that’s a separate brach of consultancy called ‘scamsultancy’
There's a third branch, usually called something like strategic consulting. This is where you hire a bunch of young people from good universities with impressive resumes to tell your clients (executives at large companies) what they already knew and want to hear so that they can in turn use it to justify whatever they wanted to do before they even met you.
The world is not fair so this is the most lucrative branch. And you take no hit to your reputation. Quite the opposite, you benefit from associating with your high status clients.
Or maybe it is fair. It's pretty hard to get into that.
I used to be an associate for a major management consulting firm and your assessment seems only "directionally correct", as we would put it. Certainly there are little incentives for risk-taking - engagements run a couple of millions for two months of a team of 3-4 people; who wants to "destroy value" risking making one of the top executives unhappy? Nonetheless, there is a lot of work that is actually pretty useful (and profitable for the clients), specially on the least fuzzy projects (eg. "How can we improve our pricing?").
I'm not sure it is a matter of fairness or not, but there seems to be a real "pain" that management consulting solves. In the most prestigious firms, it's quite a better business than most. Low-competition, high-margins. We used to call it a "revenue business": revenues are so much larger than expenses that what the firm tries to optimize is the former, not the latter.
Also, does anyone knows a startup that is run like a firm? I find it a really interesting model. I would love to know if anyone knows of one that does.
Matthew Stewart's The Management Myth[1] is a pretty brutal autobiography of "strategy consulting".
A key insight is the role of business school theorists, particularly Michael Porter.
Porter essentially looked over the fence at economics, saw what the economists introduce as the bad behaviours and outcomes of monopolists, then taught that as behaviour to be emulated.
I had a boss who hired some outside consultants to "find out what our IT department should do in the future". They had no experience in our industry. They asked me some questions and wrote down my answers. When they turned in their report, the boss was happy. For this, they charged $20K.
There's a third branch, usually called something like strategic consulting. This is where you hire a bunch of young people from good universities with impressive resumes to tell your clients (executives at large companies) what they already knew and want to hear so that they can in turn use it to justify whatever they wanted to do before they even met you.
The world is not fair so this is the most lucrative branch. And you take no hit to your reputation. Quite the opposite, you benefit from associating with your high status clients.
Or maybe it is fair. It's pretty hard to get into that.