The Consulting Value Proposition

Why do organisations hire consultants?

If you are a junior consultant, knowing why your work is valuable is likely to make your job more meaningful.

If you are a partner, knowing why your work is valuable is likely to help you sell consulting projects and make money for yourself and for the firm.

Below we outline five (5) reasons why organisations engage consulting firms.

1. Expert Knowledge

Consultants can provide management with the expertise needed to address specific business problems. For example, a company that needs to update its computer systems might seek advice from IT consultants.

The benefit of bringing in specialist consultants is that they are likely to have experience solving similar problems and an understanding of industry best practice. Large consulting firms can draw on a breadth of experience and offer clients a broad range of expertise applicable to a wide range of business problems.

Areas of expertise that a consulting firm might provide include:

  1. Industry specific knowledge;
  2. Strategy;
  3. Marketing;
  4. Supply chain optimization;
  5. Distribution;
  6. Organisational change;
  7. Information technology;
  8. Tax structuring;
  9. Risk management;
  10. Human resources; and
  11. Turnarounds.

Expertise can form a crucial part of a consulting firm’s value proposition and can be something worth fighting over.

An example from 2014 occurred when McKinsey poached two partners from AlixPartners, one of the world’s best-known restructuring firms.

Restructuring is a niche service which requires specialized knowledge and industry experience. In an apparent attempt to stop McKinsey poaching key talent, AlixPartners sued its former employees (Eric Thompson, managing director of AlixPartners’ Hong Kong office, and Ivo Naumann, head of its Shanghai branch) on claims that they misappropriated trade secrets before they left the firm’s Asian operations.

Expert knowledge can be very valuable to consulting firms and their clients.

2. Independent Advice

Consultants can assist management by providing independent advice.

Consultants can provide more objective recommendations compared with full-time staff since they do not have a vested interest in the outcome. For example, consultants would be able to recommend cost saving measures such as layoffs, restructuring, offshoring, and outsourcing. Consultants can also recommend growth strategies like market development or product development, which may be good for the organisation overall but not in the interests of a particular manager, division or department.

3. Catalyst for Change

Consultants can assist management by supporting organisational change.

There are four reasons why consultants may be well placed to do this:

  1. Impetus for action: Consultants can provide research to support a particular plan of action, which can provide the stamp of approval that management needs to legitimize its plan and overcome internal opposition. A consulting report can also provide an impetus for action by clarifying the reasons that a proposed course of action makes sense.
  2. Convenient scapegoats: Related to the first reason, consultants can provide political cover to help management pursue a potentially risky or unpopular course of action. If employees are unhappy with layoffs, management can blame the consulting report. If shareholders are unhappy with performance, management can blame the consulting report. “Nobody ever got fired for hiring McKinsey.”
  3. Open communication: Consultants can facilitate open communication within a firm and enable good ideas to reach management. Since consultants do not have a fixed position within the organisational structure it is likely to be easier for them to collect information from employees at all levels.
  4. Employee engagement: Consultants often engage with staff at all levels within an organisation and, as a result, employees may feel more involved in the change process making them less likely to resist proposed changes.

4. Implementation

Consultants can assist management by implementing recommendations.

A firm may find this appealing because implementation may be a dedicated project unrelated to the firm’s ongoing operations.

Hiring outside consultants can help a firm overcome internal bureaucracy and inertia favouring the status quo. A firm may also lack the expertise or manpower needed to implement recommendations efficiently and effectively.

5. Cost Effective Solution

For some types of projects (e.g. software development) consultants may represent a cost-effective solution.

A firm may lack the competencies needed to complete the project in a timely or cost effective manner and it may not be feasible to hire and train full time staff.

Even if engaging outside consultants appears more expensive compared with employing full time staff, it may still make sense to hire outside consultants since (a) they can be dispensed with more easily after the project is complete, and (b) consultants may be able to complete the project more quickly, which could give the organisation a competitive advantage.

[For more information on the management consulting industry, please download our “Guide to Management Consulting“.]

Image: Pexels

Consulting Exit Options

Exit Opportunities

One of the benefits of starting your career in the management consulting industry is that it provides many favorable exit opportunities.

Some of the possible exit opportunities that a consultant may consider are outlined below.

1. Another Consulting Firm

Just because you leave a consulting firm doesn’t mean that you have to leave the consulting industry.

A junior consultant with a few years of experience may decide to move to another consulting firm which offers a better office location, better pay, the promise of accelerated promotion, or more interesting projects.

2. Internal Consulting

Some companies have an internal consulting unit designed to provide support within the organisation on issues such as strategy, business development, marketing, and project management.

The benefits of this kind of arrangement for the consultant include less travel and a steady stream of work.

The downsides may include lower pay, less variety of work, and perhaps less dynamic colleagues.

3. Large Corporates

Former consultants can land themselves strategy, marketing, operations, business development or management roles in large corporations like Amazon, Apple, Coca-Cola or Procter & Gamble.

The benefits of working at a large corporate include better job security, less travel, and shorter work hours.

4. B-school

Probably the most common next step for junior consultants with a few years of experience is to attend business school.

Some consulting firms will offer to pay the tuition fees on the condition that the consultant returns to the firm for a number of years.

5. Startups

The current trend (which I believe will only become more mainstream in the coming years) is to build a team, raise capital, and start your own show.  A few years of experience at a top consulting firm can provide you with a cash buffer, a strong business skill set, and a network of friends and former colleagues who can help get your new project off the ground.

[For more information on the management consulting industry, please download our “Guide to Management Consulting“.]

(Image Source: Flickr)

Passion Versus Profession – Are Management Consulting and Music Production Really That Different?

As an aspiring management consultant who has also been working as a music producer for several years, composing, arranging, and producing songs for multiple artists, I get a lot of questions about this seemingly strange combination of interests. “If you love music so much, why don’t you do it as a full-time job?” “If you are really that passionate about consulting, shouldn’t you spend more of your free time reading about business trends instead of focusing on your hobby?”

Yes, at first glance the two areas seem very different: Management consulting is thought of as a highly rational and logical process while music is perceived to be purely creative and irrational; it should come from the heart. Consulting is about rigid analysis, solutions founded on facts and numbers, while music is founded on individual taste and perception.

Nevertheless, I don’t think there needs to be a conflict between passion and profession. In fact, most successful consultants I have met throughout the years are really passionate about things that have nothing to do with business – for many good reasons. Not only do hobbies function as a great outlet for work-related stress (and let’s not kid ourselves, a consulting career isn’t exactly stress-free), they also give you a different outlook on many problems you have to solve at work. Let me demonstrate this based on my own experience.

The similarities between consultants and music producers start with the reasons why they are hired in the first place. For consultants, it’s not that companies cannot think of any solutions to their problems themselves. It’s rather that they don’t have the time or personnel to work out solutions, since they have to keep everyday operations running; they don’t always have the necessary experience in the desired area or market; and most of all they need a fresh outside perspective to avoid thinking in familiar patterns.

Likewise, musicians usually know how to play their instruments and have great ideas, but they need producers to guarantee a quick and professional end result. They may not have the necessary equipment to record adequately; they may not have the necessary experience with the mixing process to make a song sound competitive relative to other commercial releases; and most of all they can benefit immensely from a fresh perspective and new ideas regarding arrangement, instrumentation, and effects.

When musicians arrive for a recording session, they usually have a good idea of what they want their song to sound like, but may leave with a very different result. It is also important to involve multiple people in the production process – most songs you hear on the radio have different people responsible for composition, performance, mixing, and mastering, which helps to spot mistakes and prevent what I call “creative bubbles” – when you get so used to thinking about a certain concept that you stop being open to other ideas.

Moreover, the way management consultants interact with their clients is similar to the way music producers interact with artists. Both require a certain degree of empathy and understanding for client-specific issues. At the beginning of each project, it is any consultant’s responsibility to understand the client’s problem, unique background, and boundaries concerning the project. For example, cutting research and development costs when the client’s reputation is based on innovative capabilities wouldn’t make sense in the long run, even if it seems to be the most efficient solution. Likewise, proposing a merger without understanding the two companies’ cultures first may not lead to desired results.

When music producers write or arrange songs for artists, it is just as important to gain a solid understanding of the artist’s musical style, personality, and image. Every sound or word used portrays the artist in a certain way and can make or break a record. The longer you work with someone, the better you get to know them and the better you become at catering to their specific needs. That’s also why many large corporations have been working with the same consulting firm for several years.

Last but not least, good management consultants are just like good musicians because they don’t use standard solutions. Of course, they know what generally works based on experience and data, but they can also tailor successful concepts to the client’s unique situation. While it will be obvious to most readers that consultancies may use statistical tools in order to determine so-called “industry recipes”, similar concepts apply to the music industry. The famous “Four Chord Song” by the Australian comedy group Axis of Awesome, for instance, shows how many popular hits throughout the years have used the same four chords – and while this chord progression seems to be a proven formula, the songs don’t sound the same when listened to as individual tracks. The key is to adjust a successful concept so it fits the singer’s voice, genre, and instrumentation. Similarly, consultants need to adjust business recipes so that they match the client’s core competencies, industry, and organisational structure as well as culture.

It seems as if management consulting and music production aren’t really that different after all and I can guarantee you that a similar logic apply to your passion and profession. You shouldn’t be discouraged to do what you love just because it doesn’t necessarily fit into your job’s stereotype. Actually, spending time on your hobbies can make you better at your job – there’s always much to learn.

Max Kulaga is a finalist reading Economics and Management at the University of Oxford. As a former intern at L.E.K. Consulting in London and President of one of Oxford’s largest business societies, the German-born is keen on sharing his experiences and knowledge about the consulting industry.

Image: Unsplash

Making The Most Out Of A Networking Event at University

If you are going to university, it is likely that you will attend a corporate networking event at some point. Whether you want to form connections with your dream employer, find out about a specific company or industry, or simply go because that’s what all of your friends seem to be doing, these events can be useful, but also somewhat overwhelming. What do people actually do at these events? Who should I talk to and what should I talk about? In this article, I will provide you with some practical advice based on my personal experience attending and organising countless corporate recruitment events at Oxford University.

There are different types of corporate events that involve networking, such as company presentations, workshops, and dinner or drinks events. While some events may have a formal part in the beginning or in between, the networking more or less always looks the same – you grab a drink or a bite to eat, gather around some employees, and try to engage in a conversation. After a while you move on and try to get to know another person. Some people despise this sort of event – after all, it’s only meaningless small talk, isn’t it? Actually, it doesn’t have to be. If you know what you are doing, you can benefit from attending such events and may even find them enjoyable.

First of all, you need to decide what you want to get out of the event. For specific questions concerning your application, it is often useful to talk to the recruitment team. They will not only answer your questions, but may even give you exclusive tips on how to stand out as an applicant. However, often the answers you receive may not be any different from the material presented on the company’s website – so why waste your time at the networking event if you can read through the FAQ much faster?

If you have already browsed the careers website and think that you know most basic facts about the firm as well as the recruitment process, I would advise you to talk to some of the employees in the area you are interested in. They can give you what no amount of research can: a personal narrative. Find out what they personally value about the company’s culture. That way, you can understand the work atmosphere better and simultaneously get a perfect guideline for your cover letter – after all, identifying with the corporate culture as presented by employees is a great reason to choose this firm over any other. Ask company representatives about their day-to-day work and their favourite (or least favourite) projects. Getting an impression of what the work at this firm is like will help you decide whether you want to work there, but it also makes for a good conversation starter if you would like to dig deeper. The more in-depth the conversation becomes, the more memorable it will be for the employee – which only has advantages for you. Sending a follow-up email asking another question about your conversation is also a good idea to make yourself noticed.

You have to keep in mind though: quality is better than quantity. Contrary to popular belief, a networking event is not a competition to see who can collect the most business cards. Having an interesting conversation with one employee followed by an email or LinkedIn exchange is worth much more than a brief chat with ten employees, consisting only of standard questions. Personally, I have stayed in touch with several people I met at university networking events and received useful advice on my applications as well as personal recommendations that got me to the interview stage.

Likewise, networking events can also help you meet fellow students with similar interests. Don’t forget about this aspect – these people may well help you prepare for interviews or tell you about their experience with recruitment processes that you have not gone through yet. After all, a networking event is supposed to be useful for everyone attending. So don’t be nervous – as long as you know what you want to get out of it, it will definitely help you progress your career in one way or another.

Max Kulaga is a finalist reading Economics and Management at the University of Oxford. As a former intern at L.E.K. Consulting in London and President of one of Oxford’s largest business societies, the German-born is keen on sharing his experiences and knowledge about the consulting industry.

Image: Pexels

Mythbusters: The Management Consultant Edition

So you’re interested in being a management consultant? Great! But what is it that they actually do? If you’re still not sure of the answer then read on, as I bust the myths and reveal the realities of what it truly means to be a “management consultant”.

1. Consulting only pertains to the business sector- MYTH

Consultants can be utilised among a broad range of industries and sectors. After all, no business runs smoothly 100% of the time! You can find consultants working with a broad range of sectors from manufacturing and financial services to charities and government. However, the work that consultants do for each sector is not the same; for instance, consultants may work with banks to implement new technologies whilst adhering to financial regulations but work with the manufacturing sector to streamline its supply chain.

2. Consultants can specialise in a certain type of consulting- REAL

Being a “consultant” may sound like a vague term but it is possible to specialise in a certain type of consulting, either with experience or by working for a smaller, niche firm. At a senior consultant or manager level in a large firm, you can specialise in a certain industry and become an expert in that area. Alternatively, there are specialist firms that provide specific types of services like strategy, human resources, IT, finance and outsourcing. If you’re looking for something different still, there are niche firms that focus on a particular sector, and with enough experience and knowledge you can become a freelancer and offer your services to whomever you wish. With all this choice, you’ll easily be able to find an area of consulting that you’re truly interested in and enjoy!

3. It involves a lot of teamwork – REAL

Identifying and offering solutions to large companies would be a mammoth task if you had to do it all by yourself, so thankfully there will always be a team of people to support you. Teamwork is an essential skill for consultants as they typically find themselves working within a team on projects. That is not to say that the work you do won’t be your own, but the whole team will be working closely with the client to identify problems and analyse the issue thoroughly to ensure the recommendations given are accurate and effective.

4. The work is not varied – MYTH

A consultant’s work is never done, as they jump from project to project, and with each business comes a different set of needs and thus a different set of tasks. As a result, consultants can find themselves doing a variety of work on a day-to-day basis, and it is often the wide range of experiences that most attracts people to the profession. Tasks can range from meeting with clients and carrying out research, to preparing presentations and creating computer models. A lot of the work is centred on collecting and analysing data, so you can expect to be conducting interviews, running focus groups and facilitating workshops to get the information you need. But don’t expect to be bored – many consultants cite the varied work as the reason why their job remains interesting and challenging.

5. Consulting is a degree specific industry – MYTH

This is pretty self-evident since there isn’t really a “consulting” degree, but many people assume you must have a business/economics background to be a consultant. Sure, it may help if you already have some basic business knowledge and some firms do favour candidates with numerical/analytical degrees, but that’s not to say you are barred from the profession if you don’t have this knowledge. Many consultants learn on the job through graduate training schemes and firms welcome a wide range of backgrounds and skills to suit their wide range of specialisms. However, as with any corporate job, commercial experience is helpful and commercial awareness (everyone’s favourite graduate recruitment buzzword) is essential. So although you don’t need to have studied business to be a consultant, you will need to show some understanding of how the business world works.

6. It can be a stressful job – REAL

Sadly, this is a reality that you will have to get used to as a consultant. Depending on the project, the hours can be long (a working week of 50 or more hours is common) and the deadlines tight (a project can run anywhere from one day to several months). There can also be a huge amount of pressure and responsibility put on you to hit deadlines so that the project is completed on time. Therefore, being able to deal with stress is a vital skill if you want to succeed in the profession. However, many consultants actively thrive under the pressure, so don’t be completely put off just because you may have to pull some long nights every now and again.

7. There are opportunities to work abroad – REAL

Consultants go to where the clients are, which means you may have to travel abroad. This will be more likely in bigger firms where the work is more international, as bigger clients may have offices overseas. However, even if the work you do isn’t international, consultants tend to travel a lot in general (since they are often based in clients’ offices), so expect to be moving between client sites all around the country if the client site isn’t local.

8. Career progression is structured – REAL

In most consulting firms, there is a structured ladder for career progression. As a graduate, you’ll start off as an analyst, which mainly involves research, data collection and analysis, before moving on to a full consultancy role after gaining some experience. You can progress to a senior consultant or manager level within about three years (depending on how good you are), at which point you will lead the teams and design and develop solutions and projects. From here, you can become a partner or a director of the firm, where you will be responsible for generating new business, developing client relationships and overseeing the growth of the firm. The progression doesn’t have to stop here: many move on to set up their own consulting firms or go freelance. The great thing about consulting is that there is no set time limit on when you can progress to the next level – you can move up when you’re ready. So if you work hard and are good at your job, you’ll reach the top in no time!

Vivien Zhu is a student studying History at the University of Oxford and is considering a career in Management Consultancy. She currently resides in Hertfordshire, England and is a regular contributor to student publications such as Spoon University and the Cherwell.

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Finding the One: A Job-hunter’s Fallacy

In today’s world, the lives of fresh grads are meant to revolve around their careers and professional advancement, and so it is obviously no surprise that so many of us struggle to commit to a specific field, out of fear that it’s not THE perfect job for us.

Much like dating, job-hunting is a game of statistics. And since we concede that it is impossible to know who we will end up with, why do we still insist on knowing exactly what our dream job is before we even enter the job market? Perhaps the key to finding a good fit is to broaden our search scope, apply a few necessary filters, be willing to experiment, and maybe even admit that there may be more than just one right job for you.

Experience

One misconception of recent grads is that their first real job will be great. Most jobs will require years of experience, so you’ll likely start at an entry level position. You should expect that it will be one of, if not the, most demanding job you will have, that the pay will be less than dreamy, and that you will often have to prove yourself. Conversely, this is also the upside of being a new entrant to the job market: you’re competing on equal grounds with people who have just as much experience as you, and you have the chance and energy to prove yourself. So look at it this way: you’re not looking for a job right now, you’re looking for an opportunity.

Company Maturity

You probably already know that there are countless firms out there, big and small, in need of brainpower. As a newcomer, your priority should be to learn as much as you can, as fast as you can. If you have the luxury of working at a startup, go for it, because it will push you to work in different capacities and give you loads of responsibility early on, and you will end up learning more than you could have anywhere else. If you would rather go for one of the major players, you might want to opt for graduate schemes that are much more general but give you a glimpse of different roles through rotations that will allow you to have a better understanding of what you do and don’t want in a job. Companies like Heineken, AB InBev and countless others offer such programs, which are quite competitive to get into, but will help you grow by offering resources, support, and even mentors to help you orient your career in a way that works for you.

Field

This is the most important point of the three. Whatever you do, you will be accumulating experience and connections that will help you land your next, and hopefully better, job. However, if they’re not relevant to what you want your next role to be, you might have some regrets.

This is probably why so many people want to go into consulting: it is general enough to be non-committal, but the learning curve is still sufficiently impressive to get you anywhere you want to go next.

The issue with consulting is that there are only so many roles available, and it’s just not for everyone. Luckily, it’s not the only option out there. Some good starting roles are in sales, since you will master the art of pitching and acquire soft skills that are transferable to any industry. Major players in tech like Facebook, Google, and Microsoft offer some impressive graduate schemes centered around sales roles and with a high intake, which means you will be among several peers who will start at the same time, experience similar obstacles, and make your experience a lot more interesting. Alternatively, you could take a different route by choosing to go for a highly specific role that showcases your work ethic and skills, such as Investment Banking, and hence also act as an open ticket.

Ultimately, finding a job is about selling yourself, so find your unique selling point, whether it’s a language (spoken or coded), a degree, a reference, or anything else, and start applying – not to roles that you think will get you closer to your dream job (even if you don’t know what it is yet), but to ones that will teach you more; at startups, in unique domains, and even abroad. There is no right way to figure out what you want to be doing, but my advice is to try different things, and even if you don’t love what you end up choosing for your first job, by selecting demanding roles, you will at least learn and be challenged until you move on to your next job.

Sarah Yakzan is a Master’s in Management candidate at London Business School. Before moving to London, she got a BA in English Literature from the American University of Beirut, and worked for a year as Marketing and PR manager, External Relations Coordinator, and Blogger. She will start her next role at Facebook in August.

Image: Unsplash

The Consulting Myth

The first piece of advice I was given when I started my Master’s in Management at London Business School was to beware of the mirage of consulting. On the first day of orientation, we were told that we should start applying yesterday, especially if we wanted to get into consulting – but not to put all our eggs in one basket because it was so competitive – and so we all polished our resumes and contrived our cover letters and sent them out left and right to anyone with an inbox.

As the rejections began to come through and most of us partook in a collective sigh of “oh well!”, applying to consulting began to seem like more of a rite of passage than a genuine attempt at forging a professional path. It was at this time, about two months into the program, that I began to wonder: Is consulting really the holy grail of careers?

Consultants will tell you that yes, it’s the best type of role you could hope to land; the learning curve is incredibly steep, it’s a free pass into any industry you want after a few years, and if that’s not enough for you, the benefits will make you come around. But what few of them admit is how demanding the job really is. The hours are ridiculous, the work is tedious, and you will probably be living out of your suitcase for weeks at a time. A classmate who accepted an offer from McKinsey & Company described his concerns about starting by saying “I will have all this money, and no time to spend it”.

Consulting is almost the business equivalent of being a doctor: your job is to diagnose and fix problems within companies and sometimes even industries, and you will always be on call. Does that mean you shouldn’t apply? Absolutely not, but what it does mean is that you should make sure you want the job. Not the benefits, not the travel, not the prestige. The research, endless calls, early meetings, and long hours painstakingly putting together beautiful slides instead of meeting your friends for drinks or going on a weekend getaway.

It’s not a matter of having what it takes for the job. It’s a matter of whether or not you will be happy doing it. In other words, would you do it for free? A good method to test how well you would fit into consulting is to prepare for interviews. Apply to whatever roles you want, do your online assessments, and while you wait to hear back about whether you have an interview, start doing cases as often as you can, with as many people as you can, for as long as you can. If you continue to find some fun in the challenge of solving cases and crunching data, then congratulations, you have found your calling! If you are like me, and you get bored a few days into it, maybe it’s not the right choice right now.

Consulting prep isn’t actually “boring”, but it does require a certain ability to memorize detailed frameworks and apply them to case after case, which can become tiring because of the effort of trying to impose a logical structure onto your thinking process. There is nothing wrong with these frameworks; in fact they are a highly sophisticated method of tackling problems, but I personally found them frustrating because they didn’t always fit with a certain case, they limited how creative you could get in trying to find a solution, and they seemed too perfect to be applicable to the real world as more than an initial structure, which made it difficult to see the point of being interviewed on the basis of how well I could transpose frameworks onto a case. Nonetheless, this is not a general truth, and consulting applications are not only about frameworks, they are also about your personal fit with a certain firm, how well you pitch your solution, etc., and so there is plenty to like in both the interview process and the roles themselves, as long as you really want them.

After I realized that it was not the right time for consulting, I started looking at what else was out there, and believe me, there’s a lot. I was lucky enough to find something perfect for me in Tech, and can’t wait to start, but it’s only because I questioned whether or not I really wanted to be a consultant that I figured out what my next step would be. It’s not the end of the world if you don’t want the same thing as everyone else. In fact, it’s a good way to start looking elsewhere and find a field where you can make a real impact and be happy doing it.

Sarah Yakzan is a Master’s in Management candidate at London Business School. Before moving to London, she got a BA in English Literature from the American University of Beirut, and worked for a year as Marketing and PR manager, External Relations Coordinator, and Blogger. She will start her next role at Facebook in August.

Image: Flickr

5 Steps to Structuring A Professional Email

One thing they don’t teach you at university, but which every young professional needs to learn, is how to write an effective email.

Here are five (5) steps to help you successfully structure your professional emails.

Step 1: Start with a greeting

You should start your email with a greeting.

It is important to do this for three (3) reasons. Firstly, it is convention; presumably a tradition carried over from the days when people communicated via telegrams and letters. Secondly, your greeting will help the recipient identify whether the email is intended for her. Thirdly, and most importantly, a greeting personalises your email and increases the chance that the recipient will continue reading. Emails without a greeting are much more likely to be ignored.

Generally, you should include in your greeting the name of anyone whose email address appears in the To field. Although, if you are sending the email to more than three people, you can start with a more general greeting such as:

Dear all,

Hi team,

 

If you don’t know the name of the recipient, or you are sending a bulk email to multiple recipients, you can use various alternatives such as:

Dear shareholder,

Dear customer,

Dear Sir/Madam,

If your relationship with the recipient is formal, and you are emailing the person for the first time (for example, a manager, partner, client on a project, or a professional at another firm), then you can use “Dear” followed by the person’s first name. For example:

Dear Sarah,

If you are exchanging emails back and forth and the recipient has dropped the word “Dear” in response to your emails, or if you feel that some rapport has been established, then you can drop the word “Dear” and simply use the recipient’s first name. For example:

Sarah,

If you are sending an email to a friend, or if you are sending an email to a colleague who you know well and your work culture is quite casual, then you can use a more informal greeting, such as:

Hi Sarah,

Hey Sarah,

Step 2: Open with a compliment, pleasantry or word of thanks

After greeting the recipient, you should open your email with a compliment, pleasantry or word of thanks. This is polite, and will make the recipient more receptive to your message.

If you are writing to someone you don’t know for the first time, then you might open your email with a compliment such as:

I enjoyed your talk about Artificial Intelligence last Friday.

I just finished reading your article about Cryptocurrency. Very insightful!

If you are writing to someone you know, you can open your email with a pleasantry such as, “Hope you are well!” or “How are things?”.

Alternatively, if you are replying to an email, then you should start by thanking the other person. For example:

Thank you for your questions.

Thank you for your prompt response.

Thanks for getting back to me.

Step 3: Communicate your message

The third thing you need to do is to communicate your message.

In doing so, there are five (5) tips to keep in mind.

1. State your purpose:

Start the substance of your email by stating your purpose. For example, you could say “We are writing in relation to …”, “We are writing to enquire about …” or “I am emailing to ask you about …”. By stating your purpose at the beginning, this will help the recipient to understand the relevance and importance of your email, to digest and understand your message, and to take action more quickly.

2. PDS:

Your email should be polite, direct and specific. Language can be ambiguous, and any uncertainty in your email will create stress and waste valuable time.

For example, instead of saying something like “We have a few comments on the documents.” you could instead say “Please see below our comments on the shareholder’s agreement.” (emphasis added)

If you are writing an email to multiple recipients, and some of them need to do something, then you should mention those specific people by name in the email.

3. Highlight key information:

Format your email and highlight key information to help the recipient scan your email and quickly digest your message. You can do this in various ways, for example:

  • Separate each paragraph by a blank line. Large unbroken blocks of text are daunting and hard to digest.
  • Bold key words.
  • If it is a long email, group information under headings.

4. Refer to attachments:

If you are attaching documents to your email, refer to them in your email; don’t just leave them hanging. For example, instead of saying “We have some comments on the business plan.” you could instead say “Please see attached our comments on the business plan.” or “We have some comments on the business plan (attached).”

5. Clarify next steps:

After the recipient has read your email, what needs to happen next? It is generally a good idea to clarify the next steps. Who needs to do what, and by when? For example:

Could you please send me your comments this evening?

Could you please write the article by Friday 31 March?

Please talk to John about the business plan, and then get back to me.

If appropriate, provide the recipient with a range of options. This will increase acceptance and allow you to better control the relationship. For example, instead of saying “We need to discuss.” you could say “Can we please have a call to discuss the shareholder’s agreement tomorrow: 10am-11am, 2pm-3pm, or 7pm-8pm?”

Step 4: Close with polite remarks

You may find yourself working on multiple deals or projects at the same time, all of which have tight deadlines. This can sometimes become very stressful. As a result, it is important to always conclude your emails on a positive and friendly note.

Your closing remarks should make it clear that the email has come to an end, and might also re-iterate your call to action.

It is best practice to conclude with some polite closing remarks and by thanking the reader. Examples of polite closing remarks include:

If you have any questions, please let me know.

I look forward to hearing from you.

Which should be followed by a word of thanks, examples of which include:

Thank you for your cooperation.

Thank you for your help with this.

Many thanks!

Step 5: End with a friendly signoff

The last step is to include an appropriate signoff along with your name.

You can select a professional signoff such as “Kind regards,”, “Best regards,” or “Sincerely,”.

Be careful to avoid casual signoffs such as “Best wishes,” or “Cheers,” unless you are good friends with the person.

If you found this article interesting or insightful, please download “How to Craft an Effective Business Email.” It contains additional information, plus a sample of an effective professional email.

(Image Source: Flickr)

Why Consulting?

First and foremost I want to address the myth that all high achieving students have about consulting, “You need talent to be a consultant!”. I completely dismiss this notion and would like to replace it with another idea, “You need no special talent, you only need to be passionately curious!”. Curiosity drives intuition and that’s exactly what consultants thrive on – Business Intuition.

Not too long ago, I ditched the daily milkshake that I used to grab on my way to work from a little corner shop near my office. For 3 long years, milkshakes were my daily drug, but all of a sudden I stopped buying them, and so did others. Do you want to know why? Keep reading along.

What a consumer perceives about a product, a company must foresee in advance. A consumer does not necessarily know what they need, and so a company has a unique opportunity to create a need for its consumers. As a result, it is the responsibility of the company to understand the consumer more than the consumer understands themselves.

Going back to my milkshake story, can you guess why customers stopped buying milkshakes and why the company’s sales hit rock bottom?

Was there a new milk bar in town?

Or had there been an unfortunate change to the milkshake’s recipe?

Neither of these were the case.

So, what had changed?

As it turned out, the only change that had been introduced was a change in the design of the milkshake glass. To make it more attractive, the company had created a new plastic glass that was a treat for the eyes but not for hands. It was much heavier than the previous one.

Now, you might be wondering, why is it important to understand the design of the milkshake glass? As long as it looks beautiful, why worry about the weight?

Well, let me introduce you to the world of numbers.

About 67.8% of the total milkshake sales were between 7 am to 10 am on weekdays. Of those who bought the shakes, 92% of the customers were working professionals who took the shake on-the-go, and 73% of those morning milkshake lovers travelled by public transport while sipping their shake. The new heavy milkshake glass made it too inconvenient for people to carry while hopping on and off of trains. As a result, the change in glass design directly affected the customers who bought more than 60% of the shop’s milkshakes.

The company could not figure out the cause of its declining sales until it consulted a leading management consulting firm that performed a customer analysis and identified the needs of the milk bar’s largest revenue generating customer segment.

Was this rocket science? Or was an advanced degree required to fix this problem? I can’t see anything here but simple business intuition and an ability to understand the customer.

Voila! Consulting comes easy. Doesn’t it?

Well, not really! Simple business intuition is something that takes time to develop as you learn about your clients’ vision, their positioning in the market, and the needs of their customers.

So why choose a career in consulting?

Well, if you found yourself curious to know why the milkshakes weren’t selling, then you really might be suited to consulting. A career where you seek solutions to seemingly complex problems which often have common sense solutions; where you have the opportunity to fine-tune or transform a client’s business; and where you are constantly challenged to go beyond your intellectual limits to provide advice on entirely new businesses, products and markets.

If you are attracted to a dynamic yet demanding work environment, then consulting might be the field for you.

Bhavya Gandhi is passionate about solving business problems and creating an impact in the lives of people for both economic as well as human good.

Image: Pexels

Management Consultancy 101: How to navigate your first application

So you’ve decided you want to be a management consultant? Congrats, you’re now one of thousands competing for the same job! And there’s your first problem: how do you stand out? The first step is always the hardest and sadly the most important, so here’s my guide on how to tackle your first consultancy job application.

Step 1: Why you?

To be able to convince employers to hire you, first you have to convince yourself to hire you. Understanding what you are good at is vital to answering later questions of why you would be a good consultant and why you want to be one. After all, employers often say they want to hear your passion and enthusiasm for the job – if you don’t really understand why you’re applying, how can you expect them to know? What I did first was research what a consultant actually does and the skills required. The key skills I found are as follows:

  • Problem solving
  • Understanding of businesses/organisations
  • Research and data collection skills
  • Being able to analyse the info collected
  • Presentation skills
  • Being able to manage projects
  • Leadership and teamwork skills

Now you know what you need to do, the next question to ask yourself is: can I do it and what evidence do I have to prove it? Under each skill, write down an example of when you demonstrated said skill. Try to use a variety of examples- you don’t want to seem like you only ever achieved one thing and have done nothing else since then! More recent examples work better too for the same reason. You don’t need to have done loads of work experience or have been the president of 3 different student societies – you just need to show that you have carried out that skill well. If you can find a list of the firm’s values, make sure you can demonstrate that you adhere to these values through your examples too.

Step 2: Why them?

Once you’ve understood what a consultant does and why you would be good at it, next you have to ask why you WANT to do it. You could be the perfect candidate for this job but if you’re not passionate about it, then what’s the point in even trying? The question pertains to both why you want to be a consultant and why you want to be a consultant for that particular firm. First, make a list of all the reasons why you want to be a consultant (aside from the obvious reason of money because that’s TOO obvious). This should be relatively easy – if it’s not, then maybe it’s time to rethink that career choice.

Next it’s time to do research on the consultancy firm you’re applying for. Try to extend your research to more than just the firm’s website – though it’s important to know the firm well, there are many things that the website will say that is a) Convoluted media spiel and b) Not applicable to you. You’re applying for the experience of working there, so talk to current employees at careers fairs, look at online forums for what people have said about their experience and look at profiles for the firm that have been written by someone outside the firm. Plus, all of this will show that you have thoroughly researched the firm and so you must really want to work there! Make sure your reasons for applying pertain to your own priorities and interests – employers are shopping for you too.

Step 3: The CV and cover letter

Writing a good cover letter is essential to make sure you stand out and allows you to bring all the research that you have done together. I tend to structure my cover letter like this:

  1. Short introduction – who are you, what are you studying etc
  2. Why you want to be a consultant
  3. Why you would be a good consultant
  4. Why you want to work for this firm
  5. Thank you and goodbye

Since you already have all the information on hand, all you have to do is turn that information into coherent and grammatically correct sentences. Make sure your sentences aren’t too convoluted and long – graduate recruitment have to read hundreds of these letters, so make sure your writing is succinct and to the point. Remember, your cover letter only needs to be a page long! When you’ve finished, read it out loud to see if it makes sense and that you have got all your points across clearly. Hold it away from you and look at the page – is it just one solid block of text or have you clearly signposted your main points through indentations/your paragraphs? Before you send it off, make sure at least one other person has read it. It’s easy for you to miss spelling and grammar mistakes and it’s useful to get a second opinion from someone who probably has more experience applying for jobs than you.

Usually firms will ask you to send your cover letter along with your CV. The same rules apply here – hold it away from you to make sure your points come across clearly and make sure someone else has read it. CVs pretty much all follow the same set structure, so look online to find out what this is and set it out accordingly. The only thing you can do to stand out here is through your relevant work experience and extra-curricular activities – the same examples you have used in your cover letter but reduced to several bullet points.

Once you’ve sent it off, you’re done! (for now). Now comes the sweet torture of waiting to hear if you’ve progressed to the next stage. What comes next won’t be easy, but that’s another story for another time…

Vivien Zhu is a student studying History at the University of Oxford and is considering a career in Management Consultancy. She currently resides in Hertfordshire, England and is a regular contributor to student publications such as Spoon University and the Cherwell.

(Image Source: Pexels)

How to get a head start as a first-year student

Every now and then, I meet students in their final year at university who are worried about applying for graduate jobs in consulting. “It seems like a great job – but I just don’t think my CV is good enough” is something I have heard many times.

True, graduate schemes at top firms are very competitive, and while some people are able to succeed without any previous relevant experience, it is useful to get a head start as early as possible. Likewise, if you are in the lucky position to know you want to go into consulting during your first year at university (or even your final year at school), it may seem difficult to get a grip on what exactly you can do now to stand out later.

The following list of options should serve as a rough guide, but keep in mind that there is no ‘right way’ and you may find that other activities are a much better fit for you. The options are mainly targeted at undergraduate students in the United Kingdom, but could also serve as inspiration for students from all over the world.

Consulting Insight Programmes

Some firms, such as McKinsey, BCG, and Oliver Wyman (among others), offer short insight programmes to give you some idea what consulting is all about. These programmes are probably the best way to find out whether you are interested in applying for summer internships after your penultimate year or graduate roles, while also providing you with a serious career advantage.

Not only is having a big brand name on your CV a valuable gain, you will also meet people from all over the organization who can give you advice and help you get a summer internship the year after. Insight programmes usually take place in the spring, with deadlines in December or January.

Investment Banking Spring Weeks

Even if you don’t want to go into investment banking, doing a spring week will help you gain some relevant experience and might give you an edge over your competitors when it comes to consulting internships or jobs. The good news is that almost every investment bank offers a spring week or insight programme, which means that there are more spaces available than for the consulting insight days. Nevertheless, these programmes are still highly sought after and require a basic understanding of finance.

In addition to upgrading your CV with a major brand name, doing a spring week can highlight your interest in business-related topics. As the name suggests, most spring weeks take place in the spring of your first year (although some banks also offer summer insight programmes) and require an early application, given that the majority investment banks recruit on a rolling basis. Applications usually open in August or September and close in December or January.

Extracurricular Commitment

Another way to stand out is through extracurricular activities. For example, you could join a student society, take on a part-time job (such as a campus ambassador role for a large company), or enter a business-related competition.

While you should obviously enjoy what you are doing, it is also important that your commitment allows you to showcase transferable skills like teamwork, leadership, analytical thinking, and communication. In the end, anything that requires you to develop or improve those skills will increase your value as a potential employee and can serve as a great topic of conversation.

Networking events

Alright, if you are in your first year at university, you definitely won’t need to spend every evening at a different networking event. However, it may be useful to go to one or two on-campus events to find out what they are like. That way, when it comes to the point at which you will be applying for internships or graduate roles, you will be much more confident and better at holding interesting conversations and connecting with representatives of your dream firm.

As I mentioned earlier, there are many ways into consulting. None of the paths listed in this article can guarantee you a job, and simultaneously, you might succeed without any of them if you have a great skill set and an interesting story to tell. But if you are keen to get started to build your profile as early as possible, hopefully this list is of help.

Max Kulaga is a finalist reading Economics and Management at the University of Oxford. As a former intern at L.E.K. Consulting in London and President of one of Oxford’s largest business societies, the German-born is keen on sharing his experiences and knowledge about the consulting industry.

(Image Source: Pexels)

Travel, Training and Mentorship

Travel, Training and Mentorship

Three significant aspects in the life of a management consultant: travel, training and mentorship.

Travel

When it comes to travel, different consulting firms have different policies. McKinsey consultants often spend Monday to Thursday at the client site with Fridays in the office. Bain and BCG often spend a lot of time with the client at the beginning and end of the project but less time in between.

Training

Consultants are the primary asset of a consulting firm, and top consulting firms invest a considerable amount on formal training and development programs.

Consultants may spend as much as eight weeks per year attending formal training sessions and conferences.

Since university courses are often overly theoretical and academic, the focus on training and development can serve as an invaluable bridge into the corporate world. This can lay a solid foundation for a career in the consulting industry, as well as open up attractive exit opportunities.

Mentorship

Consulting firms will typically assign new recruits with a formal mentor.

A mentor is responsible for overseeing professional development and can be an invaluable source of career guidance, an advocate to help you get staffed on projects and a person to champion your promotion within the firm.

In addition to having a formal mentor, junior consultants should also develop relationships with consultants throughout the firm, particularly with people who share a common area of interest or with whom they have developed a good rapport.

[For more information on the management consulting industry, download our “Guide to Management Consulting“.]

(Image Source: Flickr)

The Spirit of Giving

Merry Christmas!

Joyeux Noël!

Sheng Dan Kuai Le! (圣诞快乐!)

Wishing you an enjoyable day, and a happy holiday season spent with good people, surplus amounts of food and drinks, and a large number of gifts!

One idea that is firmly associated with Christmas is gift giving. This is a central part of the Christian tradition, and also has an important place in broader Western culture, which retailers are obviously happy to encourage and embrace.

The festive season’s spirit of giving provides us with a nice opportunity to revisit basic notions of “value”, “price” and “cost”.

the-spirit-of-giving-2

We can think of “value” as the benefit provided by a good or service to the end user.

Economists typically interpret this as the consumer’s “willingness of pay“. That is, the maximum amount that a consumer would be willing and able to pay for a good or service. This allows them to introduce the idea of “consumer surplus“, which is the difference between willingness to pay and the actual price level. And the notion of consumer surplus leads to the idea of “gains from trade“; the idea that both consumers and producers can be made better off if they are allowed to trade freely.

Christmas gives us a chance to re-examine this mainstream interpretation of “value”.

It is evident at this time of year that a gift’s value is often totally disconnected with how much the recipient would have been willing or able to pay for it.

Factors that might affect the value of a gift include:

  1. The strength of the relationship between the giver and receiver of the gift;
  2. Whether or not the gift is a surprise;
  3. How well the gift matches the recipient’s needs and interests;
  4. The message on the card;
  5. The decorations surrounding the gift (Xmas tree, stockings, reindeer, Nativity scene);
  6. The colourfulness of the packaging;
  7. How fun or difficult the packaging is to rip open; and
  8. The atmosphere, experience and ritual of opening gifts together with family and friends.

Christmas is a time of year when people go to great lengths to maximise the value of what they give to others, so much so that it shatters mainstream Economists’ interpretation of “value” as “willingness to pay”.

Next we can consider “price” (what a firm receives from a customer (who may or may not be the end user) in exchange for a good or service) and “cost” (what the firm needs to pay for inputs that are used to produce it).

When I studied Economics as an undergraduate at Sydney University (under such luminaries as Kunal Sengupta, Tiho Ancev, and Don Wright) it was explained to me that firms aim to maximise profits. They can do this by adjusting price and quantity in order to increase the distance between total revenue and total cost. At a minimum, I was told, they will never set a price which is lower than the average cost of producing one extra unit (that is, price will never be lower than variable cost).

At Christmas, people spend significant resources (time, money, effort, imagination) to purchase or create gifts which they then give away for free. People tend to hunt for the best “value” gift that they can find within a given budget. That is, they seek to maximise the gap between “value” and “cost”, not “price” and “cost”.  Christmas shoppers will often hunt for a bargain, but if they stumble upon a remarkable gift which exceeds their budget they will often buy it anway.

“This is far too expensive! Meh, it’s Christmas! I’ll put it on my credit card!”

Your response might be that a firm is not a family, and so this Christmas analogy is invalid.

But is it?

What would the world be like if firms thought of consumers like family members?

And, more to the point, how did many of today’s most valuable technology firms become billion dollar companies? Think of Whatsapp, Twitter, WeChat, and Facebook. They did it by trying to provide value for as many end users as possible, and only afterwards did they find a business model to sustain and grow the firm.

Merry Christmas!

Joyeux Noël!

Sheng Dan Kuai Le! (圣诞快乐!)

Image: Tom Spencer

5 Strategies To Create Workplace Happiness

5-strategies-that-create-workplace-happiness

This is a guest post from Riya Sander.

Creating a happy workplace can make it easier to retain your workers, allowing you to avoid the costs related to employee turnover. It can also increase the morale of those who stay, which may lead to higher productivity and a greater likelihood that your people take ownership of their work.

If happy workers are more loyal and productive workers, then worker happiness will have a direct impact on the profitability of your business.

What are some steps that you can take to ensure that your people are happy at work?

1. Emphasize Employee Wellness in the Workplace

If you want to keep your people happy, you will need to keep them healthy. Emphasizing health and wellness in the workplace ensures that employees don’t come to work sluggish, sick or injured.

Ways that you can improve worker health include providing an on-site gym, an on-site urgent care center or allowing workers to take time out of their day for a short walk. As a general rule, a brisk walk to reduce stress is a much more healthy and effective way to keep energy levels up compared with common alternatives like a cup of coffee or energy drink to perk up in the middle of the afternoon.

2. Ask Employees for Their Input

Conducting an employee happiness survey will allow you to learn more about what your people like and what they wish they could change about their jobs. For instance, you may discover that they don’t mind working 12 hours a day so long as they have the flexibility to choose when and where they work. By asking your people for this type of input, you can craft a schedule or create other working conditions that best meet the needs of the company and those who work for it.

ask-employees-for-their-input

3. Provide Office Cleaning Services

Employees may have a hard time keeping their mind free from clutter if the office is a mess. Therefore, it may be in your company’s best interests to hire an office cleaning service that can vacuum the floors, take out the trash and get rid of dust and other irritants in the air. In addition to helping your employees get more done, they may be healthier for it in the long run.

Hiring an office cleaning service may be a good idea even if employees share a communal working space. In fact, it may be even more important if employees share one work space since you don’t want insects or rodents running around or germs being spread between people who are working in close proximity to each other.

4. Provide Financial Incentives for a Job Well Done

You should give your workers as much incentive to do a good job as possible. For those who go above and beyond what is expected of them, you might want to compensate them for their efforts. Providing workers with a bonus for doing a good job with a client or for adding a new account will show your people that their efforts are recognized and valued. You may also want to give employees stock options or an equity stake in the company if it makes sense to do so.

5. Give Your Employees a Chance to Step Up

Employees generally don’t want to feel stuck in the same position for their entire careers. If an employee doesn’t think that they have a chance to make the most of their talents with your organization, they may look elsewhere. This is generally true even if the person enjoys working for your business. Therefore, it may be worth implementing a training program to help workers develop their skills and communicate their desire to expand their role. This will allow you to identify your potential future leaders, which will make it easier to promote from within and to replace your top managers when they eventually leave.

Your employees deserve to have a rewarding and fulfilling work experience. If you can provide them with the right incentives and encouragement, then your business will find it easier to attract and retain a large pool of talented, loyal and productive employees. This is just what you need to keep your business thriving for years to come.

Riya Sander is a reader and Australia-based writer. As a freelancer, Riya understands the importance of productivity at work. She never stops finding new ways to increase her productivity. Follow her on Twitter.

(Image Source: Pexels 1 and Pexels 2)

Leadership Lessons: How to Reinvent Yourself as a Leader

leadership-lessons-how-to-reinvent-yourself-as-a-leader

This is a guest post from Caryn Walsh.

Being a good leader has never been easy. Not everybody can learn how to carry the expectations, demands, and ambitions of a company on a single pair of shoulders. You need to know when to be tough and have a willingness to make the difficult decisions, but it isn’t all about grit and determination. It isn’t all about power and wielding your authority.

This is one of the most important lessons for modern leaders, because the business world has changed. Employees have a lot more power now than they ever did. They want to feel personally invested in the companies that they work for and they want their contribution to be recognised. But, most of all, they want to feel happy at work. If you can give them this, you’ll have their trust and respect.

At Pure Magic Business, we work with people who are finding it hard to be good leaders. The first thing that we teach them is that there’s always time to turn it around. No matter how many mistakes you might have made in the past, you can flip the script and start again.

It’s Okay to Be Humble

The idea that managers and executives have to be untouchable is outdated and it fosters an ‘us’ and ‘them’ attitude within the workplace. If you wouldn’t feel happy taking orders from somebody who looks down on you, don’t expect your employees to be. A good leader knows that power isn’t always visible. It is about taking care of the people that you’re responsible for, even when the job doesn’t directly benefit your own image.

Your Ideas Might Not Be the Best

For a business to thrive, it will need to adopt the most promising ideas in order to make smart goals and effective plans. Leaders who fear ideas better than their own only serve to stifle the organisation’s potential. Leaders need to cast the creative net wide and listen to their employees. Some will have great feedback and wonderful ideas that can improve, develop, and enhance the company. Many minds working in harmony are always more constructive than a single, lone voice. Plus, inviting workers to contribute encourages them to get emotionally invested in the future of the company.

Gossip and Drama Are Not For You

Being a leader isn’t always a positive experience. The very act of having more power than others and being in a position to tell them what to do can foster resentment. This is common in people who find it hard to deal with figures of authority. The most positive and constructive response is to treat them with as much kindness and fairness as possible so that they understand that you’re not a threat. What you must not do is engage in any kind of gossip, drama, or sniping. Rise above and lead by example. There are leadership courses that can help you learn how to combat negative behaviour within the workplace.

You Know That Success Is a Journey

And finally, a great leader is a person who’s never truly content with where they are and what they’ve achieved. They know that there’s always another ceiling to push through and a bigger challenge to tackle. Crucially, some of these challenges will be to do with their own leadership style. As businesses and corporate cultures change, so too must leaders if they want to adapt and survive. So, don’t be afraid of self-appraisal, because it will ensure that you stay relevant, valuable, and perfect for the job.

For the past 25 years, Caryn Walsh has consulted to countless organisations in Australia and overseas in areas of leadership and team development. At the helm of Pure Magic Business, Caryn leads an impressive team who focus on ‘Growing People and Transforming Organisations’ in the corporate, community and education sectors.

(Image Source: Entrepreneur.com)

Corporate Career or Entrepreneurial Path?

corporate-career-or-entrepreneurial-path

This is a guest post from Marguerite Arnold.

I am a bit of a late bloomer in some ways – certainly academically. At the age of 48, I decided, after a life spent in business of all kinds, to go back to school, obtain my EMBA, and focus on an entrepreneurial career.

It’s not really that delaying my master’s was a choice. When I was younger, I couldn’t get a school loan. I had no cosignors. And the jobs I got never paid enough to get the loan either.

But here I am.

If I were to compare myself to any generation right now, it would not be my own but to the generation of young people currently leaving university for the first time. I have no home loan and, despite a good stint on Wall Street earning a six figure salary, all of my net worth was wiped out in the “Great Recession” along with anything like steady employment.

As a person of a certain age, not to mention a foreigner in a country where I still struggle with the native language, I have embraced the digital “gig economy” – I had to. That said, I have always been exposed to it. My parents were self-employed. My uncle was Peter Drucker – a man who wrote about corporate management – yes – but who also foresaw the situation we face now. Going to business school these days, more than ever, is about learning to manage the dichotomy between the way things were and the way things are changing.

Don’t kid yourself. The entrepreneur’s path takes a lot of practice and perseverance. It is never easy. But thinking out of the box right now is the only sure path to longer term survival. The attraction of a steady full-time job, certainly in the U.S. and the U.K., is the comfort provided by getting a pay check each week, or at the end of the month. The concept of job security though has gone out the window. The concept of a “corporate manager” is also changing fast.

As business school students contemplate the future, one thing is very clear. The old ways of doing things, along with old business paradigms, are shifting faster than the textbooks can adapt. Faster, in fact, than society can. That is always the way it has been, but this time, the shift is more profound. Companies cannot survive without acting like lean and agile start-ups, and figuring out a way to make that happen is a core priority for managers.

In some ways, deciding whether to pursue a corporate track job or jump into a start up is not a choice – just a delayed reality. Newly minted business graduates, in particular, could do far worse than reset their expectations and set their vision on leading an entrepreneurial life, right from the start.

Marguerite Arnold is an entrepreneur, author and third semester EMBA candidate at the Frankfurt School of Finance and Management.

(Image Source: Copypress)

The Lessons I Learned From Peter Drucker

the-lessons-i-learned-from-peter-drucker

This is a guest post from Marguerite Arnold.

It is not like I knew Peter well – as a real live person. In fact, I only met him once – in Claremont – as a very old man. That said, I always found it rather funny and more than touching that for a man who helped chart the academic progression of American management studies, he never lost a heavy German/Austrian accent. “Zis ist Peter Drucker” – the message he recorded on his home answering machine – was a cause of much delight at one point in my life, particularly because my father spoke with an upper class English accent, and my aunt with a highly Californianized German one.

Peter was the husband of my father’s eldest sister, Doris. My father was not a fan. Apparently in my family’s frantic transition from central Europe via England and then to the U.S. during the 1930’s, the relationship between the two men became fraught with tension and personal squabbles whose original genesis was odd, to say the least. The cause of a decades long civil war apparently started over Peter’s heavy handed English language instruction to my father (then in British boarding school while Peter was a business journalist in the UK). It continued over the course of a lifetime, fuel added to the fire by envy, competition and academic success. My father thought it was fundamentally “unfair” that the End of Economic Man was published to take advantage of the announcement of the Stalin-Hitler Pact. While Peter taught at NYU, my father was at the New School. Peter followed an entrepreneurial academic path. My father a journalistic and creative one. My father also had a fundamental disgust that Drucker covered up the fact that he was Jewish. In fact, he frequently referred to my uncle as “that ugly man” and (more than once) as an “unapologetic fascist.”

Perhaps because of that, I read all of Drucker’s major works as an act of rebellion by the time I entered college (in the mid 80’s). And at that point Drucker was already being redefined, as well as slightly shelved, by the newer generation of management consultants who took his place. I also experienced his work about the “third way” by being exposed to it directly in managing a non-profit as one of my first jobs out of school. Even at the time, I thought it represented a way to redefine his voice in a way that I believe will continue to be redefined in the century “after Drucker”. He was shifting from writing about focussing on management for the manufacture of profit to management to profit society. At that point in his life he also began to believe that his work was being misinterpreted. By the turn of the century, this was much more evident, at least in private. According to my aunt, who accepted the Medal of Freedom on his behalf (because at that point he was too sick to travel), Drucker was also unbelievably embarrassed that “management by objective” had been used to justify the Iraq War.

Interpreting Drucker’s intended meaning has been, as a result, a journey that I have undertaken as part of understanding my family and myself as much as it is about management.

My perspective on Drucker started with my curiosity about why he felt that nepotism was a fundamental evil. As a child I often thought this was because of the ancient family feud between my father and my uncle.

But as an adult, my understanding became more nuanced.

Drucker was, at least in my mind, a business anthropologist. He sought to understand and explain company culture in a way that is akin to an expat trying to understand the culture of a new country. He was no less hurt than most European Jews were about being betrayed by their home countries on the basis of an intangible idea (religion). His writing about nepotism, for example, was I believe a fundamental criticism of the German “Mittelstand” and how easily companies designed for one purpose (efficient production and profit) can be perverted by politics, as happened in Europe with the rise of Hitler. Later Drucker writing on the importance of managers getting out of the way and letting employees do the work they were there to do, as well as his early interest in an IT enabled and remote working environment, was also heavily influenced by the background of a man who relied on his entrepreneurial skills and distrust of office politics to survive in a world hostile to immigrants.

By the time Drucker shifted in focus at the end of his career, he had clearly also become concerned with the way that American corporate life was rapidly undermining the stability of American society achieved after WWII. “The third way”, and his argument for the professionalization of non-profit work, was in some ways a bit of an apology for Drucker’s early celebration of corporate culture in the U.S. His writing on executive pay, for example, was clearly a reaction to the beginnings of private sector greed that has become a major political topic of our new century.

Ultimately, Drucker was a man who sought to make sense of a world caught between politics, society and culture operating within the framework of something else – the corporate structure. While the specific issues that our society is called upon to face are of course different at the beginning of this new century, I also feel that the things he wrote about have never been more pertinent and relevant.

Marguerite Arnold is an entrepreneur, author and third semester EMBA candidate at the Frankfurt School of Finance and Management.

(Image Source: Benandju)

Do You Know What You Need?

Do you know

It’s what you know.

It’s not what you know, it’s who you know.

It’s not who you know, it’s who knows you.

Knowledge, networks, and branding.

You have to start somewhere, and the logical starting point is to acquire knowledge. Society understands the importance of this, which is why primary and high school education can be obtained for free in pretty much all developed countries. And in many countries, university is also heavily subsidized.

But hold on a minute, you might be thinking, many high schools are not free. In fact, they can be very expensive. Think of schools like Eton, public schools in the UK, or private schools in Australia.

It’s true that many schools are expensive, but there is a good reason for this. The parents at these schools are buying something in addition to mere knowledge. They understand the importance of surrounding their fortunate child with other fortunate children. And they are willing to pay big money for the privilege. Friendship networks are a valuable resource that can open doors to a more prosperous and enjoyable life.

However, in a world where knowledge is increasingly commoditised and friendship networks can provide counsel and support but not definite opportunities, the truly important factor is to become distinctive.

The best schools understand and educate their students in the importance of finding an interest and standing out. In Australia, I was fortunate to attend St Aloysius’ College. It was a school run by the Jesuits where students were encouraged to partake is sports, music, cadets, drama, the Duke of Edinburgh program, and all manner of other extra-curricular activities. These activities were fun but they also gave the students a unique experience and story that we could tell about themselves. A brand that the boys could continue to build at university and beyond.

I am currently teaching at a university in China, and the students also seem to have an intuitive sense that branding is crucial. While extra-curricular activities may not be quite as important as they are in Australia, the students will do almost anything to obtain an ‘A’.

Nothing could be more devastating than a ‘B+’.

Of course, after the dust has settled and the exams are finished, the student who earns the ‘A’ doesn’t necessarily know or remember more than the student with the ‘B+’. But in a country with 1.3+ billion people, the costs of failing to distinguish oneself can be high – less chance to study abroad, fewer career opportunities and, perhaps worst of all, diminished prospects for a favorable marriage.

Knowledge is mandatory and networks are helpful, but branding is key.

[Side note: Congratulations to my alma mater, Oxford University, which was ranked #1 in the latest Times Higher Education World University Rankings, which judges the performance of 980 universities across 79 countries.]

(Image Source: Flickr)

Surviving in a Procyclical Industry

Surviving in a Procyclical Industry

(Source: Flickr)

Management consulting is a service industry that earns its keep by serving large organisations – corporate, non-profit and government.

During economic downturns these prospective clients typically have less money, or more uncertain cash flows, and so are less likely to spend money on consulting services. As a result, consultants are vulnerable to layoffs during economic downturns.

Consultants and consulting firms can go some way towards reducing the effect of economic downturns by offering a range of services including some which are counter cyclical, that is, services which are more in demand during downturns such as restructuring and turnaround support services.

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

How Empowered Are You?

Empowered

What does it mean to say that someone is “empowered”?

The Oxford dictionary defines the term as “stronger and more confident in controlling ones life”.

Key to this definition is the idea of control; that is, the ability to influence the course of events.

Roles in the community that we might think of as empowered include priests, professors, public figures, as well as sportspeople, artists and entertainers who have gained a following. People in these roles are in the business of creating and sharing different kinds of ideas: wisdom, knowledge, public announcements, entertainment, perspective and spectacle.

Each of these roles is different, but if we agree that all of them to a greater or lesser extent are “empowered”, then what can we say they have in common?

Well, for one thing, all of the people who hold these roles have a voice. That is, they have an audience who is willing to engage with their ideas.

In simple terms, then, being empowered means having a voice within the community; an audience who is willing to engage with your ideas.

How empowered are you in your life right now?

If you are not creating ideas and sharing them with people who care, then I can guess your answer.

You can start to empower yourself today by developing your ideas and putting them out into the world. You can choose whatever form you like: public speaking, music, writing, painting, poetry, physical achievement, or feats of daring. You can also choose whatever kinds of ideas best help to shine a light on your interests and aptitudes: law, finance, science, philosophy or pure entertainment and spectacle.

By empowering yourself you can gain more control over your life. And in doing so, you will then be in a better position to empower other people within your community, organisation, family or group of friends.

(Image Source: Tech Insider)

Essential Features That Your Serviced Office Should Have

Essential Features That Your Serviced Office Should Have

It is very common these days for businesses of all shapes and sizes to use serviced offices. For smaller companies and startups, however, they are particularly valuable. If a young business wants to get off the ground fast, they can do so by paying a fixed rate fee to rent a fully equipped workspace. It gives them access to state of the art resources, without the associated expenses.

If you are currently on the hunt for a suitable serviced office, there are a few things that you need to keep in mind. It is not always easy to find an adequately supplied workspace that is also maintained efficiently, but it is possible to find both of these things. A great resource to see where you can locate your business can be found here.

This post provides some of the most essential features of a serviced office and will help you find one that is perfect for your business.

Prestigious Address

If you are willing to pay for a managed office space, you have a right to expect its address to enhance your own reputation. This is why location is key when it comes to choosing a serviced office. For young businesses, it can make a huge difference, because it replaces an unprofessional domestic address with a highly regarded corporate one. It takes a lot of investment to set up that first independent site, but serviced workspaces are a great way to feel the benefit even if a company doesn’t have the necessary resources quite yet.

Flexible Contracts

The rise of nomadic entrepreneurs has bolstered the need for a much more flexible corporate culture. Innovative new businesses no longer want to be tied to one city or even a traditional work schedule. They want the freedom to work on the move and respond proactively to developing market trends. Being unrestricted by administrative ties is a big part of this and serviced offices are an easy way to invest in the amount of security that works for you. If you don’t have to commit to a two year lease, you will have more flexibility to plan for a wider range of future eventualities.

Back Office Support

The best serviced offices are more than just blank spaces for businesses to fill. They also provide access to the finest IT, secretarial, administrative, and tech support. With a back office of this calibre, entrepreneurs and startups never have to worry about going it alone. They are just one phone call away from a highly trained and experienced team of advisors. Whether you need help greeting guests, operating IT systems, or organising files, all you have to do is ask. The clue is in the name – with a ‘serviced’ office, you should expect that all of your corporate needs will be met.

Leisure Spaces

Not all serviced offices provide access to a leisure or relaxation space, but it is an essential part of the work routine. Studies have shown, time and time again, that productivity suffers when people don’t take regular breaks. In order to work efficiently, you also need to give your brain a chance to rest and recharge. The best serviced offices come with outdoor leisure spaces, so that occupants are exposed to plenty of daylight. This keeps them alert, happy, and healthy for longer. Keep this mind when searching for your ideal workspace.

Alexandra Richards is an Australian business consultant, located in Perth. She takes a keen interest in the business structures and work culture of Perth based businesses. She has recently been working with Servcorp to help deliver tailored solutions to local businesses.

Cheap money, what is it good for?

Cheap money, what is it good for

Cheap money should help to stimulate the world economy, but is it working?

Following the leave campaign winning the Brexit referendum, which will see the UK leave the EU two years after the Prime Minister notifies the European Council of its intention to do so, there was much fear about what this would mean for the strength of the UK economy.

Mark Carney, Governor of the Bank of England, issued a statement immediately following the result in which he aimed to calm market sentiment.

He acknowledged that Brexit would result in a period of uncertainty and adjustment, but there would be no initial changes in the way people are able to travel, or in the way that products and services are sold.  In a calm demeanor, he reassured us that the Bank of England would not hesitate to take additional measures, as required.

What kind of additional measures did he have in mind?

Well, Carney went on to say specifically that “… as a backstop, and to support the functioning of the markets, the Bank of England stands ready to provide more than 250 billion pounds of additional funds through its normal market operations.”

What did he mean by this?

Well, traditionally, central banks have aimed to control monetary policy by influencing interest rates. By lowering interest rates a central bank hopes to stimulate the economy by lowering the required rate of return on business investments, which should increase the total amount of investment in the economy.

As recently as ten years ago, it was unthinkable that a responsible central bank would try to stimulate the economy by turning on the printers and pumping new money into the economy. But this is what Carney was suggesting, “the Bank of England stands ready to provide more than 250 billion pounds of additional funds“.

Since the 2008 financial crisis, central banks have increasingly resorted to this new and unconventional policy known as quantitative easing. The US has engaged in three rounds of quantitative easing, purchasing an estimated $4.5 trillion in financial assets. And the UK has also been busily printing money, purchasing more than £375 billion in financial assets.

QE is new and unconventional, but notice how carefully Carney finessed his words.

“The Bank of England stands ready to provide more than 250 billion pounds of additional funds through its normal market operations.”

There is absolutely nothing “normal” about printing money in order to prop up the economy. This behaviour was traditionally the province of banana republics like Zimbabwe and the Weimar Republic, and in both of those cases it led to rampant hyperinflation. The Bank of England’s website even acknowledges this, stating “Quantitative easing (QE) is an unconventional form of monetary policy where a Central Bank creates new money electronically to buy financial assets, like government bonds.” (emphasis added)

However, mid-last week, Carney’s “normal market operations” appear to have finally hit a bump in the road.

The FT reported that the Bank of England’s new programme to buy long-dated UK government bonds had run into trouble as pension funds and insurance companies were refusing to sell. “The Bank of England fell £50m short in its gilt purchase target … , and even then only secured [as much as it did] by paying well above market price,” said Darren Bustin, head of derivatives at Royal London Asset Management.

Is the Bank of England’s money no good?

Why might these institutions be refusing to sell their long-dated bonds?

A few reasons.

Firstly, by printing money and lowering long term interest rates, the Bank of England is, in effect, siphoning money out of the pockets of old people.

Pension funds have long term liabilities which will not fall due for many years. In order to be able to provide for their members during retirement, these institutions need to buy long-dated assets, which will provide revenue over a long period of time. With interest rates continuing to fall, it makes sense that these institutions would prefer to hold onto their long term bonds, which will provide a steady stream of fixed coupon payments.

Already this year, 10-year gilt yields have fallen from 2% to a staggering low of 0.56%, which has led to worsening funding shortfalls for UK pension funds. Lower interest rates mean that pension funds expect to earn less from their bond portfolios in future, and so will be less able to pay their members’ pension entitlements. This means that employees, worried about their standard of living during retirement, are now under pressure to save even more than before (exactly the opposite of what the Bank of England is hoping to achieve).

The second reason that these institutions may be reluctant to part with their bonds in exchange for cash is that, as central banks continue to engage in quantitative easing, money is becoming increasingly worthless.

If we think of interest rates as the “price” of money, then we can see that in many countries money has never been less valuable.

Here is a list of prevailing central bank interest rates in some of the world’s major economies (as of today, August 14th 2016):

  • Bank of Japan: -0.1%
  • European Central Bank: -0.4%
  • Swiss National Bank: -0.75%
  • Sweden’s Riksbank: -0.5%
  • U.S. Federal Reserve: 0.4%
  • Bank of England: 0.25%
  • Reserve Bank of Australia: 1.5%

Cheap money should help to stimulate the world economy, but is it working?

The evidence doesn’t seem too positive.

Low rates are meant to encourage business investment, but in a low growth world where companies and governments are already heavily indebted it is easy to understand why this may not happen.  Moreover, if banks absorb the cost of negative interest rates themselves, then this lowers their profit margins and may make them less likely to lend money.

As we saw in Germany on Friday, one bank has now decided to pass on negative interest rates to its retail clients. In other words, it will now penalise thrifty individuals for having savings in the bank. If enough other banks follow this lead and make more customers pay to hold their money in the bank, then customers may start putting cash under the mattress or stashing it in a safe. This would reduce the total amount of deposits held in banks and could potentially set off a bank run.

Cheap money, what is it good for?

(Image Source: Flickr)

“Up or Out” Policy

Up or Out

(Source: Flickr)

It is common for top consulting firms to subject consultants to a rigorous “up or out” policy.

What this means is that consultants are required to advance to the next level of responsibility within a certain period of time or leave the firm.

Consultants normally receive regular performance feedback and so have frequent opportunities to gauge whether they are making satisfactory progress.

If a consultant is falling short, they will normally have opportunities to talk to their manager about areas for improvement and benchmarks to measure progress. If the consultant is unable to make the necessary headway within an agreed timeframe, they will normally be asked to resign. This extended resignation process is referred to as “counselling out”.

Consulting firms appear to employ the “up or out” policy for three reasons.

Firstly, consulting firms typically embrace a meritocratic culture, and so the “up or out” policy is a way of making sure that the best consultants advance within the firm.

Secondly, most consulting firms adopt a business model based on a pyramid organisational structure with a small number of partners at the top and a relatively large number of business analysts at the bottom. The only way to hire a constant flow of talented business analysts is to ensure that existing consultants are advancing upwards or leaving the firm.

Thirdly, top consulting firms value their alumni network and use it to drum up new business. The up or out policy ensures that this network continues to grow.

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

Consulting Roles

Consulting Roles

(Source: Flickr)

A consultant who enjoys a successful career progression within the consulting industry will be promoted up through the ranks and hold various different roles along the way. Job titles will vary by firm.

An entry level consultant may be called a business analyst or junior associate.

New recruits who hold an advanced degree (e.g. MBA, PhD, JD/LLB or MD) may start as an associate, senior associate or senior consultant. Many top consulting firms require analysts to pursue an MBA before being promoted to associate.

Consultants who perform well at associate level are likely to be promoted to manager, and will be responsible for managing projects and the day to day client relationship.

Managers who perform will be promoted to senior manager and then ultimately to partner level. Partners are responsible for building the business, forming new client relationships, and developing the firm’s brand and intellectual property.

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

Harnessing Creative Energy

China comes up for criticism in modern times for stealing software technology from the West.

Software is a language (or a set of languages) which can be used to make computer hardware do marvelous things, and because software is easy to copy (or reverse engineer), it’s easy to steal.

But if there is software stealing going on in China and elsewhere, should we really be concerned about it?

Software development is currently a fertile ground for creative minds to explore because the leverage provided by billions of computers and smartphones networked over the Internet means that a single piece of software can be used to solve problems and delight millions of people. And the additional cost of reaching one extra person is basically zero.

This presents a wonderful opportunity for creative minds to make a big impact.

And when it comes to stealing software, the reality is that creative types have been stealing from each other since the dawn of time.

In ancient times, travelling minstrels would borrow each others words, using the principle that “he writeth best who stealeth best all things both great and small, for the great mind that used them first from nature stole them all.”

In more modern times, Steve Jobs adopted the philosophy of a travelling minstrel, and is well known for stealing many of his best ideas including the idea for the computer mouse which he discovered at Xerox park.

Legal protections for intellectual property like patents and copyright remain important. But not for the reasons that most people will tell you.

The common line in the media is that patents and copyright are important because they protect the innovator’s profits, and therefore protect the innovator’s incentive to invent new technology and continue innovating.

This may be part of the story, and it is certainly true that many people are interested in profit. However, the biggest innovators in history have been the people who have pushed the boundaries because they were interested in the work. People like Galileo Galilei, Leonardo Da Vinci and Steve Jobs. They were not driven by profits but by a passion for the work.

And so, if the most creative people are driven by passion, and will do the work whether they get paid or not, then why are legal protections required?

Well, at the heart of the issue would appear to be the concept of “fairness”.

Discovering new technology is difficult, but copying a technology once it exists is often a task that any fool can accomplish. And once a new technology has been copied, the production process can often be scaled up quite quickly.

What this means is that, in the absence of legal protections, a fast follower might be able to scale up more quickly than the original innovator and thereby take most of the benefits from innovation.

This seems like a very unfair outcome.

And it is not the kind of outcome that is encouraged in countries that champion innovation such as Australia, America, or the UK.

By making legal protections available for new technology, a community can give the original innovator time to scale it up and the chance to make an impact. And this is the community’s way of saying thank you for the gift of a new creation.

An issue arises though when multiple countries are innovating concurrently, each playing by a different set of rules.

Should we be concerned if new technologies are being created in America, say, and then copied and scaled up overseas?

On the one hand, this seems quite unfair. The reason that firms in Silicon Valley are able to innovate and develop new technology is that they are located in a country that supports innovation and provides appropriate legal protections. Having secured these protections, though, many of these firms then turn to foreign companies to help them scale up production. Thereby transferring employment, productive capacity and tax revenues overseas.

It is easy to see how some people might view this as unfair.

On the other hand, most Economists would argue in favour of technology transfer and the offshoring of production to low cost jurisdictions. Average labour costs in China, for example, are low relative to developed countries, and so increased production in China allows the rest of the world to benefit from cheap imports (and Chinese workers to benefit from rising wages). Many young people in China aspire to study in Western countries and buy Western products, and successful Chinese firms are likely to invest overseas. And so, by helping China to become more prosperous, America and other developed countries are helping themselves in a kind of positive feedback loop.

One thing that seems clear is that the creative process involves two separate components. Firstly, it requires some kind of creative leap, which might involve discovering a new technology, or combining existing technology in a way that people really love. Secondly, it requires a viable business model that allows the organisation to provide the new offering at a price which exceeds the cost of production, which is likely to require economies of scale and production experience.

The role of Silicon Valley firms in making the creative leap and pushing the boundaries of innovation is crucial for the creative process.  At the same time, however, it might be argued that the role played by low cost manufacturers in places like Shenzhen, China is equally crucial because it allows new offerings to be created at sufficiently low cost to allow for viable business models.

Successfully harnessing humanity’s creative energy clearly requires high levels of cooperation. Lots of people in many different organisations working in various countries across the globe.

Thinking as an Economist, I would argue without hesitation that the more globalisation, foreign direct investment and international trade we have the better it will be for everyone.

However, we need to bear in mind that organisations and their respective country governments will typically care more about their own self interest rather than obtaining the theoretical optimal solution for the world as a whole.

Thinking as a strategist, I would provide some words of caution. When an organisation is thinking about outsourcing activities that provide value for the end customer, it is important to consider how strategically important those activities might be. Will outsourcing lead to the loss of crucial knowledge that will be difficult to re-learn? Is it possible that the supplier will become a future competitor? What are the firm’s competitive advantages and will these be strengthened or weakened as a result of outsourcing? Will the new supplier benefit from economies of scale and so be difficult to compete with later if necessary?

Thinking as a government policy maker, there are some other issues that might be relevant. For example, how many jobs and how much tax revenue might be lost as a result of local firms sending production overseas? Instead of providing welfare payments to unemployed people, would it make more sense to provide subsidies and tax incentives to encourage firms to incorporate and build production capacity locally rather than overseas? Is the outsourced knowledge important for national security? Are domestic firms outsourcing production to a country whose government is uncooperative or hostile to the values of the domestic country?

We live in a world where robots and the automation of work could lead to unprecedented levels of unemployment over the coming decades.  And so, it has never been more important for individuals, firms, government and the world at large to think about how we can harness our collective creative energy.

Globalization will have a large role to play, but it will also be important for individuals, firms and our respective governments to act independently and work for the benefit for their respective stakeholders. Through cooperation, we can all be made better off.

Sanitised vs Sanitary

Are you trying to build a work environment that is more sanitised or more sanitary?

There is a difference.

A sanitised work environment is generally inoffensive, and is designed to satisfy the strict (and habitually self-serving) requirements of the HR checklist.

sanitary work environment, on the other hand, is one that’s designed to be favourable for the health and proper functioning of the organisation.

Do employees have enough free time and appropriate physical space where they can meet and mingle? This is likely to be important for relaxation, stress relief and the serendipitous generation of new ideas.

Are the key working areas of the business fit for purpose?

Too often the answer is no.

Take for example a professional services firm; it could be a consulting firm, law firm or accounting firm.  The existing mantra at many professional services firms is the “open plan” office, a form of madness which takes the much needed physical space that staff need, and plonks it right in the heart of productive work areas. The result is noisy chatter, annoyance for anyone who needs to concentrate for more than 30 minutes at a stretch, increased stress levels and reduced productivity. The workspaces at your typical professional services firm will satisfy the HR checklist, but they are often not fit for purpose.

Sanitized is not the same thing as sanitary.

 

Generalist versus Specialist

Generalist versus Specialist

(Source: Flickr)

The traditional consulting career model employed by top consulting firms like McKinsey was to develop generalist consultants who could apply general business principles and frameworks across different industries, sectors and functional areas.

Clients increasingly value industry experience and specialized knowledge, and so firms are evolving the traditional consulting career model to accommodate these changing client demands.

Consulting firms often expect generalist consultants to specialize within two or three years of joining the firm. As a junior consultant you need to be pro-active in managing your career since you can quickly become pigeonholed. For example, if your first few projects relate to “big data” you could become the firm’s in-house expert and then work primarily on projects relating to big data.

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

Destiny vs Destination

When things go badly, the optimist is likely to respond with a reference to forces outside her control, “our competitors got lucky this time!”

When things go well, the pessimist is likely to respond in a similar way, “I got lucky this time!”

In both situations the person is making a call to destiny.

The optimist believes that things will go well as a matter of course, and so any setbacks are explained away as temporary bad luck.

The pessimist seems to believe the opposite; every situation presents the realistic possibility of failure and defeat. And when things go well, the pessimist is just thankful for the good fortune she enjoyed this time around.

The literature on positive psychology is totally in favour of the optimist, and with good reason. By explaining away defeat, the research has shown that a person will be much more resilient, which means they will be more likely to try again next time.

Resilience is important because it can help people to achieve their goals, and to avoid depression.

The problem with this blind support for the optimist though is that it ignores the value of intellectual honesty.

Sometimes you will have bad luck, and it is obviously fine to say so.

However, sometimes you will catch a lucky break, and in these instances claiming that your success is caused by your god-given brilliance may simply be dishonest, distasteful or downright obnoxious.

The winds can change.

Seneca, the Roman Stoic philosopher, is quoted as saying that “if one does not know to which port one is sailing, no wind is favorable.”

Good luck will feel wonderful and bad luck will feel horrible, but both can be equally unfavourable if you have no ultimate destination in mind.

You might have heard Behavioural Economists talk about “outcome bias”, which means judging a decision based on the outcome (good or bad?) rather than the quality of the decision at the time it was made.

In life, as in business, we should assess the quality of our decisions by whether they stand a reasonable chance of bringing us closer to our goals.

Which port are you sailing to?

Brief History of the Consulting Industry

Brief History of the Consulting Industry

(Source: Flickr)

Executives often rely on the advice of management consultants.

Was it always this way? Where did it all begin?

The management consulting industry, as we know it, originated in America.

The very first management consulting firm was Arthur D. Little, founded all the way back in 1886 by a professor at MIT whose name was (funnily enough) Arthur D. Little.

Almost 30 years later, Booz Allen Hamilton was founded in 1914. Booz was the first management consultancy to serve both industry and government clients.

Founded in 1926, McKinsey & Company was the world’s first pure management and strategy consulting company. McKinsey is arguably the world’s most prestigious consulting firm. The culture of the firm was heavily influenced by a man named Marvin Bower, who served as managing director from 1950 to 1967. Bower believed that management consultancies should adhere to the same high professional standards as lawyers and doctors. To this day, the core guiding principle at McKinsey is professionalism.

Boston Consulting Group, arguably the world’s second most prestigious consulting firm, was founded in 1963 by Bruce Henderson. It all began when Henderson left Arthur D. Little to accept a challenge from the CEO of the Boston Safe Deposit and Trust Company to start a consulting arm for the bank.

Ten years later, in 1973, Bill Bain and others left the Boston Consulting Group to form Bain & Company, which is also one of the world’s leading consulting firms.

According to the UK Management Consultancies Association, the consulting industry in the UK began to grow quickly in the 1950s, fuelled by the arrival of the US consulting firms, a wave of new management techniques, and increased demand from clients for specialised consulting skills.

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

Taking Profit

I am currently living in Beijing, lecturing strategy and finance courses to undergraduates.

One observation I’ve made is that the people here are good at identifying opportunities for profit.

And I use the word profit not in a financial sense, but with the broader meaning of the French verb profiter, which means “to make the most advantage of”.

This can have positive, negative and hilarious consequences.

Here are three examples:

  1. Food is a religion here in China. There is no better example of making the most out of life than having a true appreciation of good food. (Peking duck, jiaozi and baozi are my three current favourites.)
  2. People often say that the Chinese are hard bargainers, which is true. They see how big the pie is, and, with a friendly smile, they ask for all of it. This is obviously a generalization, but I have witnessed it enough times for it to have become a familiar pattern. It can be extremely positive, for example, if the person is your friend and is helping you to bargain for a big ticket item. It can also have calamitous consequences, such as the traffic jam which is frequently caused at an intersection near my apartment because every driver tries to gain a small edge by cutting through the intersection without waiting for a green light; a complete traffic meltdown typically ensues.
  3. Opportunity knocks at the door only once (机不可失,时不再来). I was recently at a large French retail store called Auchan. I left my shopping trolley at the end of a long isle, with a few items in it, and walked down the isle to see if I needed anything. When I returned to my trolley, I noticed that my items had been neatly placed on a shelf, and the trolley was gone. It took me a half a minute to figure out what had happened … someone had stolen my trolley! The experience was so bizarre. Five minutes later and a few isles further along I spotted a middle aged Chinese lady with a huge carry bag sitting in a trolley that looked suspiciously like the one I had lost.

Sometimes you have to laugh.

We would do well though to follow the Chinese example of trying to always make the most out of life, particularly where it involves a shared positive experience or the chance to create something valuable for others (like the wonderful Chinese cuisine!).

Profite!

Disclaimer: Creating traffic jams, and stealing shopping trolleys should generally be avoided.

Consulting Jargon

Consulting Jargon

(Source: Flickr)

We have commented on consulting jargon before, but we will do it again.

Organisations hire management consultants to provide advice on their most challenging business problems. Senior management are busy people, and so consultants need to communicate as clearly as possible.

The need for clarity, however, has not prevented consultants from developing an industry jargon all of their own, which can sometimes be pretty incomprehensible to industry outsiders.

Below we outline some of the jargon that you are likely to come across in the consulting industry.

10,000 foot view: A high-level overview of the situation.

80/20 rule: A rule of thumb which holds that 80% of a business problem can be solved by focusing on 20% of the issues.

Add some color: Make it more interesting/appealing/persuasive.

Adding value: Making a contribution.

AOB: Stands for “any other business” and might be used in a meeting agenda to block out time for miscellaneous discussion.

At the end of the day: A consultant may use this phrase before summarising the main thrust of her argument.

B2B: Stands for “business to business” and indicates that a business is aiming to sell to other businesses rather than to end consumers.

B2C: Stands for “business to consumer” and indicates that a business is aiming to sell directly to consumers rather than to other businesses.

Bandwidth: Capacity to take on additional work commitments. For example, “I don’t have any bandwidth this week”.

Big 3: McKinsey, Bain and BCG.

Big 4: Deloitte, EY, KPMG, PwC.

Boil the ocean: Go overboard; undertake an excessive amount of analysis; fail to follow the 80/20 rule.

Buckets: Categories.

Buy in: Agreement; support. For example, “we need to get buy in from the client before finalising the report”.

CAGR: Compound annual growth rate.

Charge code: A unique code provided for a project which can be used to record work-related expenses.

Circle back: Follow up with someone at a later point in time.

Close the loop: Completing an item on the agenda or topic of discussion with everyone being in agreement.

Core client: A client that has a long-standing relationship with the firm.

Deck: PowerPoint slides.

Deep dive: To conduct an extensive examination of a particular issue.

Deliverable: Work product that a consultant needs to provide to her manager or the client as part of a client engagement.

Development opportunity: A professional shortcoming or area for improvement that requires attention.

Due diligence: Comprehensive examination of all relevant issues, such as a review of the client’s business or industry.

Elevator pitch: A short persuasive summary of a proposal, which leaves the listener wanting to know more.

Fact pack: A pack of information that provides the essential facts for a project/industry/company.

Granular: Focusing on the finer details, as in “this analysis needs to be more granular.”

Hard stop: A stated time after which the person will no longer be available to continue the meeting/discussion. For example, “I have a hard stop at 3 o’clock”.

Key: Critical; essential; required; important; central. For example, “the key issues are X, Y, Z.”

Let me play this back: Words used before providing a summary of the discussion from the listener’s perspective. This is a helpful technique which can allow a consultant to clarify her understanding of the key issues and at the same time sound intelligent by saying something even if the summary adds no additional insights.

Leverage: Make use of.

Low hanging fruit: Targets that are easily achievable, issues that can be quickly resolved, opportunities that can be readily exploited, or problems that are simple to solve. By picking the low hanging fruit first, consultants can demonstrate quick results, which can boost client confidence in the project and help build initial momentum.

Lots of moving parts: Complex.

Managing upwards: Providing feedback to more senior employees.

MBB: McKinsey, Bain and BCG.

MECE: Pronounced “me see”, and stands for “mutually exclusive, collectively exhaustive”. It is a principle developed at McKinsey for grouping information into distinct categories which, taken together, deal with all available options.
On the beach: In between assignments. Time spent on the beach may be spent in training or used for new business development.

On the same page: See things from the same perspective.

Opportunity cost: What you give up in order to pursue an opportunity; the value of the next best alternative.

Out of the box thinking: Lateral thinking; coming up with new ideas which don’t follow neatly from the data.

Ping: Contact someone, as in “I will ping you later via email.”

PIOUTA: Pulled it out of thin air.

Pipeline: Current and upcoming client engagements.

Production: A department of the consulting firm (often outsourced) that assists in producing material needed for presentations and meetings.

Pushback: Resistance or disagreement, as in “we received some pushback from the client.”

Right size: Downsize.

Sandwich feedback technique: A structure for providing feedback that resembles a sandwich – one positive comment, followed by a piece of constructive feedback, and ending with a positive comment.

Scope: Agreed set of deliverables for a client engagement.

Scope creep: When the client adds, or tries to add, additional deliverables which were not agreed in the initial project brief.

Sniff test: A common sense check of a particular idea, proposal or analysis.

SWAG: Some wild-ass guess.

Take the lead: Take responsibility for something, as in: “Why don’t you take the lead on this project.”

Takeaways: The key points that should remembered at the end of a discussion or meeting.

Touch base: To meet at a certain time to talk about the project.

Up or out: Many top consulting firms employ an “up or out” policy. Employees are expected to advance up to the next level of responsibility or they will be counselled out of the firm.

Work stream: The tasks that make up a project.

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

Learn How To Avoid The Five Most Common Mistakes Made By Leaders And Managers

Learn How To Avoid The Five Most Common Mistakes Made By Leaders And Managers

If you have recently been placed in a leadership or managerial position in your company, then you may need to change the way you approach work each day.

The five most common mistakes discussed below are made by those in management in virtually every sector of the business world.

Learning how to avoid them can help your team to thrive!

1. Goals – A team without goals is a huge problem. Some managers, especially those that are new to the role, make the assumption that everyone knows what to do rather than providing guidance regarding assignments and priorities.

2. Poor focus – Even those who have set goals do not always focus on what’s important. Rather than acknowledging progress and creating positive results, these managers get caught up in the details and busyness of urgent everyday tasks.

Rather than micromanaging your team, monitor their progress on a schedule, ensuring that they are moving forward as needed. Running around the office looking busy all of the time is not the same as accomplishing the desired results.

3. Hiring and firing – It is important to have a strong team capable of handling the tasks assigned to them.

In a rush to have sufficient manpower, some managers make the mistake of hiring people too quickly and are slow to let them go, even when it is apparent that they are not capable of fulfilling their role.

These poor practices can harm the morale of the team and make it even more difficult to get the job done.

Make sure that you consider candidates carefully before hiring. Not only do applicants need to have the necessary skills and abilities, but they also need to have the right combination of personality, flexibility and dedication.

It is better to have an open position than to expect your team to carry someone who is not a good fit for the job.

Likewise, delaying firing an employee can lead to frustration and your team may believe that you are too soft. Although it can be difficult to let someone go, you should not keep someone on the payroll just because you are uncomfortable with confrontation. You will be doing the employee and your company a favor by ending things quickly. Firmly but politely explain to the person why she is being let go, and give some positive feedback concerning the areas where she excelled.

4. Morale – No matter the size and type of organization that you are leading, good morale is essential.

Some managers believe that they need to rule with an iron fist, forcing employees to mold into some preconceived idea of what a “perfect employee” looks like.

Instead, you need to keep an eye on morale and take steps to boost it when necessary. This may be through encouraging stories or giving praise to team members for their contributions. In fact, some leaders make it a point during conferences to find something positive and honest to say about each person and the value they contribute to the team.

5. Poor boundaries – Whether standoffish or being a buddy, both strategies are doomed to fail for leaders. If those under you are not comfortable approaching you with questions, your company can lose valuable resources down the line because of mistakes. And, while you should be approachable, you should not perceive yourself as an equal, nor should they. While you can socialize and joke with the team, you should maintain a degree of separation. Otherwise, you may have a difficult time reprimanding someone and some employees may take advantage of your friendly nature.

You can embrace the challenges that come with your new role as manager or leader and have a strong team as a result. Avoid the five most common mistakes and continue to learn from mentors and others about the methods, tools and tricks for becoming a respected and successful leader.

Jeremy Johnson is a real estate enthusiast and has written content for dozens of real estate and related sites around the world. RealEstateCompanies.info is a side project he maintains because of his interest in real estate.

Consulting or Banking

Consulting vs Banking

(Source: Google Images)

If you are a high achieving undergraduate or MBA student, then you are likely to be considering various highly paid and prestigious career options.

This post provides you with a high level comparison of management consulting and investment banking.

1. Nature of the job

Management consultants assist organisations by providing advice to address specific problems and to improve organisational performance.

Investment banks help companies raise money for various purposes including investment, acquisitions, and provision of working capital. They do this by selling stocks and bonds to public investors. Within an investment bank, the work is split into many roles including investment banking, sales and trading, equity research, risk management, operations, and technology.

People in the “investment banking” or “corporate finance” division typically help large organisations undertake merges and acquisitions. This is a front office role and normally the most prestigious and highest paid role at an investment bank.

People in the “sales and trading” division buy and sell financial products. Sales people communicate with investors to sell financial products. Traders buy and sell securities with the bank’s money with the aim of making money for the bank.

People in “equity research” review listed companies and provide buy/sell recommendations. Investment banks employ “sell-side analysts” while investment funds employ “buy-side analysts”. The research division will provide reports to the sales and trading division to inform trading activity and provide ideas to help sell financial products. The research division may also provide research to clients in the hope that they will execute trades through the bank’s sales and trading division.

Risk management is a middle/front office role which assesses the market or credit risk assumed by the bank or its clients in a particular transaction. Prior to the 2008 financial crisis the views of the risk management division in most banks were overlooked in favor of the short term profit opportunities pursued by the investment banking division (this may or may not still be the case).

Investment banks also employ people in a range of back office roles including operations and technology.

2. Salary

For fresh graduates, the base salary for investment banking is typically similar to the base salary for management consulting. However, in good years bankers typically get an end of year bonus in the range of 50% to 100% of base salary. Consultants may also receive an end of year bonus, but it will be much smaller, around 10% of base salary.

Salaries will vary by country and over time.

Below are some average base salary and bonus figures for new analysts drawn from Glassdoor for 2014/2015.

Consulting or Banking

In general, adjusting for experience level, bankers will earn more than consultants.

While there are many factors to consider when charting your career direction, if money is a deciding factor for you, then banking may be the way to go.

3. Lifestyle

Hours: Banking work hours can average 10 to 18 hours per day, while consulting work hours average around 12 hours per day.

Work hours in both industries will vary depending on various factors including client demands, the eccentricities of your boss, and where you find yourself in the deal/project lifecycle.

Travel: Bankers sometimes do roadshows to drum up support from investors, but will typically spend 90% of their time in the office.

In stark contrast, it is normal for consultants to travel up to 80% of the time.

Work culture: Consulting firms typically have a professional and collegial atmosphere where an intense client focus is combined with networking and professional development opportunities.

In comparison, investment banks are competitive and hierarchical. It is not uncommon for bosses to yell at staff for mistakes, and colleagues are less likely to lend a helping hand since everyone is competing for the same bonus pool.

4. Exit Opportunities

Consulting offers many exit opportunities including industry, academia, government and entrepreneurship. Top consulting firms make a point of keeping current employees in touch with alumni, so there are likely to be many firm sponsored networking events.

Investment banking is an excellent starting point for future careers in the finance industry including private equity and hedge funds, although less helpful if you want to pursue non-finance related exit opportunities.

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

Is Consulting For You?

Is Consulting For You

(Source: Flickr)

Management consulting is a nice perch, but it is not for everyone.

Many people go into consulting with a plan to gain a few years of experience and then apply for B-school or pivot into industry or entrepreneurship. This is a legitimate strategy, but it can also be a cop out with many people leaving their career direction too much to chance.

The sooner you figure out what you are passionate about, the better.

One of the reasons that many applicants are attracted to the consulting industry is that consultants travel with work.

Travelling sounds like fun, but travelling for work can be a double edged sword. Constant travel, lonely hotel rooms, and an inability to plan time with family and friends can be disruptive and exhausting. Different consulting firms have different travel policies, and if travel is an important factor for your decision then look into this before applying.

Consulting is not for everyone, and one reason is that consultants work hard to provide valuable recommendations but tend not to see the fruits of their labor. Consultants often leave a client prior to implementation. For people who enjoy seeing projects through to completion, this can be unsatisfying. Clients also tend to take the credit for positive outcomes and blame consultants if things go wrong. As New York based consultant Alan Weiss would say, “If you want to be loved, get a dog.”

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

3 Ways to Distinguish Yourself

We live in an increasingly digital and technology enabled world, which is increasing the level of competition between organisations.

Why is this the case?

There are three key reasons.

Firstly, technology is helping to lower barriers to entry. It has never been easier to create new goods and services, and get them noticed by your target audience.  Whether it be a website, a blog or an iPhone app, the initial startup costs for launching a new project have never been lower. This is especially true for organisations that have software development skills and who are able to produce new digital products by drawing on their own capabilities.

Secondly, the Internet is the greatest communication device ever invented, and allows customers to find out about products quickly and easily. This means that customers have more information than ever before, and are able to switch from one organisation to another based on the benefits on offer and the asking price. Customers have more power, and so organisations need to stay on their toes.

Thirdly, the large number of startups which are being launched each year means that there are lots of failures but also lots of breakout success stories. This increases the intensity of competitive rivalry for everyone, and makes it more important for organisations to innovate where they can before someone else innovates for them.

In this world of increased competition, here are three (3) ways to distinguish yourself:

1. Brand building – tell a compelling story and build relationships with the people who care. Your story won’t resonate with everyone, but it will resonate with some people. And so the goal is to find your people, to feed them and to delight them.

2. Making old things new – iPhone apps and websites can be used to add additional value to offline products and services. One example of a company that seems to have done this quite nicely is Bluesmart. Travel bags are old news, but by redesigning the travel bag and connecting it with a user friendly iPhone app, the company has created the world’s first smart luggage and is re-imagining the travel experience.

3. Mix things up – I am currently staying in a hotel in Beijing. The reception staff have been very nice to me, but they don’t seem to be too friendly to the locals who come to stay here. The staff appear to have the mentality that they are selling beds, and so the need to smile and be friendly to customers is not part of what they are providing. This, of course, misses the point entirely. Everything you say or do is part of the experience, and part of the value that you provide to others. And so while smiling may not be a core part of your business, it doesn’t hurt to mix things up a little.

Required Consulting Skills

Required Consulting Skills

(Source: Flickr)

The consulting industry provides many services and covers many industry sectors, and so the domain knowledge and expertise that a consultant needs will vary depending on the industry focus and services that the consultant actually provides.

That being said, there are some generic skills that every consultant will need to have.

As a starting point, every consultant will need to be intelligent and energetic to cope with client expectations, a relentless travel schedule and demanding deadlines. Consultants will also need to enjoy learning since no two consulting assignments are the same. Consulting firms screen heavily for intelligence and enthusiasm during the application process. If you are not smart and energetic then breaking into and succeeding in the consulting industry may be an uphill battle.

Skills Required By Junior and Mid-level Consultants

Assuming a consultant has sufficient aptitude and the right temperament, there are also a number of generic skills that junior and mid-level consultants require, outlined below.

As you read through the list, be honest with yourself. Do you possess these skills? You don’t need to be perfect on day one, but your time is valuable and pursuing a career in consulting will be challenging if you are not well prepared.

Which areas do you need to work on?

  1. Communication skills – Consultants work in many different service areas and industry sectors. Where ever a consultant may find herself, she will need to be able to communicate clearly and persuasively. Consultants need to be able to collect information from employees, obtain client buy-in, ensure that the proposed solution is feasible, and present recommendations to senior management.
  2. People skills – Consultants work in teams and often deal with the client’s senior management team. As such, consultants need to be agreeable and pleasant to work with as well as assertive and able to influence outcomes.
  3. Quantitative skills – Consulting firms screen applicants in the interview for their quantitative skills using market sizing and maths questions. It is important for consultants to be comfortable working with numbers and using programs like Excel. Some people are better at maths than others, but all applicants can improve their maths skills through dedicated practice.
  4. Analytical skills – Consultants need the ability to collect and synthesize large amounts of information, develop a hypothesis about the client’s problem, analyze the data to uncover insights, and come up with a set of recommendations. In short, consultants require strong analytical skills.
  5. Organisational skills – Consulting assignments can be fast paced, multifaceted and chaotic, and consultants are sometimes staffed on more than one assignment. Consultants without strong organizational skills are likely to flounder.
  6. Initiative – Consultants need to be able to identify issues and take action without supervision, and to know when to ask for help. A consultant will sometimes be sent to work independently at the client site, and should be able to represent her consulting firm and make a favorable impression with the client.

Skills Required By Partners

With good core skills and a strong performance record a consultant can get promoted through the ranks. However, once she approaches partner level a consultant will also need strong sales and marketing skills if she wants to be able to sell high priced consulting services and enjoy continued success at partner level.

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

9 M’s Resource Audit Checklist

An organisation’s approach to strategy will always depend on the circumstances.

Who are the organisation’s competitors? There will be existing competitors, and outsiders who might threaten to compete in future.

And who are the organisation’s customers? There will be existing customers, and larger groups that the organisation wants to target.

By understanding the external environment, an organisation will then be able to develop a strategy to achieve continued success by taking advantage of opportunities and avoiding threats.

But while understanding the business situation will obviously be very important for ongoing success, an organisation’s ability to compete will ultimately be determined by the resources and capabilities that the organisation has available to it.

In order to find out what these resources and capabilities might be, an organisation will want to carry out a systematic review; a process that might be referred to as a ‘resource audit’.

The thing about auditing is that it tends to be quite a formal process, and you want to make sure that you don’t miss anything. And so, it will be a good idea to use a checklist.

While by no means perfect, the 9 M’s Resource Audit Checklist might prove useful for the task.

The checklist categorises an organisation’s resources into nine categories; each of which, as you might of guessed, starts with the letter ‘M’:

  1. Materials: Who are the organisation’s suppliers? Does the organisation have good working relationships with them? Are they reliable and responsive? Do they provide quality inputs? How much do they cost? Do they have spare capacity? Where are they located?
  2. Machinery: What kind of plant, equipment and other tangible assets are used by the organisation to turn raw materials into finished products? What is the age, condition and utilisation rate of these asset? Are they technologically up to date? What is the likely replacement cost? What is the quality of finished products?
  3. Make-up: What is the culture and structure of the organisation? What intangible assets does the organisation possess, e.g. patents, trade marks, brands, and good will?
  4. Management: What are the skills, experience level and vision of senior management? What is the management structure and prospects for career progression? Are management loyal to the organisation, and are there programs in place to align management incentives with the long-term interests of the organisation?
  5. Management information: Does management have the ability to generate and share relevant and timely information within the organisation? Does management have the ability to easily collect and analyse information from within the organisation to support strategic decision making?
  6. Markets: What customer segments and regions does the organisation serve? What products are sold in each market? What is the market position of the organisation? What is the position and life cycle of its products?
  7. Men and women: How many staff does the organisation employ? How does the organisation attract, select and recruit new candidates? What skills do they have, and what training programs are in place to support their development? How are staff compensated, and what are wage costs as a proportion of total costs? What is the level of staff morale and labour turnover?
  8. Methods: How are activities carried out? Are they capital intensive or labour intensive? Which activities are performed in-house, and which activities are outsourced? How does the organisation handle its supply chain process, e.g. push method, pull method?
  9. Money: What is the organisation’s cash position? What is the credit period? What is the turnover period? What kind of short-term and long-term financing does the organisation have access to? What is the organisation’s debt-to-asset ratio? What are its investment plans, and how will they be funded?

What Do Consultants Do Each Day?

What Do Consultants Do Each Day

(Source: Flickr)

Consultants work on projects of varying lengths, and are often required to travel to work on site with the client.

The specific tasks that a consultant undertakes will depend on which firm she works for, the project requirements, as well as her level of seniority and experience.

Projects typically follow a predictable cycle which involves five stages: pitching, hypothesis generation, research and analysis, reporting, and implementation.

1. Pitching

Pitching involves selling the firm and its consultants to prospective clients, and includes not only sending the final proposal but also conducting industry research, investigating prospective clients, and making sales calls. Much of the pitching process at consulting firms is handled at partner level.

Consultants who are “on the beach” (that is, not staffed on a client project) may spend time researching prospective clients and supporting the firm’s marketing and business development efforts.

2. Hypothesis Generation

Prior to commencing any research or analysis, most consulting firms start by developing a case hypothesis about the specific business problem that needs to be solved. This may require a few days of brainstorming involving the consulting project team and members of the client organisation.

3. Research and Analysis

The consulting team will perform research and analysis to test its case hypothesis. This may involve gathering information from the client, conducting market surveys, attending client meetings, interviewing employees and building quantitative models.

The consulting team will use its research findings to uncover insights and develop a set of recommendations.

4. Reporting

The consulting team will usually communicate with the client organisation throughout the project at various intervals: daily, weekly, monthly.

The purpose of ongoing communication is to keep the client informed about the evolving hypothesis, get buy in about key assumptions, and make sure the consulting team is on track to meet client expectations.

The consulting team will often conclude its project by delivering a final report accompanied by a polished PowerPoint presentation.

5. Implementation

Providing recommendations is often not the end of the story, and clients often engage consultants to help implement the recommendations produced by the consulting project. Depending on the nature of the project, implementation may involve project management, software development, systems integration and testing, or post-merger integration.

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

Types of Consulting

Types of Consulting

(Source: Flickr)

There are many different types of consulting.

As an aspiring consultant, you would be well advised to understand your options so that you can make an informed decision about which kind of consulting is right for you.

Here are five (5) of the main types of consulting that might interest you:

  1. Strategy: Think BCG, McKinsey and Bain (although it is worth noting that these firms are doing less and less “pure” strategy work and more operations, implementation and restructuring). Strategy consulting is the kind of consulting that you probably think of when people say “management consulting”. Strategy consultants work with the CEO and senior management to address strategic problems including declining profitability, growth strategy, market entry, product development, or responding to a competitive threat.
  2. Operations: While strategy consultants give recommendations about what a client “should” do, operations consultants help clients actually improve existing operations. Operations consultants might work on projects relating to supply chain management including streamlining procurement or improving manufacturing efficiency.
  3. Information Technology: In an increasingly competitive digital world organisations are increasingly looking for digital solutions. IT consultants work with the CTO and senior management to develop software solutions to improve efficiency and organisational performance.
  4. Human Resources: For many firms wages are their biggest expense and people are their biggest asset. HR consultants help organisations attract, select, train, compensate and assess employees.
  5. Economic: Economic consultants normally work with government and law firms to provide economic forecasts and expert evidence based on statistical analysis and econometric models.

[For more information on the management consulting industry, download our “Guide to Management Consulting“.]

5 Reasons It’s Okay To Say “No”

  1. If you are using your talents in a way that interests you for the benefit of other people, then that’s a good thing. Charities, non-profits and religions may come to you for aid, but it’s valid to refuse if your gifts to them would detract from the good work you are already doing
  2. Giving more than you can manage can create an imbalance in your relationships with other people, which can damage or destroy those relationships when you discover that they do not reciprocate to the same extent
  3. Saying “no” marks a boundary beyond which you are not willing or able to go right now, which helps to demonstrate your independence and enhance your identity
  4. It makes sense to put your own Oxygen mask on first. Helping other people when your own affairs are not in order can cause harm to you or harm to other people who may need to step in and rescue you
  5. One of the three necessary ingredients of a have strong personal, professional or corporate strategy is “focus”. Steve Jobs once said that “[p]eople think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”

What is Consulting?

What is Consulting

(Source: Flickr)

“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“.]

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“.]

The sky is falling

Back in September last year, the Wall Street Journal wrote an article about how low oil prices could lead to a global recession. An article by the Guardian last Friday repeated the sentiment with a suggestion that low oil prices could hurt the stock market.

Look out, Chicken Little, the sky is falling!

The doom and gloom argument appears to be based on two factors:

  1. Falling oil prices will hurt oil producers like Exxon and Chevron. Since these firms are large, falling profits will lead to lower share prices which in turn will pull down the market index and lead to a drop in the overall market. This would bad for shareholders;
  2. Secondly, the falling oil price will make it more difficult for oil companies to repay outstanding debts. When oil prices were high many Wall Street banks lent money to finance new drilling expeditions, and Dealogic estimates that the oil and gas industry has roughly $500 billion in outstanding debt. Increased levels of distressed debts could lead to stress in the banking sector.

Oil producers and the banks who backed their optimistic projects during the boom years will stand to lose in the new reality of low oil prices.

Luckily though the economy is composed of more than just banks and oil producers.

Richard Branson, the billionaire entrepreneur and philanthropist, provided some sound wisdom at Davos recently when he said that “oil prices are good for the consumer, they are good for most businesses. They are very good for the airline businesses. And obviously if you are an oil company they are not so good for you. But I think what the market has missed is that with oil below $30 a barrel and likely to stay there for a long time, that there is no need to try to make up a recession. This is going to be the greatest boost to the economy that you can imagine.”

In support of Branson’s view, The Economist reported on Saturday January 22nd that “the economies that have enjoyed the strongest GDP growth in the past year have .. been oil importers: India, Pakistan and countries in east Africa.” Similarly, in the IMF’s latest forecast, published on Tuesday January 19th, the economies that were spared a GDP growth downgrade — China, India, Germany, Britain, Spain and Italy — were all net oil importers.

While it is true that a slump in oil prices will produce winners and losers, and there are likely to be stormy waters ahead for countries like Brazil, Saudi Arabia, Russia and Nigeria, the good news is that the sky is not falling.

Negotiating An Offer Of Employment

Negotiating An Offer Of Employment 3

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If you have received an offer of employment from the consulting firm of your choice, you may still want to negotiate the terms of the offer.

How should you go about doing this?

Use your bargaining power

Your ability to negotiate the terms of your offer depends on how much bargaining power you have. The consulting industry is currently experiencing growth in various markets, and so it may be possible to negotiate a more favorable employment contract.

Whatever the state of the economy, it is worth considering negotiating the terms of your offer. After you accept your offer of employment you will have virtually no bargaining power, and so the time for negotiation is beforehand.

If you are friendly and businesslike then negotiating needn’t create a negative impression, on the contrary, it demonstrates that you have a keen business sense and a healthy level of self confidence.

Obtain written confirmation

You need to obtain written confirmation of all terms that you successfully negotiate.

Terms to negotiate

There are a number of offer terms that you may want to negotiate, these include:

  1. Office location;
  2. Start date;
  3. Compensation;
  4. Starting position;
  5. Annual leave; and
  6. Offer response deadline.

1. Office location

To negotiate a change of office location, a first step might be to explain the reason for your request to the recruitment manager. If they agree to look into the matter, make sure you agree on a date to follow up with them.

If your request is turned down, try to identify a person in your target office who can vouch for the transfer. When you find someone, contact them to explain your situation and ask if there’s anything he or she can do to help you. Offer to meet with them in person.

2. Start date

In a weak economy, you may be able to negotiate a later start date. This benefits the firm by allowing them to start paying your salary later than planned.

3. Salary and bonus

Given the strong growth of the consulting industry, it may be possible to negotiate an improved remuneration package.

The best form of leverage is to have another offer that pays more money. If you are an MBA or lateral hire and your previous salary was higher then you can use this as leverage. You may be able to convince the recruiter that you are being undervalued.

4. Starting position

If the job offer is for a position at a lower level than you believe is justified given your qualifications and experience then you can ask for higher starting position. If this doesn’t work, then you might want to ask for a shorter performance review period, which will allow you to prove yourself and get promoted sooner.

5. Annual leave

If you don’t like the amount of annual leave provided, then you might want to try asking for more. If that fails, ask about the firms unpaid leave policy.

6. Offer response deadline

Consulting firms are in a war for talent and can sometimes give applicants an “exploding offer”, which expires within a very short time period.

Exploding offers are designed to pressure applicants to accept an offer as soon as possible in order to minimise the risk that the applicant accepts a more favourable offer from another employer.

If you need an extension to the offer deadline, ask for it. It’s a very common thing to get more time to make a decision.

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

Bricks and Mortar

Builders intuitively know that if you are building a house then you need both bricks and mortar, and they need to be arranged in a certain way in order to construct a safe, functional and attractive residence.

The bricks provide strength, the mortar holds it all together, and the architect’s plan ensures that they are arranged in an appealing way.

This seems like a common sense approach to building.

However, when it comes to building organisations in the corporate world, this basic logic regularly gets thrown by the way side.

All too often, organisations idolize super stars. The solid bricks. Those individual over-achievers who it is believed will enable organisational success.

But how much effort is spent on giving people the philosophy, community, time and space that they need to work together in a productive and harmonious way?

And how much care is taken to ensure that the right people get placed in the right parts of the organisation for maximum effect?

People are important, and talented individuals will often be able to make a big contribution. But wonderful organisations (like buildings that are able to stand the test of time) will always be more than the sum of their parts.

Accepting An Offer Of Employment

Accepting An Offer Of Employment

(Source: Flickr)

If you are offered a position with a consulting firm (and are happy with the terms of the offer) then feel free to accept it.

You can talk to the recruitment management to let them know your decision, and you will also need to sign, date, and return a copy of the offer letter.

Be sure to make a copy for your records.

If you have successfully negotiated any terms of the offer, then you need to capture the additional or amended terms in writing.

Ideally the firm should provide you with an updated offer letter reflecting the agreed terms of the offer.

However, the recruitment manager may conveniently forget to provide this, in which case you should set out the agreed terms in an email and send it to the recruitment manager.

The firm may try to wriggle out of its obligations later, and so you need to have written evidence of what was agreed.

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

Fixed Thinking

Many people are afraid to fail.

Terrified of flunking a test, getting fired, having their heart broken, or being laughed at.

Loss is painful, yes, it truly can be.

The problem with this way of experiencing life, though, is that it represents fixed thinking. A belief that things can stay the same and a desire to preserve the way things were.

There is an alternative.

You can look up at the stars and appreciate the abundance of space.

You can reflect on the passing of the seasons and accept that change is constant.

You can be curious about life and cultivate a openness to new ideas and experiences.

You can have heroes and role models who remind you that, if you dare to dream big, success is possible.

You can bear with life’s changing tides and be open to new opportunities to learn, contribute and grow.

After The Interview

After The Interview

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We have talked at length all year about consulting interviews, and in this post we provide three (3) thoughts on what to do after the interview comes to an end.

  1. Confirming the next step: To find out about the next step in the recruitment process, talk to the recruitment manager (this will probably be someone other than your interviewers).
  2. Thank you email: It is a nice courtesy to send a short thank you email to your interviewer the day after your interview. The note should thank the interviewer for her time, remind her of a few key points that you discussed, and state again why you are genuinely interested in working with the firm.
  3. Following up: If the date on which you expected to hear back from the firm has passed, then feel free to call the recruitment manager to follow up on the status of your application.

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