Introduction to Management Consulting
Dr. Joe OMahoney 2007
Todays Learning Objectives
1. To give an overview of the course 2. To know the definition, history and purpose of management consulting 3. To understand the consultancy market: the main players, industry segmentation, clients and trends 4. To gain an overview of the consulting life-cycle 5. To understand the basics of approaching cases, guestimating and analysing.
The Agenda
1. The Course 2. What is Management Consulting? 3. Who are Management Consultants? 4. Clients 5. Analysing Cases
Management Consulting
The Course
Practical, Practical, Practical
Case-based (Harvard)
Develops skills Get jobs Highest retention rates
To
Understand Consultancy Analyse businesses Develop solutions
No...
Books Theories Bullshit
The Course Pt. I
Introduction to Consulting
Overview of Consulting Designing your own firm
Proposals and Planning
Planning, Costing and Proposing Assignment: Speaker from StayMobile Ltd.
Strategy Consulting & Market Analysis
Analysing Trends Making Recommendations
IT & e-Commerce
Requirements Management E-business
The Course Pt. II
Dark Sides of Consulting
Stress, manipulation and exploitation Illegal trades: Enron, Parmalat, WorldCom
Speaker Day 1: Consulting Work
EDS & Deloitte Managing Delivery
Speaker Day 2: Analysis with SSM
Jeremy Hilton: Private Consultant Methodologies & Modelling
Speaker Day 3: Consulting Careers and CVs
IBM Getting a job & getting on
What is Management Consulting?
Historical & Future Trends
Dates 1890 1940
1940 1970 1970 1990 1990 2000
Focus Technical Analysis
Strategic Management Technical & Financial Specialisms Niche: outsourcing, ebusiness, BPR
Hires Academics
MBAs & Academics Graduates, MBAs Experienced hires
Typical Firms AD Little, Booz, Allen, Hamilton, AT Kearney.
McKinseys, Bain & Co., Boston Consulting Group Arthur Anderson, KPMG, IBM, Deloitte, E&Y Razorfish, Sapient, Viant, iXL
Big player recovery from 2000 - 2003 (DotCom bust) Accountability (Chinese Walls, Enron, Sarbanes-Oxley, Basel II) Diversification (M&A, Internationalisation, Sectors) Image (MBAs, Up selling, Over-charging, Facsimile Consulting) Projects (outsourcing, e-business, protection vs. emergent markets) Competition (numbers, approved lists, proven track record, sceptical clients)
The Biggest Consulting Firms
Accenture Cap Gemini CSC IBM BCS PWC KPMG / Bearing Point Deloitte
BAH Anderson
(IT, Operations, HRM) (IT, Operations) (IT, Operations) (IT) (IT, Operations, HRM) (IT, Operations) (IT, Operations)
McKinsey & Co. Mercer A. T Kearney Monitor BCG A.D. Little Bain & Co.
(Strategy, Operations)
(Strategy, Operations)
(Strategy, HRM)
(Operations)
(Strategy, HRM) (Strategy) (Strategy) (Strategy) (Strategy)
Segmentation
Industry
Telcos Digital Media Finance & Banking Utilities - Health - Manufacturing - FMCG& Retail - Transportation
Function
Strategy Operations - HRM - IT (incl. e-business)
Sector
Non-profit Public Private
A Consulting Typology
Strategy Consultants
McKinsey Oliver Wyman A.T. Kearney Sapient Scient
/ Utilities
Diamond
Service providers
Deloitte PwC Accenture EDS
Software Providers
CSC
IBM
Technology Providers
Sector Analysis Pt. I
Strategy
Direction, Long-term plans & High-level goals Lever to implementation Bain & Co. - BCG McKinseys - Monitor
Operations
Day-to day running of firm, Reaching, strategic goals Re-engineering, outsourcing, supply-chains Accenture - Deloitte Cap Gemini - CSC
Sector Analysis Pt. II
IT
Systems development, implementation Business focused requirements IBM - AMS (American Management Systems) Accenture - CSC
HRM
Strategic alignment of people function ERP, training, culture change, competence management Accenture - PWC Mercer - AT Kearney
Consulting Products
Dates 1976
1980 1985
Product Portfolio Analysis
Five Forces Value Chain Analysis
Consultant Henderson
Porter Hamel & Prahalad
Organisation BCG
Monitor / Harvard Strategos / Harvard
1998 1990 1993
1993
TQM Core Competencies BPR
Economic Added Value
Peters & Waterman Reichheld
MIT Bain & Co.
Hammer & Champy CSC
Stewart Stern Stewart
Products have a name, a methodology, an application and great PR Consultants are charged with introducing fashions
Who are Management Consultants?
What is a Management Consultant?
1. Not the brightest and the best 2. Not all Harvard MBAs or even business students 3. Not Magicians, Preachers or Witch-Doctors
Skill Profile
Broad set of general consulting competencies
Depth of expertise: skill or knowledge based
Skills:
Outstanding interpersonal skills Great Presenter Excellent at writing reports
Knowledge:
Generalist business knowledge Methods & Frameworks In-depth specific skill
Basic Salaries (UK)
Graduate Junior Project Lead Team Leader Senior Consultant Principle Consultant Partner 20 26k 30 35k 40 60k 60 80k 70 100k 100k +
+ 10 20% bonus + car + health care, share options Highest salaries earned at niche consultancies
Design your own Consultancy
In pairs: you and 20 consultants wish to start your own medium-sized consultancy. You will consult on general strategic management issues such as mergers and acquisitions, outsourcing and new product development.
Write 10 scenarios (5 each) that you think might be likely to occur whilst running this consultancy. What functions, departments and skills will you need in the consultancy. Sketch a brief organisational design and strategy outlining: Skills Required Structure & Function Major Costs Key problems
Clients
Marketing Consultancy Work
1. Finding a problem
External threats Mimicking others Falling behind: benchmarks New opportunities
2. Marketing Consultancy
Links with top academics / Business Schools (HBS, MIT, Sloan) Links to conferences, institutions, Publications: books, journals, the press
3. Getting in
Free surveys / research Solution stories Referrals Jumpers
Why Employ Consultants?
1. Expertise 2. Objectivity 3. Someone to blame 4. To save money 5. External knowledge (e.g. best practice, benchmarking)
Types of project
1. Providing Advice: should I launch this product? 2. Project Design: how should I launch this product? 3. Implementation: install a system that will pay suppliers 4. Functional Management: run our department for us
Working With Clients
Defining the project
Open Closed questions: Predicament > Definition > Solution Key Decision Makers
Enticing the Client
Free analysis Free juniors Corporate entertainment
Successful Projects
Contract, contract, contract Clear goals, roles & procedures Boilerplating & reuse Quick measurable wins Solid Conclusions The person not the project
The Consulting Life-cycle
Initial Contact
Initial Contact Definition Proposal & Contract Data Collection
Project Definition Initial Analysis
Formal Proposal
Contract Project Implementation
Data Collection Data Analysis Decisions / Plan Intervention
Disengaging
Review
Data Analysis
Intervention
Decision-making, Planning
Review
The Consulting Life-cycle
Initial Contact Definition Proposal & Contract Data Collection
Review
Data Analysis
Disengaging
Intervention
Decision-making, Planning
Analysing Cases
Case 1: LightBox Inc.
I am the CEO of a light-bulb manufacturer. I have developed an ever-lasting light-bulb.
How much should I sell it for? What will the increase in our share-price be?
Additional Information
It cost 20 million to develop the product.
It costs 5 to make the product
Normal Lightbulbs
Cost 0.5 to manufacture Are sold to distributers for 0.25 Who sell to retailers for 0.50 Who sell to the customer for 0.75
What about the markets?
Cannibalisation? Government?
Case 2: Three
The Company
Hutchison Whampoa Owned by Li KaShing ($20bn) Family interests of $630bn Owns ports, telecoms, property (Hong Kong)
The Context
3G Telecoms: video & music over the phone 1999: UK first gov. to sell 3G licences 2000 2005: Followed by most others
Case 2: Three
The Decision
Should Hutchison buy a 3G licence in the UK? How much should they pay for it? What strategic issues should they look out for?
Links
http://www.vault.co.uk http://www.mca.org.uk http://www.mbajungle.com http://www.consultingcentral.com http://www.feaco.org http://www.mca.org.uk http://www.amcf.org
Questions?
