Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Sidi

99% Recommendation Rate

426 Meetings

4,129 Q&A Upvotes

USD 449 / Coaching

3

What is the real value consultancies bring to organizations?

This seems to be subject to an ongoing debate and I (being a student) wonder how the massive fees of a firm linke McKinsey can be justified in the eyes of the shareholders of an organization?

This seems to be subject to an ongoing debate and I (being a student) wonder how the massive fees of a firm linke McKinsey can be justified in the eyes of the shareholders of an organization?

3 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Sidi

99% Recommendation Rate

426 Meetings

4,129 Q&A Upvotes

USD 449 / Coaching

Hi there,

the most relevant dimensions based on my experience of serving clients for McKinsey and BCG:

Expertise. Sometimes this is being questioned, but MBB consulting firms are indeed specialized in a large array of industries and business functions. When adding up the experience of their consultants from junior business analysts to senior partners and knowledge experts, they can bring thousands of years of experience in each particular sector to their clients. Additionally, top firms spend millions in industry-leading research each year. Lastly, they are able to tap into the best external knowledge via expert platforms.

Pool knowledge across functions and across levels. Consultants are not part of the client's culture, politics, or organization culture. In the first month, as the firm builds a fact base, consultants usually interview people across functions. In large companies, cross-functional problem-solving rarely happens. Just getting different functions in a room typically unlocks creative problem solving. Similarly, consultants interview, watch, and tag along with people down the organization's structure, often starting with customers and moving through sales and line roles. CEOs and the exec team of large companies rarely do this (exception being their largest customers). There are tremendous insights to be had by doing this.

Problem solving & methodological toolkit. Consultants are the most experienced problem solvers in the business world. They have established processes, tools as well as access to data and experts to deal with any question a company, government or NGO could possibly imagine. From my own experience, it is just amazing how the drive of a small motivated and experienced team of hard working problem solvers can identify and solve business problems, that the client they are working for is unable to solve within a much longer timespan and a much bigger workforce.

Outside perspective. Consultants can bring an objective outside perspective into the client organisation. Since they serve mostly very large corporations or governments, the clients are prone to suffer from management inertia, groupthink, and daily routines. Bringing fresh and objective thinking from the outside can go a long way in such environments to crack crusted structures and old paradigms.

Driving change. As an external force, they are often called to evaluate a company’s issues, recommend solutions and lastly, help overcome or circumvent internal politics to drive change in the organization. Consultants are not bound by the client’s internal political landscape or other issues. Therefore, their substantiated advice can often be used as a powerful force of change. Additionally, especially McKinsey have made huge strides to increasingly support the implementation of their recommendations and have established a rich set of "new delivery models".

Capability building. Besides the analytical work a typical consulting engagement often includes, consultants can spend a significant amount of their time to train employees of their client, either in 1-on-1 coachings or full-fledged workshops. They transfer skills, build up knowledge to help bring their solutions into the organization and facilitate the implementation. Consultants usually train people from senior client leadership to sales staff and shop floor workers.

Political leverage. CEOs that want or need to make an unpopular decision often bring in a consulting firm to help. This provides ammunition to recommend an unpopular or risky decision to the board (expansion into a new business line or geography, or shutting down a plant). The CEO can also distance herself from an unpopular decision by blaming the consultants. Finally, if things go wrong, consultants are a handy scapegoat who won't complain too loud.

Cheers, Sidi

Hi there,

the most relevant dimensions based on my experience of serving clients for McKinsey and BCG:

Expertise. Sometimes this is being questioned, but MBB consulting firms are indeed specialized in a large array of industries and business functions. When adding up the experience of their consultants from junior business analysts to senior partners and knowledge experts, they can bring thousands of years of experience in each particular sector to their clients. Additionally, top firms spend millions in industry-leading research each year. Lastly, they are able to tap into the best external knowledge via expert platforms.

Pool knowledge across functions and across levels. Consultants are not part of the client's culture, politics, or organization culture. In the first month, as the firm builds a fact base, consultants usually interview people across functions. In large companies, cross-functional problem-solving rarely happens. Just getting different functions in a room typically unlocks creative problem solving. Similarly, consultants interview, watch, and tag along with people down the organization's structure, often starting with customers and moving through sales and line roles. CEOs and the exec team of large companies rarely do this (exception being their largest customers). There are tremendous insights to be had by doing this.

Problem solving & methodological toolkit. Consultants are the most experienced problem solvers in the business world. They have established processes, tools as well as access to data and experts to deal with any question a company, government or NGO could possibly imagine. From my own experience, it is just amazing how the drive of a small motivated and experienced team of hard working problem solvers can identify and solve business problems, that the client they are working for is unable to solve within a much longer timespan and a much bigger workforce.

Outside perspective. Consultants can bring an objective outside perspective into the client organisation. Since they serve mostly very large corporations or governments, the clients are prone to suffer from management inertia, groupthink, and daily routines. Bringing fresh and objective thinking from the outside can go a long way in such environments to crack crusted structures and old paradigms.

Driving change. As an external force, they are often called to evaluate a company’s issues, recommend solutions and lastly, help overcome or circumvent internal politics to drive change in the organization. Consultants are not bound by the client’s internal political landscape or other issues. Therefore, their substantiated advice can often be used as a powerful force of change. Additionally, especially McKinsey have made huge strides to increasingly support the implementation of their recommendations and have established a rich set of "new delivery models".

Capability building. Besides the analytical work a typical consulting engagement often includes, consultants can spend a significant amount of their time to train employees of their client, either in 1-on-1 coachings or full-fledged workshops. They transfer skills, build up knowledge to help bring their solutions into the organization and facilitate the implementation. Consultants usually train people from senior client leadership to sales staff and shop floor workers.

Political leverage. CEOs that want or need to make an unpopular decision often bring in a consulting firm to help. This provides ammunition to recommend an unpopular or risky decision to the board (expansion into a new business line or geography, or shutting down a plant). The CEO can also distance herself from an unpopular decision by blaming the consultants. Finally, if things go wrong, consultants are a handy scapegoat who won't complain too loud.

Cheers, Sidi

Book a coaching with Guennael

99% Recommendation Rate

284 Meetings

1,395 Q&A Upvotes

USD 319 / Coaching

Look also no further than these (self-serving) analysis showing how MBB's clients add value over time vs. their peers

Caveat: I have never devled into the underside of these analysis, and suspect at least some of the overperformance is due to conveniently chosen dates and peer group -> always take these with a grain of salt, but they should be directionally right since consultancies would have too much at stake if called out on the analysis.

Look also no further than these (self-serving) analysis showing how MBB's clients add value over time vs. their peers

Caveat: I have never devled into the underside of these analysis, and suspect at least some of the overperformance is due to conveniently chosen dates and peer group -> always take these with a grain of salt, but they should be directionally right since consultancies would have too much at stake if called out on the analysis.

To add an additional point to a great response by Sidi, troubled companies that invite consultants send a strong signal to the market that the company is willing and doing things to change for the better. This is particularly true for behemoth state companies in emerging markets.

To add an additional point to a great response by Sidi, troubled companies that invite consultants send a strong signal to the market that the company is willing and doing things to change for the better. This is particularly true for behemoth state companies in emerging markets.

Related BootCamp article(s)

Interviewer-Led vs Candidate-Led cases

Case Interviews can be led by the candidate or by the interviewer: In Candidate-led cases the main challenge is the structure. In Interviewer-led cases the main challenge is to adapt quickly

Related case(s)

McKinsey Questions

Solved 39.3k times
McKinsey Questions Tell me of a situation where you had an opinion and no one seemed to agree with you. What was your goal when you decided to join university / work / clubs / a sports team? Did you have a goal that you were not able to reach? What did you do? What do you want to be remembered for and how are you achieving it? What is your typical way of dealing with conflict?
4.5 5 862
| Rating: (4.5 / 5.0) |
Difficulty: Intermediate | Style: Fit Interview | Topics: Personal fit

Tell me of a situation where you had an opinion and no one seemed to agree with you. What was your goal when you decided to join university / work / clubs / a sports team? Did you have a goal that you were not able to reach? What did you do? What do you want to be remembered for and how are you ... Open whole case

MBB Final Round Case - Smart Education

Solved 16.4k times
MBB Final Round Case - Smart Education Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvantaged areas. The client is considering starting operations for its services in the Chicago area. They hired us to understand if that makes sense. Due to the nonprofit regulation, SmartBridge should operate on its own in the market, without any partnership. How would you help our client?
4.6 5 561
| Rating: (4.6 / 5.0)

Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case

Espresso, Whatelse?

Solved 9.7k times
Espresso, Whatelse? Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin. Your client wants to understand the root causes of this 2019 trend and how to increase its profit margin again.  
4.6 5 484
| Rating: (4.6 / 5.0)

Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin. Your client wants to understand ... Open whole case

Hot Wheels

Solved 5.2k times
Hot Wheels Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability.
4.6 5 289
| Rating: (4.6 / 5.0)

Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability. Open whole case

MBB Case: COVID-19 Vaccine

Solved 4.6k times
MBB Case: COVID-19 Vaccine The COVID-19 pandemic has killed millions of people worldwide and led to devastating economic impact. A vaccine is one of the biggest hopes for stopping the pandemic.  The World Health Organization (WHO) is working with multiple stakeholders to ensure groups at higher risk of becoming infected and dying (e.g. elderly people and healthcare workers) receive a safe an effective COVID-19 vaccine in the next six months. The WHO’s Director-General asked your help to build a plan to achieve this goal. What should be included in this plan?
4.6 5 242
| Rating: (4.6 / 5.0)

The COVID-19 pandemic has killed millions of people worldwide and led to devastating economic impact. A vaccine is one of the biggest hopes for stopping the pandemic. The World Health Organization (WHO) is working with multiple stakeholders to ensure groups at higher risk of becoming infected and ... Open whole case