Introduction To Consulting Slides

Introduction to Management Consulting Dr. Joe O’Mahoney 2007

Today’s Learning Objectives
To give an overview of the course
To know the definition, history and purpose of management consulting
To understand the consultancy market: the main players, industry segmentation, clients and trends
To gain an overview of the consulting life-cycle
To understand the basics of approaching cases, guestimating and analysing.

The Agenda
The Course
What is Management Consulting?
Who are Management Consultants?
Clients
Analysing Cases
Management Consulting

The Course
Practical, Practical, Practical……
Case-based (Harvard)
Develops skills
Get jobs
Highest retention rates
To…
Understand Consultancy
Analyse businesses
Develop solutions
No...
Books
Theories
Bullshit

The Course Pt. I
Introduction to Consulting
Overview of Consulting
Designing your own firm
Proposals and Planning
Planning, Costing and Proposing
Assignment: Speaker from StayMobile Ltd.
Strategy Consulting & Market Analysis
Analysing Trends
Making Recommendations
IT & e-Commerce
Requirements Management
E-business

The Course Pt. II
Dark Sides of Consulting
Stress, manipulation and exploitation
Illegal trades: Enron, Parmalat, WorldCom
Speaker Day 1: Consulting Work
EDS & Deloitte
Managing Delivery
Speaker Day 2: Analysis with SSM
Jeremy Hilton: Private Consultant
Methodologies & Modelling
Speaker Day 3: Consulting Careers and CVs
IBM
Getting a job & getting on

What is Management Consulting?

Historical & Future Trends
Big player recovery from 2000 - 2003 (DotCom bust)
Accountability (Chinese Walls, Enron, Sarbanes-Oxley, Basel II)
Diversification (M&A, Internationalisation, Sectors)
Image (MBAs, Up selling, Over-charging, Facsimile Consulting)
Projects (outsourcing, e-business, protection vs. emergent markets)
Competition (numbers, approved lists, proven track record, sceptical clients)
Razorfish, Sapient, Viant, iXL Experienced hires Niche: outsourcing, e-business, BPR 1990 - 2000 Arthur Anderson, KPMG, IBM, Deloitte, E&Y Graduates, MBAs Technical & Financial Specialisms 1970 – 1990 McKinseys, Bain & Co., Boston Consulting Group MBAs & Academics Strategic Management 1940 – 1970 AD Little, Booz, Allen, Hamilton, AT Kearney. Academics Technical Analysis 1890 – 1940 Typical Firms Hires Focus Dates

The Biggest Consulting Firms
Accenture (IT, Operations, HRM)
Cap Gemini (IT, Operations)
CSC (IT, Operations)
IBM BCS (IT)
PWC (IT, Operations, HRM)
KPMG / Bearing Point (IT, Operations)
Deloitte (IT, Operations)
McKinsey & Co. (Strategy, Operations)
BAH (Strategy, Operations)
Mercer (Strategy, HRM)
Anderson (Operations)
A. T Kearney (Strategy, HRM)
Monitor (Strategy)
BCG (Strategy)
A.D. Little (Strategy)
Bain & Co. (Strategy)

Segmentation
Industry
Telcos - Health
Digital Media - Manufacturing
Finance & Banking - FMCG& Retail
Utilities - Transportation
Function
Strategy - HRM
Operations - IT (incl. e-business)
Sector
Non-profit
Public
Private

A Consulting Typology / Utilities Technology Providers Software Providers Service providers McKinsey IBM A.T. Kearney Oliver Wyman Deloitte Accenture PwC CSC EDS Scient Sapient Diamond Strategy Consultants

Sector Analysis Pt. I
Strategy
Direction, Long-term plans & High-level goals
Lever to implementation
Bain & Co. - BCG
McKinseys - Monitor
Operations
Day-to day running of firm, Reaching, strategic goals
Re-engineering, outsourcing, supply-chains
Accenture - Deloitte
Cap Gemini - CSC

Sector Analysis Pt. II
IT
Systems development, implementation
Business focused requirements
IBM - AMS (American Management Systems)
Accenture - CSC
HRM
Strategic alignment of people function
ERP, training, culture change, competence management
Accenture - PWC
Mercer - AT Kearney

Consulting Products Products have a name, a methodology, an application and great PR Consultants are charged with introducing ‘fashions’ Stern Stewart Stewart Economic Added Value 1993 CSC Hammer & Champy BPR 1993 Bain & Co. Reichheld Core Competencies 1990 MIT Peters & Waterman TQM 1998 Strategos / Harvard Hamel & Prahalad Value Chain Analysis 1985 Monitor / Harvard Porter Five Forces 1980 BCG Henderson Portfolio Analysis 1976 Organisation Consultant Product Dates

Who are Management Consultants?

What is a Management Consultant?
Not the brightest and the best
Not all Harvard MBAs or even business students
Not Magicians, Preachers or Witch-Doctors

Skill Profile
Skills:
Outstanding interpersonal skills
Great Presenter
Excellent at writing reports
Knowledge:
Generalist business knowledge
Methods & Frameworks
In-depth specific skill
Depth of expertise: skill or knowledge based Broad set of general consulting competencies

Basic Salaries (UK)
Graduate £20 – 26k
Junior Project Lead £30 – 35k
Team Leader £40 – 60k
Senior Consultant £60 – 80k
Principle Consultant £70 – 100k
Partner £100k +
+ 10 – 20% bonus
+ car
+ health care, share options
Highest salaries earned at niche consultancies

Design your own Consultancy
In pairs: you and 20 consultants wish to start your own medium-sized consultancy. You will consult on general strategic management issues such as mergers and acquisitions, outsourcing and new product development.
Write 10 scenarios (5 each) that you think might be likely to occur whilst running this consultancy. What functions, departments and skills will you need in the consultancy. Sketch a brief organisational design and strategy outlining:
Skills Required
Structure & Function
Major Costs
Key problems

Clients

Marketing Consultancy Work
Finding a problem
External threats
Mimicking others
Falling behind: benchmarks
New opportunities
Marketing Consultancy
Links with top academics / Business Schools (HBS, MIT, Sloan)
Links to conferences, institutions,
Publications: books, journals, the press
Getting in
Free surveys / research
‘ Solution’ stories
Referrals
‘ Jumpers’

Why Employ Consultants?
Expertise
Objectivity
Someone to blame
To save money
External knowledge (e.g. best practice, benchmarking)

Types of project
Providing Advice: should I launch this product?
Project Design: how should I launch this product?
Implementation: install a system that will pay suppliers
Functional Management: run our department for us

Working With Clients
Defining the project
Open  Closed questions: Predicament > Definition > Solution
Key Decision Makers
Enticing the Client
Free analysis
Free juniors
Corporate entertainment
Successful Projects
Contract, contract, contract
Clear goals, roles & procedures
Boilerplating & reuse
Quick measurable wins
Solid Conclusions
The person not the project

The Consulting Life-cycle
Initial Contact
Project Definition
Initial Analysis
Formal Proposal
Contract
Project Implementation
Data Collection
Data Analysis
Decisions / Plan
Intervention
Review
Initial Contact Definition Proposal & Contract Data Collection Data Analysis Decision-making, Planning Intervention Disengaging Review

The Consulting Life-cycle Initial Contact Definition Proposal & Contract Data Collection Data Analysis Decision-making, Planning Intervention Disengaging Review

Analysing Cases

Case 1: LightBox Inc.
I am the CEO of a light-bulb manufacturer. I have developed an ever-lasting light-bulb.
How much should I sell it for?
What will the increase in our share-price be?

Additional Information
It cost £20 million to develop the product.
It costs £5 to make the product
Normal Lightbulbs
Cost £0.5 to manufacture
Are sold to distributers for £0.25
Who sell to retailers for £0.50
Who sell to the customer for £0.75
What about the markets?
Cannibalisation?
Government?

Case 2: Three
The Company
Hutchison Whampoa
Owned by Li KaShing ($20bn)
Family interests of $630bn
Owns ports, telecoms, property (Hong Kong)
The Context
3G Telecoms: video & music over the phone
1999: UK first gov. to sell 3G licences
2000 – 2005: Followed by most others

Case 2: Three
The Decision
Should Hutchison buy a 3G licence in the UK?
How much should they pay for it?
What strategic issues should they look out for?

Links
http://www.vault.co.uk
http://www.mca.org.uk
http://www.mbajungle.com
http://www.consultingcentral.com
http://www.feaco.org
http://www.mca.org.uk
http://www.amcf.org

Questions?

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Introduction To Consulting Slides

by Joe O'Mahoney

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