This document provides an overview of management consulting as an introduction to a course on the topic. It defines management consulting, discusses the history and typical players in the industry, and outlines the consulting lifecycle from initial contact to project implementation and review. It also briefly describes common consulting clients, how to analyze cases, and key skills needed for a career in management consulting.

2. Introduction to Management Consulting Dr. Joe O’Mahoney 2007

3. 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.

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

5. 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

6. 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

7. 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

8. What is Management Consulting?

9. 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

10. 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)

11. 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

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

13. 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

14. 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

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

16. Who are Management Consultants?

17. 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

18. 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

19. 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

20. 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

21. Clients

22. 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’

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

24. 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

25. 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

26. 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

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

28. Analysing Cases

29. 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?

30. 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?

31. 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

32. 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?

33. 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

34. Questions?