Introduction To Consulting Slides


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Introduction To Consulting Slides

  1. 2. Introduction to Management Consulting Dr. Joe O’Mahoney 2007
  2. 3. Today’s Learning Objectives <ul><li>To give an overview of the course </li></ul><ul><li>To know the definition, history and purpose of management consulting </li></ul><ul><li>To understand the consultancy market: the main players, industry segmentation, clients and trends </li></ul><ul><li>To gain an overview of the consulting life-cycle </li></ul><ul><li>To understand the basics of approaching cases, guestimating and analysing. </li></ul>
  3. 4. The Agenda <ul><li>The Course </li></ul><ul><li>What is Management Consulting? </li></ul><ul><li>Who are Management Consultants? </li></ul><ul><li>Clients </li></ul><ul><li>Analysing Cases </li></ul>Management Consulting
  4. 5. The Course <ul><li>Practical, Practical, Practical…… </li></ul><ul><li>Case-based (Harvard) </li></ul><ul><ul><li>Develops skills </li></ul></ul><ul><ul><li>Get jobs </li></ul></ul><ul><ul><li>Highest retention rates </li></ul></ul><ul><li>To… </li></ul><ul><ul><li>Understand Consultancy </li></ul></ul><ul><ul><li>Analyse businesses </li></ul></ul><ul><ul><li>Develop solutions </li></ul></ul><ul><li>No... </li></ul><ul><ul><li>Books </li></ul></ul><ul><ul><li>Theories </li></ul></ul><ul><ul><li>Bullshit </li></ul></ul>
  5. 6. The Course Pt. I <ul><li>Introduction to Consulting </li></ul><ul><ul><li>Overview of Consulting </li></ul></ul><ul><ul><li>Designing your own firm </li></ul></ul><ul><li>Proposals and Planning </li></ul><ul><ul><li>Planning, Costing and Proposing </li></ul></ul><ul><ul><li>Assignment: Speaker from StayMobile Ltd. </li></ul></ul><ul><li>Strategy Consulting & Market Analysis </li></ul><ul><ul><li>Analysing Trends </li></ul></ul><ul><ul><li>Making Recommendations </li></ul></ul><ul><li>IT & e-Commerce </li></ul><ul><ul><li>Requirements Management </li></ul></ul><ul><ul><li>E-business </li></ul></ul>
  6. 7. The Course Pt. II <ul><li>Dark Sides of Consulting </li></ul><ul><ul><li>Stress, manipulation and exploitation </li></ul></ul><ul><ul><li>Illegal trades: Enron, Parmalat, WorldCom </li></ul></ul><ul><li>Speaker Day 1: Consulting Work </li></ul><ul><ul><li>EDS & Deloitte </li></ul></ul><ul><ul><li>Managing Delivery </li></ul></ul><ul><li>Speaker Day 2: Analysis with SSM </li></ul><ul><ul><li>Jeremy Hilton: Private Consultant </li></ul></ul><ul><ul><li>Methodologies & Modelling </li></ul></ul><ul><li>Speaker Day 3: Consulting Careers and CVs </li></ul><ul><ul><li>IBM </li></ul></ul><ul><ul><li>Getting a job & getting on </li></ul></ul>
  7. 8. What is Management Consulting?
  8. 9. Historical & Future Trends <ul><li>Big player recovery from 2000 - 2003 (DotCom bust) </li></ul><ul><li>Accountability (Chinese Walls, Enron, Sarbanes-Oxley, Basel II) </li></ul><ul><li>Diversification (M&A, Internationalisation, Sectors) </li></ul><ul><li>Image (MBAs, Up selling, Over-charging, Facsimile Consulting) </li></ul><ul><li>Projects (outsourcing, e-business, protection vs. emergent markets) </li></ul><ul><li>Competition (numbers, approved lists, proven track record, sceptical clients) </li></ul>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
  9. 10. The Biggest Consulting Firms <ul><li>Accenture (IT, Operations, HRM) </li></ul><ul><li>Cap Gemini (IT, Operations) </li></ul><ul><li>CSC (IT, Operations) </li></ul><ul><li>IBM BCS (IT) </li></ul><ul><li>PWC (IT, Operations, HRM) </li></ul><ul><li>KPMG / Bearing Point (IT, Operations) </li></ul><ul><li>Deloitte (IT, Operations) </li></ul><ul><li>McKinsey & Co. (Strategy, Operations) </li></ul><ul><li>BAH (Strategy, Operations) </li></ul><ul><li>Mercer (Strategy, HRM) </li></ul><ul><li>Anderson (Operations) </li></ul><ul><li>A. T Kearney (Strategy, HRM) </li></ul><ul><li>Monitor (Strategy) </li></ul><ul><li>BCG (Strategy) </li></ul><ul><li>A.D. Little (Strategy) </li></ul><ul><li>Bain & Co. (Strategy) </li></ul>
  10. 11. Segmentation <ul><li>Industry </li></ul><ul><ul><li>Telcos - Health </li></ul></ul><ul><ul><li>Digital Media - Manufacturing </li></ul></ul><ul><ul><li>Finance & Banking - FMCG& Retail </li></ul></ul><ul><ul><li>Utilities - Transportation </li></ul></ul><ul><li>Function </li></ul><ul><ul><li>Strategy - HRM </li></ul></ul><ul><ul><li>Operations - IT (incl. e-business) </li></ul></ul><ul><li>Sector </li></ul><ul><ul><li>Non-profit </li></ul></ul><ul><ul><li>Public </li></ul></ul><ul><ul><li>Private </li></ul></ul>
  11. 12. 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
  12. 13. Sector Analysis Pt. I <ul><li>Strategy </li></ul><ul><ul><li>Direction, Long-term plans & High-level goals </li></ul></ul><ul><ul><li>Lever to implementation </li></ul></ul><ul><ul><li>Bain & Co. - BCG </li></ul></ul><ul><ul><li>McKinseys - Monitor </li></ul></ul><ul><li>Operations </li></ul><ul><ul><li>Day-to day running of firm, Reaching, strategic goals </li></ul></ul><ul><ul><li>Re-engineering, outsourcing, supply-chains </li></ul></ul><ul><ul><li>Accenture - Deloitte </li></ul></ul><ul><ul><li>Cap Gemini - CSC </li></ul></ul>
  13. 14. Sector Analysis Pt. II <ul><li>IT </li></ul><ul><ul><li>Systems development, implementation </li></ul></ul><ul><ul><li>Business focused requirements </li></ul></ul><ul><ul><li>IBM - AMS (American Management Systems) </li></ul></ul><ul><ul><li>Accenture - CSC </li></ul></ul><ul><li>HRM </li></ul><ul><ul><li>Strategic alignment of people function </li></ul></ul><ul><ul><li>ERP, training, culture change, competence management </li></ul></ul><ul><ul><li>Accenture - PWC </li></ul></ul><ul><ul><li>Mercer - AT Kearney </li></ul></ul>
  14. 15. 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
  15. 16. Who are Management Consultants?
  16. 17. What is a Management Consultant? <ul><li>Not the brightest and the best </li></ul><ul><li>Not all Harvard MBAs or even business students </li></ul><ul><li>Not Magicians, Preachers or Witch-Doctors </li></ul>
  17. 18. Skill Profile <ul><li>Skills: </li></ul><ul><ul><li>Outstanding interpersonal skills </li></ul></ul><ul><ul><li>Great Presenter </li></ul></ul><ul><ul><li>Excellent at writing reports </li></ul></ul><ul><li>Knowledge: </li></ul><ul><ul><li>Generalist business knowledge </li></ul></ul><ul><ul><li>Methods & Frameworks </li></ul></ul><ul><ul><li>In-depth specific skill </li></ul></ul>Depth of expertise: skill or knowledge based Broad set of general consulting competencies
  18. 19. Basic Salaries (UK) <ul><li>Graduate £20 – 26k </li></ul><ul><li>Junior Project Lead £30 – 35k </li></ul><ul><li>Team Leader £40 – 60k </li></ul><ul><li>Senior Consultant £60 – 80k </li></ul><ul><li>Principle Consultant £70 – 100k </li></ul><ul><li>Partner £100k + </li></ul><ul><li>+ 10 – 20% bonus </li></ul><ul><li>+ car </li></ul><ul><li>+ health care, share options </li></ul><ul><li>Highest salaries earned at niche consultancies </li></ul>
  19. 20. Design your own Consultancy <ul><li>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. </li></ul><ul><li>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: </li></ul><ul><li>Skills Required </li></ul><ul><li>Structure & Function </li></ul><ul><li>Major Costs </li></ul><ul><li>Key problems </li></ul>
  20. 21. Clients
  21. 22. Marketing Consultancy Work <ul><li>Finding a problem </li></ul><ul><ul><li>External threats </li></ul></ul><ul><ul><li>Mimicking others </li></ul></ul><ul><ul><li>Falling behind: benchmarks </li></ul></ul><ul><ul><li>New opportunities </li></ul></ul><ul><li>Marketing Consultancy </li></ul><ul><ul><li>Links with top academics / Business Schools (HBS, MIT, Sloan) </li></ul></ul><ul><ul><li>Links to conferences, institutions, </li></ul></ul><ul><ul><li>Publications: books, journals, the press </li></ul></ul><ul><li>Getting in </li></ul><ul><ul><li>Free surveys / research </li></ul></ul><ul><ul><li>‘ Solution’ stories </li></ul></ul><ul><ul><li>Referrals </li></ul></ul><ul><ul><li>‘ Jumpers’ </li></ul></ul>
  22. 23. Why Employ Consultants? <ul><li>Expertise </li></ul><ul><li>Objectivity </li></ul><ul><li>Someone to blame </li></ul><ul><li>To save money </li></ul><ul><li>External knowledge (e.g. best practice, benchmarking) </li></ul>
  23. 24. Types of project <ul><li>Providing Advice: should I launch this product? </li></ul><ul><li>Project Design: how should I launch this product? </li></ul><ul><li>Implementation: install a system that will pay suppliers </li></ul><ul><li>Functional Management: run our department for us </li></ul>
  24. 25. Working With Clients <ul><li>Defining the project </li></ul><ul><ul><li>Open  Closed questions: Predicament > Definition > Solution </li></ul></ul><ul><ul><li>Key Decision Makers </li></ul></ul><ul><li>Enticing the Client </li></ul><ul><ul><li>Free analysis </li></ul></ul><ul><ul><li>Free juniors </li></ul></ul><ul><ul><li>Corporate entertainment </li></ul></ul><ul><li>Successful Projects </li></ul><ul><ul><li>Contract, contract, contract </li></ul></ul><ul><ul><li>Clear goals, roles & procedures </li></ul></ul><ul><ul><li>Boilerplating & reuse </li></ul></ul><ul><ul><li>Quick measurable wins </li></ul></ul><ul><ul><li>Solid Conclusions </li></ul></ul><ul><ul><li>The person not the project </li></ul></ul>
  25. 26. The Consulting Life-cycle <ul><li>Initial Contact </li></ul><ul><li>Project Definition </li></ul><ul><li>Initial Analysis </li></ul><ul><li>Formal Proposal </li></ul><ul><li>Contract </li></ul><ul><li>Project Implementation </li></ul><ul><ul><li>Data Collection </li></ul></ul><ul><ul><li>Data Analysis </li></ul></ul><ul><ul><li>Decisions / Plan </li></ul></ul><ul><ul><li>Intervention </li></ul></ul><ul><li>Review </li></ul>Initial Contact Definition Proposal & Contract Data Collection Data Analysis Decision-making, Planning Intervention Disengaging Review
  26. 27. The Consulting Life-cycle Initial Contact Definition Proposal & Contract Data Collection Data Analysis Decision-making, Planning Intervention Disengaging Review
  27. 28. Analysing Cases
  28. 29. Case 1: LightBox Inc. <ul><li>I am the CEO of a light-bulb manufacturer. I have developed an ever-lasting light-bulb. </li></ul><ul><ul><li>How much should I sell it for? </li></ul></ul><ul><ul><li>What will the increase in our share-price be? </li></ul></ul>
  29. 30. Additional Information <ul><li>It cost £20 million to develop the product. </li></ul><ul><li>It costs £5 to make the product </li></ul><ul><li>Normal Lightbulbs </li></ul><ul><ul><li>Cost £0.5 to manufacture </li></ul></ul><ul><ul><li>Are sold to distributers for £0.25 </li></ul></ul><ul><ul><li>Who sell to retailers for £0.50 </li></ul></ul><ul><ul><li>Who sell to the customer for £0.75 </li></ul></ul><ul><li>What about the markets? </li></ul><ul><ul><li>Cannibalisation? </li></ul></ul><ul><ul><li>Government? </li></ul></ul>
  30. 31. Case 2: Three <ul><li>The Company </li></ul><ul><ul><li>Hutchison Whampoa </li></ul></ul><ul><ul><li>Owned by Li KaShing ($20bn) </li></ul></ul><ul><ul><li>Family interests of $630bn </li></ul></ul><ul><ul><li>Owns ports, telecoms, property (Hong Kong) </li></ul></ul><ul><li>The Context </li></ul><ul><ul><li>3G Telecoms: video & music over the phone </li></ul></ul><ul><ul><li>1999: UK first gov. to sell 3G licences </li></ul></ul><ul><ul><li>2000 – 2005: Followed by most others </li></ul></ul>
  31. 32. Case 2: Three <ul><li>The Decision </li></ul><ul><ul><li>Should Hutchison buy a 3G licence in the UK? </li></ul></ul><ul><ul><li>How much should they pay for it? </li></ul></ul><ul><ul><li>What strategic issues should they look out for? </li></ul></ul>
  32. 33. Links <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>
  33. 34. Questions?