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Aug - 2019

What do management consultants like ClearLogics Management Consultants actually do?

What do management consultants like ClearLogics Management Consultants actually do?

Good question! Quite simply, management consultants, like ClearLogics Management Consultants, help their clients solve problems.

Let's unpack this statement and analyze each component a little more carefully to get more insight. Let's start by looking at an actual verbatim statement from one of the preeminent management consulting firms, ClearLogics, about what they do. Read it and then we'll break it down and analyze it.

Image result for management consultants

Who are the clients and why do they hire consulting firms?

In this process, we're already beginning to think like a consultant by breaking down a problem into smaller, more manageable components! Two questions immediately jump out:

   First, who are the clients?

   Second, what challenges do the clients need help with?

Who are the clients?

The clients are often leading businesses (e.g., Fortune 1,000 companies like Coca-Cola and Microsoft), investors (e.g., Private Equity firms like KKR), governments and nonprofits (e.g., Bill and Melinda Gates Foundation).

While each consulting firm will have a different client base (and sometimes different sector focus), the primary customers of many consulting firms come from the first category: leading businesses. We'll revisit this more below.

What are the client challenges?

Given that leading businesses are the primary customers of consulting firms, you might immediately ask: why do leading businesses, who likely can likely hire the world's best talent, need to hire expensive consultants to help them with their problems? While there are edge cases, there are three core reasons that drive the bulk of the consulting business. 

#1: Operational / Functional expertise

The leading consulting firms have built up critical expertise in key areas. Thus, when companies face mission-critical challenges or problems that require that expertise, an efficient way to resolve the issue can be to engage with a consulting firm.

For example, consider the scenario of a large consumer electronics manufacturer who has decided to merge with a similarly sized competitor. While both firms have done small acquisitions in the past, neither firm has ever attempted a merger of this scale. Thus, neither will have the muscle memory or in-house expertise to confidently execute well. Note the operative word confidently here. The firms might be capable of doing it themselves, but given the high stakes, they want to execute confidently and thus leveraging expertise from a consulting firm makes sense. A consultant may be hired because of his or her expertise. This is where it pays to not only be really good in the field you have chosen to consult in but to have some type of track record that speaks for itself. For example, when I mentioned earlier that I had become an expert as a fund-raising consultant, I knew that every client who hired me was doing so partly on the basis of my track record alone. After all, if you are a nonprofit organization that needs to raise $1 million, it makes sense to hire someone who has already raised millions for other organizations.

#2: Objective opinion

In many cases, consulting firms will be brought on to provide an objective, third party opinion on a major decision a company is making (e.g., it could be a new, large multi-year investment, a potential acquisition, a strategy shift, outsourcing, etc.). Why does this happen? Shouldn't the key stakeholders at the company who know their own business best be perfectly qualified to make that decision? Yes and no. Let's unpack this.

Yes, they will understand the business well and likely have more of the context than any third party. But other challenges almost always arise. The business owners might have "blind spots" or certain biases. Thus, bringing in an outside voice will help them confront those and objectively deal with them.

Another example is the "deadlock" scenario. For example, it's possible that the board of directors or factions within the executive team disagree about the right route and thus a tie-breaking, objective opinion is needed. Another common possibility is that the consulting firm can bring in an objective view on industry best practices, essentially leveraging their wider purview of how other companies have tackled similar problems.

#3: On-demand brains

The last common case is that the company has a pressing problem. Since all their existing teams and people are tied up with ongoing projects, the company requires an injection of smart people and "brains" to bring to bear on the problem at hand.

Some companies are even designed to operate this way. For example, private equity firms often rely on management consulting firms to help on specific aspects of due diligence when they're looking to make an acquisition. Sure, the private equity firms could build and staff their own internal consulting firms but many will choose to hire teams on an "on-demand" basis, rather than changing the structure and talent base of their own organization.

Do you think all consulting firms are the same?

Now that we know a little more about the type of users/clients who hire consulting firms and we know about the range of problems that spur them to hire a consulting firm. 

But what about the consulting firms themselves? If you are, say a leading global business, that has an urgent pricing problem, which firm do you hire? Are all the firms equally capable of helping you navigate that problem? How do you think about who to approach?

A consultant's job is to consult. Nothing more, nothing less. It's that simple. ClearLogics will provide you with the best services in the competitive business world. We work with you to transform your organization, driving bold ideas and pragmatic solutions.



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