Management Consulting: A Step-By-Step Guide To Understanding The Industry
What is management consulting?
By Bree Binder
“Management Consulting” is a vague concept which gives rise to dozens of questions. Our goal with this blog is to capture and answer your questions with our perspectives and other relevant information. To make sure we’re hitting the correct points, we’ve asked current and former consultants for their perspectives in hopes of tapping into their experiences and insights. We’ll be updating this content a few times a year to keep it up to date, so please continue to check back and see what other insightful updates we’ve added. Or if you’d like to see something specific, shoot us an email and we’ll happily oblige. Without further ado, let’s get to it!
What Is Management Consulting?
At Strategic Value Partners (SVP), we define management consulting as a way to overcome strategic, operating, and financial hurdles; capture opportunities; and achieve tangible results. Results are a way of life here. We live and breathe through a lens of “how can we make this better?” but it makes our clients very happy and leads to incredibly successful projects and results -- not just on paper, but in real life.
How Management Consulting Started?
Management consulting has been around since 1886 when Arthur Dehon Little, a chemist from the Massachusetts Institute of Technology, started his own consulting firm. Other people came in afterward and gradually institutionalized the field of management consulting, like the DuPont and McKinsey & Company who were pioneers in the industry. For more on these pioneers, check out this article from the Paris Innovation Review.
What Do Management Consultants Do?
Now, you might have a friend or a connection on LinkedIn who is listed as a “management consultant.” They talk of their travels and huge companies they work with. They’re constantly dressed in the latest trendy business casual outfits, but you ask yourself, “What do management consultants actually do all day?” Now, we can’t speak for your friend, but we can speak about what we do here at SVP.
The Strategic Value Partners team successfully delivers tangible results through strategic planning, team building and development, and intensive change management. As management consultants, we’re primarily concerned with the strategy, structure, management, and operations of our client's company. Our job is to identify options for their organization and suggest recommendations for change, as well as advise them on additional resources to implement new solutions brought forth by the team.
Communication is central to our work internally and externally. For clients, we integrate corporate and investor communications into our strategies and plans from day one, and don’t stop until the project is successfully implemented.
Not only are we expert communicators, but the consultants at Strategic Value Partners exist to solve problems -- not just any problems, but complex business problems. The ones which require a very carefully thought out, high-quality analysis. We top this off with an aggressive attitude towards fact-gathering and big-picture thinking. For reference, sometimes these take massive amounts of energy, brain power, and time, thus SVP can turbocharge and accelerate internal company efforts.
Other consulting firms we’ve seen can be hyper-specialized on a specific area of expertise. Management Consulting firms, like ours, work with a broad range of industries, but our goal is to improve the overall performance and operations of a specific company to meet specific goals set out by the Board, Chief Executive Officer (CEO), Chief Financial Officer (CFO), Business Unit Head, or other executive sponsor(s).
Management Consulting Services?
The suite of management consulting services differs from company to company. At Strategic Value Partners, generally speaking, our list of capabilities are as follows:
Board Book Development
Board, CEO & CFO Advisory
Business Plan Development, Progress Assessments & Updates
Change Management: Restructuring/Turnaround Programs
Change Management: Transformations & Critical Initiatives
Coaching & Development for Executives and Nex-Gen of Talent
Cost Reduction Diagnostics & Programs
Customer Segmentation, Loyalty & Defection
Development & Maintenance of 13-Week & 15-Month Cash Flow Models
Development of High-Impact Storylines & Presentations
Digital & Mobile Strategies and Tactics
Full Potential Diagnostics
Mergers, Acquisitions & Divestitures
M&A: Dataroom Setup & Management
M&A: From Deal Concepts to Post-Merger Integration
M&A: Post-Divestiture Cost Reduction/Right-Sizing
M&A: Strategic Investments
M&A: Term Sheet Development & Checks
Market Mapping/Sizing & Go-to-Market Strategy
Mediation of Business Conflicts
Negotiation Support in Complex Situations
Onboarding & Training for Board Directors
Operating and/or Financial Models & Model "Checks/Reviews"
Product Line Profitability
Product Plan Development, Progress Assessments & Updates
Project Management: Transformations & Critical Initiatives
Strategic Plan Development, Progress Assessments & Updates
Strategic Planning Offsites for Board and/or Management
Training for Strategy, Corp Development, Finance & Legal Teams
Interim Executive Staffing
Our clients are our business. We strive to collaborate with our clients over years, follow strict internal policies on potential conflicts of interest, and align fee structures with client objectives and results.
Clients we work with are the Boards, CEOs, CFOs and Business Unit Heads of aerospace and defense, automotive, healthcare, natural resource, retail, and technology, media, and telecommunications (TMT) companies. We also work with alternative investment managers. In every case, our goal is to create exponential returns while proactively managing strategic, operating, and financial risks.
Is Management Consulting For My Company?
If you’re a company who is stuck on a problem and can’t seem to solve it with the resources at hand, or if you’re a high-level executive who’s stumped and looking for a way to fix your business? Then the answer is YES, SVP’s management consulting firm is for you. We work with extraordinary clients and help them realize that any problem, no matter how ambiguous or daunting it may seem, can be broken into chunks and ultimately solved. The fact of the matter is simply, someone, somewhere has been in their shoes and we’re here to find out who and how they moved past it.
Why You Should Hire a Management Consulting Firm?
Management consulting firms like us at SVP are typically hired for 4 reasons:
First, clients are facing a hurdle or have an opportunity which requires specialized capabilities and expertise. Maybe they want an outside eye - someone who can objectively look at the company as a whole and make edits as they see fit. Much like editing your own copy or graphic design work -- you don’t notice the little things when you’ve been staring at it every day for a week.
Secondly, the company must accelerate towards objectives faster than internal staffing allows. We touched on this point in a recent blog, but if you don’t have dedicated staffing to hone in on the issue at hand, you could be stretching the day-to-day leaders too thin which may result in underperformance on the deal and missed operating targets in the existing business.
Third, the issue cannot be addressed due to a short-term vacancy in a key position.
Or lastly, the project requires an independent assessment from a third party.
Who Are Some Of The Management Consulting Firms?
Management Consulting Operations
One of the key elements in a management consulting team is a high focus on confidentiality. Most management consulting firms will have its employees and clients sign non-disclosure agreements (NDAs) and will never disclose confidential information even after the project is over. At SVP, we’re always looking over our shoulder and have a deep knowledge of when we can (internally and with our teammates assigned to the project) and can’t talk about project details (basically any other time). This may be described as a bit paranoid, but… years ago, our Founder was at a FedEx Kinkos late one night when he stumbled upon a non-public presentation by a copier who laid out the valuation for a major telecom acquisition in detail. The deal was publicly announced shortly thereafter, but the experience never left him.
How is a “Typical” Consulting Project Structured?
A “typical” SVP consulting project starts by getting the team together. Internally, this means staffing the right people for the job, conducting background/contextual work on our nickel, and leveraging each person’s experience so the team can fire on all cylinders. Externally this means actually meeting with the client executive sponsor(s) and their team(s), and hearing their assumptions and insights first-hand. This meeting is called the “Kick-Off Meeting.”
At the kick-off meeting, the typical agenda is a time for the firm to meet, discuss terms, and display a full summary of the project so far and typically includes a data request. A data request is usually a large file containing things like customer relations management (CRM) data file to analyze consumer data, personnel files, salary caps, etc. By displaying a thorough knowledge of the goal and steps on how to reach it, our clients are easily able to see our ability to deliver the work.
With initial meetings behind us, we start building out an initial hypothesis. This hypothesis is typically a synthesis of two perspectives. The first being directly from the client's point of view - what they have expressed as their top issues to us so far. The second being what our past experience leads us to believe about the company and their struggles.
Once we have an idea of the problem we’re trying to solve is, we go into the fact-finding mode. This includes thoroughly analyzing the data from the data request, and an intensive deep dive into the company, it's public statements, news articles, investor pieces, annual reports, etc. and relating it back to what the team said in our initial meeting.
Lastly, after the deep dive, we step back and look big picture at everything we’ve found. Do our facts and our initial hypothesis match up? Is the problem we guessed was thought initially, the actual problem we need to solve? If the answer is yes, then we begin implementing.
Where Is Management Consulting?
Management consulting firms can focus locally, regionally, nationally, or globally. Our office is conveniently located in the Dallas-Fort Worth region, a single flight away from nearly all of our clients and potential clients across the globe.
Can Management Consultants, Investment Bankers, Lawyers, and Accounting Firms Effectively Work Together?
Yes. Management consultants constantly work side-by-side with investment bankers, in-house counsel, outside lawyers, and accounting firms on corporate transactions, due diligence, financings, complex agreements, and other matters. All of these professional service teams can play important roles, and it is critical for them to collaborate in order for clients to achieve their objectives.
Typically, a client defines the roles and responsibilities of each party at the start of the work, and the parties quickly develop an integrated working relationship (e.g., an efficient process for reviewing term sheets and consolidating internal comments before returning term sheets to the counterparty. However, when this does not occur, it is up to each firm to clearly define their roles and responsibilities with the client and other parties, and how we all go out of our way to collaborate with one another. At SVP, we are comfortable leading and managing all aspects of a deal, and just as comfortable playing a support role (e.g., providing an independent assessment of an operating or financial model or providing another set of eyes to review term sheets and definitive documents).
Management Consulting Work-Life Balance
As you probably guessed by now, part the management consultant job description can be traveling to the client - in the US or abroad. For some firms, this is a case by case basis and isn’t a huge part of the day to day. For other firms this could mean Monday-through-Thursday you’re on-the-road, or even living remotely for a few months to work through a specific project.
Can Management Consultants Become Operating Executives (and VIce Versa)?
We’ve seen past consultants, much like our very own David Gross, take their experience, insight, and valuable set of skills to leverage and create their own successful company. A little bit about our personal experience – David is a former Bain & Company consultant and operating executive who has developed, implemented, and evolved over 75 business and operating plans – primarily in highly regulated industries. During his time at Bain, David specialized in the design and execution of restructuring programs for public and private companies in the US and abroad.
He founded SVP to deliver tangible results to extraordinary clients through strategic planning, team building and development, operating excellence, complex commercial agreements, M&A, and highly-structured change management processes and procedures.
Prior to SVP, David served as a Director at Water Street Partners and led clients through structuring, launching, managing, and exiting joint ventures around the globe. Earlier in his career, David headed up corporate development at a disruptive medical diagnostics, data, and analytics company and served in progressive strategic planning, financial planning, treasury, and investor relations roles in the media industry. He has also managed a strategic marketing team in China and has lived on 5 continents throughout his career.