What’s the Difference Between Strategy and Management Consulting?

1. Nature of Work

Organizations pay consultants to deliver unique projects that they cannot deliver with their in-house skills or capacity. These projects are centered around a change in the organization such as technology implementation, organizational restructuring, etc. They are big, complex projects but once completed can be maintained by significantly fewer people therefore it does not make sense to permanently hire expensive employees until the change is implemented thus, consultants are a popular solution.

Consultants also bring experience working on similar projects and so, bring their learnings with them to maximize the project value and efficiency.

Strategy and management consulting are interrelated which is why there is often a 'handing over' point in the project from strategy to management. This can create difficulties and implementation challenges and to overcome this, firms such as PwC have acquired strategy firms to be able to offer an end-to-end consulting solution from strategy through to execution.

2. Strategy Consulting

At the start of a consulting project will be the strategy phase. This is working with c-suite executives to research and prioritize the highest value strategic project to maximize value for shareholders and business growth (usually profit margin or revenues).

The most common point when companies hire strategy consultants is when a new CEO is appointed. The CEO will want to set a strategic vision for their tenure, usually a 5-year timeline, in order to meet a business target such as growing revenues by 20% in the next 5 years. Strategy consultants will then work with the executive to decide the best way to achieve those goals based on competitors, market conditions, etc. Once the strategic direction has been set then it will fall to the business and potentially management consultants to implement the strategy.

These projects are much shorter than the implementation phase and typically last 4-8 weeks. This means they are often fast-paced and heavily research-based.

Strategy consulting requires a strong aptitude for problem-solving and arithmetics as well as out-of-the-box thinking and high adaptability. Excellent people skills, time management, and organization are also skills required from top strategy consultants so they can quickly engage with multiple stakeholders within a business to extract the information they need to make robust decisions.

The ultimate goal of strategy consulting is to give clients a clear path to more market share and a competitive edge in their industry.

Some examples of projects a strategy consultant might be engaged in are:

• Launching a new product, service, or line of business

• Increasing market share

• Mergers and acquisitions

• Current and future trend analysis

McKinsey, Boston Consulting Group, and Bain & Company are known as the ‘Big Three’ of the consulting industry and are the most competitive and well-established strategy consulting firms in the world.

3. Management Consulting

Management consultants focus on implementing change in an organization and that can be improving existing operations or implementing strategic change (usually preceded by a strategy).

The typical management consulting project involves the following steps:

1. Problem understanding

2. Deliverable agreement (what will be delivered)

3. Project plan (when will milestones be delivered)

4. Discovery (what are the possible solutions)

5. Solution design (how will the problem be fixed based on budget and client situation)

6. Implementation plan (what are the key tasks required to deliver the agreed change)

7. Implementation (delivery of solution)

All implementations have recently adopted an approach that originated in technology deployments:

• Pilot: small-scale implementation on test group to mitigate the risk of failure

• Learn: any failures or issues with the solution in the pilot are recorded

• Iterate: any issues are corrected before a wider rollout

• Implement: mass-scale implementation is carried out across the client organization

• Monitor: the implementation is monitored post-implementation for any further issues

Steps 1-6 can be done by both strategy and management consultants. However, management consultant expertise typically tends to lie in implementation, as outlined in step 7.

Some of the biggest management consulting firms are IBM, Accenture, and the ‘Big Four’ (Deloitte, EY, PwC, and KPMG). These companies hire competitively and deliver high-quality services, implementing innovative and sustainable solutions to their clients across a broad variety of industries.

Management consultants can be specialized in various business areas and so have a deep understanding of their respective fields of work. For example, consultants at IBM specialize in cloud solutions, and consultants such as Accenture and the ‘Big Four’ offer consulting services across risk, tax, people, and technology with each practice area only delivering projects in their respective area. Across the board, quantitative and problem-solving skills are required as they are for strategy consulting however for management consultants excellent communication and interpersonal skills are even more important as they typically work side by side with employees from the client on difficult topics such as process change.

4. Working Hours Differences

The hours in consulting, as with most corporate career paths, are infamous for being long. They can range from 8-16 hours per day, depending on the nature of the ongoing project.

Strategy consultants aim to provide the expertise and resources needed to solve business problems such as those mentioned above. The nature of these projects can often be short due to strict deadlines, but of high intensity, so can result in longer working hours for the duration of the project.

In contrast, management consultants are often employed for longer-term projects involving the implementation of new strategies for a client organization and can last for 6 months to more than a year as consultants work closely with their clients to ensure a smooth transition period during the solution implementation. Due to the reduced time pressure, management consultants can tend to work the standard 8-hour workday (9 am to 5 pm) on projects with periods of long hours as implementation deadlines approach.

However, it is important to note that the working hours of both strategy and management consulting are variable and can change depending on the nature and complexity of the client’s project, so whilst these times can give an average estimation, they are not an exact answer. Additionally, many other factors can affect working hours in consulting such as location, client demands, travel requirements, and firm expectations.

5. Salary Differences

Consulting firms have a large range of starting salaries for graduates, ranging from $30,000 to $80,000 depending on the firm, with an average of around $50,000. Have a look at our article on the management consultant salary in the UK to find out what you are able to mean in this specific area. 

Our analysis of 60 of the top consulting firms in the world suggests that on average, strategy consultants can expect to earn 23% more than management consultants. This is a combination of longer working hours and also the complexity of work attracting higher prices.

The difference in salaries is apparent even between firms that have both strategy and management consulting practices within their service offering. Salaries are aligned to market rates and therefore consulting graduates in the same firm will likely experience differences in starting salaries.

Salary differences exist all the way up the organizational period as well as ultimately strategy consultants charge a higher price for their work and this is reflected in salaries.

6. Project Examples

Below listed are some examples of project types and services offered by strategy and management consultants. Typically, management consulting involves the ‘implementation stage’ of professional business advice and is, therefore, more time-consuming and extensive, whereas strategy consulting projects tend to be sporadic and intense on a tight schedule.

Management

• Technology transformation (changing an organization’s tech systems including all hardware, software, data storage, internal/external networks, and information systems)

• People & culture change (creating a new and more motivating environment for workers, improving recruitment processes and appraisal systems)

• Digital implementation (digitizing areas of business operations by implementing digital technology)

• Cloud migration (moving all documents and data for a company from on-site locations to a digital cloud space)

• Program management (overseeing day-to-day operations)

• Organizational restructuring (re-working the hierarchy and chain of command for more efficient communication and effective leadership and delegation)

• Cybersecurity implementation (improving firewalls and online security systems company-wide)

Strategy

• Organizational design (creating a new/better structure for the organization including all roles, line managers, and directors to improvise lines of communication)

• Cost reduction (lowering raw material or production costs (fixed or variable) for a product)

• New technology market scan (market analysis and tactics to search for new tech and competitors)

• New business model design (innovative and unique strategies to renew the existing model and restructure the business)

• Pricing strategy (working to create competitive pricing schemes and models that fit the market)

• Market Entry (entering a new market with a new product or service successfully)

• Growth strategy (trend analysis and forecasting to formulate business development strategies)
   

Both strategy and management consulting are fast-moving, varied, and fascinating areas to work in within the consulting industry. Consultants are always learning, collaborating, and striving to deliver the best possible results to their clients.

7. Firm Examples

There are thousands of consultancies across the globe with many spanning more than 60 countries and employing thousands of employees.

MBB is the acronym given to the three biggest strategy consulting firms; McKinsey, Bain, and BCG. These firms are accompanied by numerous other strategy firms that compete for the same work, Strategy& and Oliver Wyman are two of these.

Management consultancies have grown significantly in the age of digital and technology transformations. IBM famously transitioned from selling IT hardware to software and now is a global supplier of technology consulting services focusing on cloud migrations, cyber security, and artificial intelligence. The Big Four professional services firms (PwC, Deloitte, EY, and KPMG) have all moved into this space in the last 10 years, leveraging their existing client relationships to provide transformation services.

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