Difference between Strategy Consulting and Management Consulting.
With tongue in cheek, one might say that the biggest difference between strategy consulting and management consulting is the level of fees charged. Why is this? Well, one simple answer is that strategy consulting tends to be directed towards the CEO and the Board of Directors in larger companies and Public Sector organizations, whereas management consulting is most often deployed at a lower level in large companies and to many different levels in smaller companies.
When you operate at higher levels in larger companies, then the fees you can charge are proportionally higher. The pedigree of your consulting firm will also decide if you can successfully operate in this space or not. This is the feeding ground of larger consulting practices including the following:
- Boston Consulting Group
- McKinsey & Company
- Bain & Company
- Monitor Deloitte
Industry expertise is of paramount importance in strategy consulting assignments and the leading strategy consulting firms operate industry specialist groups. Combined with this, they also have issue-based specialists that tend to concentrate on specific business issues. When deploying strategy consulting teams, they will usually pick a combination of specialists from both groups. This depth and breadth of competencies and expertize is rarely present in smaller consulting firms and therefore it is difficult to replicate. Instead, smaller firms may set themselves up as specialists in just a few core areas and concentrate on delivering value in these niche sectors.
Strategy consultants are needed primarily because busy senior executives in client companies may find it difficult to free themselves up from their core responsibilities, to allow sufficient thinking and analysis time on strategic issues, which may have a significant impact on the business going forward. In essence, client companies are renting out experienced brains to do some of their thinking for them, and they expect to get well-reasoned recommendations, based on industry and data analysis. As specialists in the client’s industry, the strategy consultants will frequently have seen the issues and challenges before and can quickly add value to the senior executive team.
Strategy consultants tend to be deeply involved in defining problems, gathering and analyzing data, and making recommendations to clients. Unlike their management consulting colleagues, they tend not to get involved in implementing the recommended strategies.
Management consulting, also frequently called business consulting, is focused on helping organizations to address business issues and in improving business performance. Although not quite as elitist as strategy consulting for larger clients, in essence many management consulting firms do in fact provide strategy consulting to a differentiated group of smaller clients. Management consultants operate across the spectrum of large, medium and small businesses and deliver a wide variety of services, which go way beyond strategy recommendations and in fact frequently involve the implementation of their recommendations in conjunction with a client’s in-house team.
We have all heard the old description of a management consultant as being someone that goes into a client’s business, listens attentively to what the client tells him, and then comes back later to tell the client what the client originally told him. The central thrust of a management consultant’s role is delivering value to a client and there is obviously no tangible value delivered in the old maxim.
Whether working for a management consulting firm or acting as a sole practitioner, I tend to see a management consultant as someone with a broad set of business and market experience, who provides an extra pair of hands (and a brain) to clients, when they most need it. Acting initially as an external sounding board for senior management, the management consultant brings a different perspective to the management team and delivers objective advice and experience that usually does not already exist within the business.
Beyond the advisory role, the management consultant uniquely delivers rapid execution capability across a wide spectrum of business issues and disciplines, and if he is worth his paycheck, he will transfer some of his important skills to the in-situ management team in the course of an assignment. A management consultant can also bring together a team of experienced professionals to supplement an existing management team, choosing all of the key players wisely, based on the project and client needs at hand. It is extremely difficult for a busy CEO or an executive team to do this on their own.
So is the strategy consultant or management consultant worth the expense?
As with all things in life, the answer is – it depends. At the top end of the scale, you may get great advice but you will undoubtedly pay dearly for the consultant’s time and recommendations. At the bottom end of the scale, you may get mediocre advice and formulaic solutions that do not in fact solve your business problems, but it may not cost you an arm and a leg.
You need to find the sweet spot wherein you are paying a reasonable price but you are getting tremendous value. Return on investment is the only proper metric for measuring the value of using strategy consultants or management consultants.