What is Consulting?

What is Consulting

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“Consulting” is a pretty general term, and doesn’t really give you a clear idea of what consultants actually do.

The Oxford dictionary indicates that “to consult” means to “seek information or advice from someone (especially an expert)”.

In other words, consultants are people who provide expert advice.

We are interested mainly in the consultants who provide advice to organisations (corporate, non-profit and government). They are typically employed by management, and hence they tend to be called “management consultants”.

In general terms, management consulting involves providing advice to organisations with the aim of helping to improve organisational performance or solve specific business problems.

Consultants can perform a wide range of tasks including framing a business problem, synthesizing large amounts of data, undertaking research, interviewing employees, developing recommendations, and presenting findings to senior management.

Consultants can work in a wide range of industries including automotive, CPG (consumer packaged goods), chemicals, defense, electronics, financial services, healthcare, infrastructure, logistics, media, mining, oil & gas, pharmaceuticals, private equity, retail, social sector, technology, telecommunications and tourism.

Consultants can also provide many different services including growth strategy, pricing, marketing, supply chain optimization, software development, human resources management and economic forecasting.

Large full service firms like Deloitte, PwC and KPMG typically provide a wide range of consulting services across a broad range of industries. While smaller consulting firms often specialize in providing advice in a particular service area or to a specific industry.

[For more information on the management consulting industry, please download “The HUB’s Guide to Management Consulting“.]

The Great Reset?

This past week there has been fear circulating among founders and private investors who hold stock in certain early stage startups that have achieved sky-high valuations.

Why the fear?

The startups in question are privately held, meaning that the founders and early stage investors own shares in the companies, but shares have not yet been offered for sale to members of the public.

Many of these startups have achieved record valuations, based largely on a hope among investors that they will be able to sell shares in these companies to members of the public at even more inflated prices when the companies are eventually sold via IPO.

Early stage investors are willing to bet big because they are desperately searching for the next big win, the next Facebook, Airbnb or Whatsapp.  And they have been comforted by the fact that, if their optimistic expectations don’t come to pass, they should still be able to break even or turn a small profit by passing the buck onto a hapless public.

This form of aggressive investing has produced a record number of unicorns (that is, startups with a valuation of more than $1 billion). Unfortunately for all the Venture Capitalist cowboys, though, prices for tech companies in the public markets have been falling, and this has started to make unicorns that are yet to float on the stock market look over valued. Business Insider reports that “[o]ver the past year, LinkedIn shares have fallen by about 52%.”

Falling prices in the public markets means that a fear of missing out on the next big thing appears to have morphed into a fear of losing money. Early stage investors will need to reset their expectations, ignore the startup hype and return to investing basics by looking for companies with a proven business model.

A Career In Management Consulting

A Career in Management Consulting

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Consulting is an appealing career choice for many graduates.

Consultants have the potential to travel with work, network with Fortune 500 executives, earn six figure salaries, develop high-level transferable business skills, and benefit from lucrative exit opportunities.

What’s not to like?

Well, for all its benefits, the life of a consultant is not necessarily a bed of roses.

Consultants can be placed under a lot of pressure, required to work extremely long hours, spend endless nights in lonely hotel rooms, and face the continual threat of redundancy either due to an economic downturn or the firm’s ‘up or out’ policy.

Before you embark on a career in management consulting, it is worth taking some time to understand the consulting industry and whether the requirements of the industry are likely to be a good fit with your personality and goals for the future.

[For more information on the management consulting industry, please download “The HUB’s Guide to Management Consulting“.]

False Dilemma

Harvard Business School Professor Michael Porter argued back in 1985 that there are three generic strategies that an organisation can follow to achieve above average performance.

You can operate at low cost, provide distinct value to customers, or focus on doing one of these things while targeting a specific niche in the market.

The unfortunate fallacy that Porter introduced is that he made us think of these three choices, “low cost”, “differentiation” and “focus”, as three separate strategy alternatives.

In reality, they might more accurately be thought of as three necessary ingredients of any strategy that stands a chance of thriving in the long run.

Two companies that appear to have adopted the strategy trifecta are Aldi and Ikea.

Both firms have focused on a particular market niche. Ikea provides nicely designed furniture, and Aldi provides good quality groceries.

Both firms have designed their organisations to enable them to operate at low cost and they have passed these savings on to the customer.

The additional beauty of pursuing this strategy is that delighted customers can’t help but talk about the value for money that they receive, and so the firms make further savings by being able to reduce their marketing costs.

The choice of pursuing low cost or high value is a false dilemma.

While it is true that it might be difficult to achieve both on any given day if the resources and systems are not in place, it is also true that organisations don’t exist merely at a point in time.

Most organisations exist for many years and a sound strategy is one that will make this enduring existence more certain, sustained and successful.

How To Deal With Rejection

Dealing with Rejection

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If you have gone through the consulting interview process and are not offered a position with your target firm, then you should find out why.

There are two reasons this is important.

Firstly, getting specific feedback on your performance is the only way you can learn and improve.

Secondly, you may discover that the firm has formed an inaccurate opinion of you.  It is usually impossible to transform a rejection into an offer, but you really have nothing to lose.

If you believe that you were very close to getting an offer, then you may want to try proposing a compromise. You could offer to work for free, or on a trial basis rather than in a permanent full time position.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]