attractiveness to foreign workforce is low or the level of protection of locals is high. In fact, in government dominated economies, where main spenders are ministries and state monopolies, decision makers need support to back their shoulders and have limited pressure on cost containment. In countries where locals are very protected and they tend to be granted positions they don’t deserve, there will always be the need for external advisors to hold their hand, support their decisions, and, again, amend their inadequacy. This is what happens for instance in the Gulf where policies like Emiratisation or Saudisation, though very rationale, will lead more and more key positions to be held unfit people
• Digital transformation (for how generic this word can be) is a big game changer. Until few years back IT and strategy consulting where pretty detached. The big strategy consulting houses had IT practices which were “just” designing high level architectures and IT strategies, with very little understanding of the technicalities behind systems and software. On the other hand, Accenture and the Big Fours had little strategic capabilities but a deep IT background. Now that “software is eating the world” most businesses are becoming software houses. Technology is everywhere and even though the McKinseys like are writing all sorts of white papers on how businesses should embrace the digital revolution, in the end they do a lot of philosophy but have little practical experience re which understanding of which solutions work and which don’t. For this reason, they are now starting to follow a similar, but opposite, path to that of Accenture and the Big Fours in the past. As the latter tried to integrate their process and IT capabilities with strategic ones, Strategy Consultants are developing dedicated entities able to deliver digital solutions (e.g. coding). The question is whether it will work. Will they be able to develop an effective cooperation (and cross fertilization) model between the two capabilities? Who will serve who? How easy will be to create a homogeneous culture among people with very different backgrounds and compensation levels? They have strong brands and credibility. They will therefore benefit some patience from customers and will have some time to refine such models, but for sure they will need to be very careful because like in all businesses, new consultancies, without legacy, established in a culture centered on digital enabling, will become tough competitors. Also Accenture and the Big Fours will become a more credible threat than ever before in this space.

In summary, I think that the consulting business is more alive than ever, but big strategy consultants will have hard times in the developed countries. Here, unless they invest a lot in vertical capabilities, they will struggle to retain their margins and will face the competition of smaller firms, with lower fixed costs, and of networks of independent consultants. Such networks are able to reach out to a huge number of former top tier consultants with all sorts of expertise and to set-up customized teams for each project/ client. They also have little fixed costs, can acquire even strong vertical competence based on need (e.g. former consultants that have then covered very technical and specific roles in the industry) and therefore deliver high quality at much lower prices. They will also suffer the competition of companies like Alkemy, i.e. native digital enablers, that are able with a proven cohesive model to design new strategies, implement them and even run some services for their clients (e.g. eCommerce).

Developing countries on the other side will represent a huge potential for growth and, if companies will be properly managed, represent cash cows to fund investments in developed countries. This will nonetheless entail a new way of thinking at global level and, in some cases, new compensation logics for partners.

What is the takeaway of all this for a young graduate? I see few of them:

• In developed markets, competitive stress will probably lead to more stress on the job but in the meantime to broader opportunities, more project types and new paths for personal growth. The fact that big names will not be able to sit and exploit the strength of their brands, as it has been for some time now, will bring consultants to the forefront of innovation as well
• The growth of independent consulting networks and of new type of specialists will increase the options for those who, at more senior levels, want to become entrepreneurs and “owner of their time”. For instance, you will have the option to exit and do some work as independent consultant while exploring the viability of a new business venture. Or simply you will be able to work in a more independent way, without being involved in a large organization
• I think seniority will become more important. This will mean longer career paths and more patience. Nonetheless, this is not such bad news: in the end life is becoming longer and careers will as well
• Options to work in different continents will grow and some will find the job easier in the developing world. Living abroad is for me always a great experience, but you should be also aware that where clients are less demanding (and life for consultants easier) you learn less. In an African office you will therefore learn less than in Europe, China or North America where people will have the chance to experiment solutions with more advanced customers. Hence, I would rather suggest moves to these offices once a person has developed a solid background in mature markets.

7- Conclusion

Although I am certainly biased, I suggest consulting as one of the best options to start a career. Even though a lot of people will look at you thinking “who is this bullshitter?”, you will always be ahead in terms of business acumen, knowledge and maturity than most of your contemporaries. You will have the chance to learn how to structure and solve all sorts of problems without anxiety. You will have a great perspective on future trends. Finally, you will keep plenty of career options open: if you start as a controller in a company, you will probably do that job for your entire life and maybe become a good CFO. If you start as a consultant you will be able to remain a consultant with a big consulting firm, consult on your own, launch your own business, be hired in the strategy team of a big group, join a private equity firm, and still become a controller at a later stage if you wish. You will also work harder, but without hard work there is no remuneration. The world changes fast, but unless you win the lottery, there is always a golden rule: there is no free lunch in the market.

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It has been an honor for me to be your guest and have the chance to interact with you all. Good luck for your future.