What’s the Difference Between Strategy and Management Consulting?

1. Why Do Companies Hire Consulting Firms in General?

Companies hire consulting firms for a variety of reasons, including:

Expertise: Consultants bring specialized knowledge and skills that may not exist within the company. They can provide expert advice on a range of topics, from business strategy to technical solutions.

Objectivity: Consultants are often able to offer an unbiased perspective on a company's challenges and opportunities. They can provide an outside perspective that may be difficult for internal staff to achieve.

Efficiency: Consultants can often complete projects or tasks more efficiently than internal staff. They are typically highly focused and able to work quickly and effectively.

Flexibility: Consultants can be brought in for specific projects or periods of time, allowing companies to quickly scale up or down as needed without the burden of hiring full-time staff.

Cost savings: Hiring consultants can often be more cost-effective than hiring full-time staff with similar expertise. Additionally, consultants can help identify cost savings opportunities within a company.

Overall, organizations pay consultants to deliver unique projects that they cannot deliver with their in-house skills or capacity. These projects are usually centered around changes in the organization such as technology implementation, organizational restructuring, digital transformation etc. Working with consultants helps them to gain access to specialized knowledge and efficient, flexible resources to achieve their goals.

2. What Are the Main Differences between Strategy and Management Consulting?

Strategy consulting and management consulting are both types of consulting services, but they focus on different areas of a company's operations. While there is some overlap between the two types of consulting, strategy consulting is more focused on long-term planning and big-picture thinking, while management consulting is more focused on executing specific projects and initiatives.

Strategy consultants help a company define its overall business strategy, including its goals, direction, and approach to competition. Strategy consultants typically work with senior executives to help them develop and refine their strategic vision, identify growth opportunities, and make decisions on major investments, partnerships, or acquisitions.

Management consultants, on the other hand, focus on helping companies improve their day-to-day operations and management practices. Management consultants work with a wide range of teams and departments within a company to help them optimize their processes, reduce costs, and improve performance. This can include everything from improving supply chain management to streamlining HR processes to optimizing IT infrastructure.

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.

As strategy and management consulting are interrelated, there is often a 'handing over' point in the project from strategy to management. This can create difficulties and implementation challenges. 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.

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.

3. What Are Typical Projects in Strategy Consulting?

At the start of each 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.

Strategy consulting 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:

• 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 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 including mergers and acquisitions)

McKinsey, Boston Consulting Group (BCG), and Bain & Company are known as the ‘Big Three’ of the consulting industry and often summarized as ‘MBB’. They are the most competitive and well-established strategy consulting firms in the world. These top consultancies are accompanied by numerous other strategy firms that compete for the same work. Roland Berger, Strategy& and Oliver Wyman are some of them.

4. What Are Typical Projects in 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)

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 examples of projects a management consultant might be engaged in are:

• 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)

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.

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.

5. How Do Working Hours Differ between Strategy and Management Consulting?

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.

6. How Do Salaries Differ between Strategy and Management Consulting?

Entry-level salaries for management and strategy consulting can vary depending on a variety of factors, including the consulting firm, location, and the candidate's qualifications and experience.

In general, strategy consulting firms tend to offer higher entry-level salaries than management consulting firms. This is because strategy consulting requires more specialized knowledge and expertise, and the work tends to be more high-level and strategic. Moreover, strategy consultants charge higher prices for their work and this is reflected in salaries.

An 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 due to a combination of longer working hours and also the complexity of work attracting higher prices.

According to industry data, entry-level consultants at top-tier strategy consulting firms can expect to earn starting salaries in the range of $80,000 to $110,000 per year, while entry-level consultants at management consulting firms may earn starting salaries in the range of $60,000 to $80,000 per year.

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.

It's important to note that these are general ranges and that salaries can vary widely depending on the firm, location, and other factors. Additionally, consulting firms often offer other benefits and perks, such as signing bonuses, performance bonuses, and opportunities for advancement, that can impact the overall compensation package.

Have a look at our articles on the consultant salaries in the UK and US to find out what you are able to make in your specific area.

7. Which Career Is Right for You? Strategy or Management Consulting?

Determining which career is right for you, whether it's strategy or management consulting, depends on a variety of factors, including your skills, interests, values, and career goals.

Strategy consulting tends to be more focused on long-term planning and big-picture thinking, while management consulting is more focused on executing specific projects and initiatives. If you enjoy analyzing data and developing high-level recommendations, strategy consulting may be a better fit for you. On the other hand, if you enjoy working with teams to implement change and solve specific problems, management consulting may be just the right career option for you.

In addition to considering the nature of the work, it's important to consider the lifestyle and culture of each type of consulting. Both types of consulting can involve long hours and frequent travel, but strategy consulting often involves more travel and longer hours. Management consulting can also be more focused on operational details and require more hands-on work.