Management consulting is the practice or business of helping other companies improve their performances and accountability through efficiency analysis, IT analysis, studying existing and potential business problems, and helping develop corporate goals.
It involves the leveraging of best practices across the company, as well as identifying and controlling risk. Management consulting uses rigid frameworks or methodologies in order to identify problems and suggest better ways of performing business tasks.
Management consulting overlaps in many other areas of business consulting, including
- IT consulting,
- risk management consulting,
- change management consulting.
History of management consulting
In the 1890s, Arthur D. Little opened the first management consulting firm near MIT (where an Arthur D. Little office stands to this day).
Originally, it specialized in technical research, as one would expect from an MIT professor, but later it became a general management consultancy business.
The first solely management consulting business was McKinsey &Co. in Chicago. Opened in 1926 by James O. McKinsey, it was later shaped primarily by Marvin Bower, who turned the field of management consultancy into a true profession. A.T. Kearney also came from this same new company.
Much later, the Boston Consulting Group brought a strong analytical approach to management consulting, forming the foundations of modern management consulting.
In the 1960s and 1970s, major accounting firms and IT services like IBM also developed large consulting arms.
Management consulting today
Today, three main types of consulting firms exist.
The first is the large multiple-service firm like IBM, who provide not only management consulting but also IT, accounting, or risk management consulting, among other things.
Large management and consulting firms like McKinsey offer pure management consulting, but are not specialized in any industry; they provide generalized management consulting for a variety of industries.
Finally, smaller “boutique” firms like First Manhattan provide management consulting in very specific industries, such as banking, healthcare, or IT.
Management consulting provides a bridge between the academic and philosophical ideas of management and the practical, day-to-day application of these ideas.
Their tools and techniques approach business problems in both a practical and an analytical manner and are therefore often superior to previous forms of management.
Unfortunately, the methodologies of management consulting, since they are so close to the cutting edge and sometimes use untried ideas, have also gotten the reputation of being impractical and farfetched.
No doubt, for some management consulting ideas, this is true. But a seasoned management consultant, used to working in the real world with philosophical business practice ideas, will not only be well-versed in cutting-edge methods but will also have an understanding of what will and what will not work in today’s business world.
When choosing a management consultant, look for one who has good, solid experience in your industry, as well as a thorough understanding of how the latest ideas work out in the real world.
Don’t let someone experiment with your company; instead, find someone who approaches your business as if it were his own.
