I'm a management consultant. My work is not ridiculous. What is ridiculous is the level of damage caused by the utter apathy and incompetence that exists in many organisations.
Just because someone is technichally skilled and highly intelligent, does not necessarily make them a capable leader, or a good manager, or even a productive employee. I have met managers, engineers and architects and other technical folks costing their employers millions due to their inability to communicate with others, process basic information and gain the trust of their colleagues. Non technical as well.
I have worked with dozens of organisations, engaging deeply with the people embedded there, and i have developed a decent understanding of how to identify 'people' issues and develop creative solutions, in a relatively short period of time.
Apologies if i sound defensive, but i see your sentiment on here a lot. And it is dead wrong.
For what it's worth, i do not have an mba or specific industry experience. Just good interpersonal skills and a willingness to listen, empathise, and improve the way things are done.
I am sure you believe management consultants provide value and drive changes that shore up flailing organizations. That might even be objectively true for a minority of cases. But having seen a few MBB engagements "deliver value" my take on it is that consulting business survives by delivering one service (only). A backstop for the executive leadership to justify their agenda. MBB said so! Sice they are expensive as hell they must be right.
Again this is about strategy consulting. The other flavors like turnaround/ execution consultants do provide tangible value. But the typical management consulting bashing is about the strategy kind. This is just my opinion. I don't expect anyone to agree. Nor am I attacking your worth as a professional. You could very well be the exception.
> But the typical management consulting bashing is about the strategy kind.
I technically do strategy consulting. Generally speaking, yes there is a lot of fluff to industry (if you want to call it that), but that's not because the role itself is flawed, it's because the individuals who are employed in it are. Note - I also do not have an MBA.
- People who are in their early 20's with 2-3 years of experience can offer great insight to strategy work, but their lack of experience really limits the amount of value they can provide. Clients frankly do not want to pay for them (they do anyway, but you get my point). So how do you get new talent into this area if you're not willing to pay for it? (I have no solution btw). Truly talented people move on elsewhere.
- I personally do not sell strategy services that cannot add value, but that's because my firm is a boutique provider and that's part of my value proposition. The big boys (McKinsey, Bain, etc) will literally sell you anything their price tag can justify, even if they don't genuinely believe the price tag is justify. That's not a knock of those firms, it's just the "Way it is"...I would do the same thing if I were in there shoes (there's a reason I'm not).
- Corporate profits continually grow at all time highs (despite relatively slow top growth outside of tech). Management/strategy consultants are VERY good at increasing profits, but are horribly matched for helping grow revenues/sales.
- Many companies have good internal strategic people within their exec teams, but need an external voice of reason to justify their position. I often claim my work consists of "Using Email, Excel, and Powerpoint to convince people to act". Sometimes it is very valid to have someone else with a different perspective to provide advice about something that you may be biased about. Again, my value proposition is that I'm not afraid to say what needs to be said, free from any incentives. Unfortunately many firms in this space like their follow-on services opportunity too much (class example is a Accenture/PwC/Deloitte/etc firm telling a client in a strategy session that they need to do an ERP implementation, oh and by the way, they sell that implementation too...THAT is bad strategy advice)
- I have first hand seen the result of good strategy work that has made individuals incredibly wealthy. I've also seen strategy fees hurt the bottom line because execs are unwilling to act on the advice they need. It's not a foolproof service offering - this is absolutely true.
If you think management is only common sense, then paying 500 bucks an hour for MBA grads is ridiculously.
Using that logic, either the CEO is stupid, or the company employees are utterly incompetent and lacks common sense.
Or, more likely,
a) there's some science/skills behind management that can be learned at school even by non experienced people;
b) those young MBA people worked 60/70 hours per week for 3/4 years being part of a team reporting directly to the C-level executives of Fortune 500 corps, solving quite complex problems.
He or she might be; plenty get those kinds of jobs on their personal connections rather than their track records.
But a more usual scenario is that the CEO wants to fund their next bonus by slashing jobs, and paying management consultants - with the company's money - to facilitate that is, to that sort of person, a shrewd move.
Those people were hired for a reason; if the CEO literally cannot think of anything useful for them to do then they have utterly failed as leaders. But they are lavishly rewarded nonetheless.
I'm not sure if this is what you mean, but what I heard is that the most common task of management consulting is to sell an already made decision to the rest of the company. The consultant appears neutral and is expected to have good presentation and sales skills. The analysis technique and inputs can be chosen to yield the desired result. The more expensive the consultant the better for credibility. So it's obviously a great way to make money.
The principal-agent problem is thus between the company and the person hiring the management consultant(s).
Backfilling a CEO idea happens sometimes. And that's not bad per se. They still need to see if their idea holds water, and consultants have great presentation skills that the CEO can leverage trying to explain the idea to stakeholders.
But most of the time, at least the top consultancies, they will call out stupid ideas. They have their own reputation to keep and shareholders, the guys actually paying for the party, don't usually like being made fools constantly.
Or, most commonly, be hired to shed some light on a bunch of seemingly equally good ideas. Business strategy issues hardly have black or white and sometimes the recommendations fail. People in the company make sure to publicize the consultancy involvement as a cover your a strategy, but hardly share the credit when things work.
About the parent comment on principal-agent problem. He must be a management consultant for throwing a buzzword around in a discussion and dropping the mic :)
At least the school my fiancée is currently attending (Kellogg) is decidedly not stuffed with people 2-3 years in investment banking. A lot of people here are exactly the same graduating class (2011) because of the almost mandatory 5 years. There are exceptions, but a large portion of the people I've met during these past two years are exactly my fiancée's age.
The skewed distribution of grad students who have reached the minimum requirement of job experience suggests, to me, that they are there primarily to advance their careers through credentialing, and not because of the knowledge a Kellogg MBA imparts. Is there really a substantive difference between a school stuffed with 2-3 years out of undergrad, and one stuffed with students 5 years out? I doubt it.
A large part of the Kellogg "experience" is what the other students bring into the classroom. 2 years may not seem like a lot, but it's a world of difference apparently in what stories/examples students can provide one another for the concepts being taught in class.
I don't have a direct understanding of any of this, but that's how my fiancée and our friends explain it when I ask. Take that for what you will!
Management consultants can be extremely valuable. If, for example, a new restaurant hired a good one with domain experience, a lot of money would be saved and fewer restaurants would fail. How many new restaurant owners have extensive experience with HR efficiency or ordering supplies efficiently or marketing effectively given their target market? Hell, many new restaurant owners have no idea about their market — they’re betting on decor and recipes and hype rather than implementing sound business practices from the start. Even experienced chefs might not know how to budget and plan well. They also might not be good at marketing either.
Management consultants can add incredible value. It’s ridiculous to dismiss their work.
If, for example, a new restaurant hired a good one with domain experience, a lot of money would be saved and fewer restaurants would fail.
But there is a name for that role already: Head Chef
A better analogy is a manager of an already successful restaurant hiring a consultant to help them reduce the staff's wages and make them work longer hours. Such as an expert on zero-hours contracts perhaps.
All the top US MBA programmes are stuffed with people with 2-3 years investment banking or management consulting as their sole experience.
The concept of a management consultant is possibly even more ridiculous to begin with