FACTS & TRENDS The business of consulting is large. In 1995, over 100,000 consultants sold over $43 billion of advice. Compound annual growth expected to be 14 percent through 1998. Today, technology planning, strategic services and enterprise consulting represent 35 percent, 20 percent and 15 percent respectively of the worldwide consulting spending. It is very hard to break into the top firms in consulting like Bain, McKinsey and Mercer Management Consulting. McKinsey hiring chief Howard Williams targets hiring at top MBA schools including Harvard Business School, Wharton, Stanford, Sloan (MIT), Kellogg (Northwestern) and INSEAD. That said, the firm hires heavily at these schools. Ten percent of the 1993 Harvard graduating class went to work for McKinsey. The Big Six firms are giving more autonomy to their consulting practices. In September 1995, Deloitte & Touche announced that it was going to separate its consulting operation from its auditing arm in order to create clearer incentives for the consulting outfit. In the words of Philip Laskawy, Chairman of Ernst & Young: "Consulting is where the action is, and we're targeting it for 50% of our total revenues in three years." Other firms have taken the approach of integrating consulting throughout the firm. For example, KPMG/Peat Marwick has a market focus on five integrated sector groups and staffs each area with auditors, tax specialists and consultants. Integrated or not, the pursuit of specialized knowledge is rising rapidly. Firms are looking for consultants with very specific knowledge in areas like logistics management, knowledge management, data warehousing, multimedia, client-server development, sales force automation, electronic commerce, brand management and value management. Other firms such as Andersen Consulting are large and easier to crack into. Andersen has hired thousands of consultants on college campuses in a given year. Some of the best people in consulting work in small firms. The reason is that the best people may prefer the autonomy and impact that they can have there. The responsibilities of a consultant are significant, regardless of the size of the practice. Its much more like being an attorney; an attorney in a small firm can have a very large case. While consulting firms have traditionally targeted MBA students, they are becoming more willing to hire students with Ph.D degrees, lawyers and engineers and put them through business training. McKinsey has a 30-day mini-MBA course. That said, its important to show an open mind as an engineer or techie entering consulting. While consulting firms are always looking for sharp people with good analytical skills, surprisingly they are often hesitant to hire engineers because of fear that they can't break out of the box. Rigid thinking that cant adapt to business situtations is the worry. A good way to get a consulting position with engineering experience is to convey flexible thinking in an interview. Even better would be successful business experience where you applied your engineering know-how to solve a business problem. "Relationship consulting" is on the rise. This involves working with a company over many years to ensure continued monitoring, discussion and implementation of new ideas. Longer consulting contracts have brought higher fees. It is not uncommon for a long-term consulting contract to cost over $20 million in consulting fees. Consulting has been growing at a rapid rate since the late 1970s. Money Magazine reported in February 1992 that the profession has grown 52% since 1978 and has a good future outlook. One important explanation of the rapid growth in consulting is change and a tumultuous business environment. The Nineties have challenged corporations with unprecedented new global competition, breathtaking technological advances and important new ideas about organization. The upshot of all of this is that advice from consultants has been in high demand. Another important reason to expect growth in consulting is the expanding demand for consulting services in other countries. U.S. consultants have been consulting for major firms around the globe while helping companies at home such as AT&T and Avon Products crack foreign markets. The Big Six accounting firms and McKinsey have had a strong presence in Europe for many years. The global focus of consulting growth has created high demand for foreign students. This growth in foreign business will be particularly significant in developing countries. The reason is simple. There is a narrowing gap between developing and developed economies. Consultants are helping to bridge that gap by bringing solutions and ideas to firms in economies as diverse as China, Brazil and Nigeria. Because these ideas are creating huge amounts of value, the demand for consultants services is skyrocketing and should continue to do so for the next several decades. Several of the main strategic consulting firms are now realizing over half of their revenue outside of the First World. As you go through school, try to develop a framework that you can use to analyze and think about developing economies by taking courses in development economics, trade and international finance. A new trend in consulting is to include members of the management of the client firm as part of the consulting team. This eases implementation of recommendations and can commit the client to buying into new ideas. Many consulting firms use the case interview method where you are presented with a business situation and asked to suggest a solution. Charles Wendel, VP of Mercer Management Consulting, justified this approach by saying that "We want to get the people who are the most mentally alert and intellectually alive and the case approach works particularly well." (Business Week) It's tough to make it in solo consulting because of the difficulty of maintaining credibility and marketing yourself. Only one in ten solo consultants lasts for ten years. If you go into business for yourself it is important to credibly convey your expertise. One way to do this is to become a Certified Management Consultant (CMC). Contact the Institute of Management Consultants, 230 Park Ave., Suite 544, New York, NY 10169, (212) 697-9693 for more information. Reengineering is cold. Hammer is getting hammered. The reason is that firms are attempting to grow rapidly as economic prospects have brightened. Firms like Mercer, Booz Allen and Coopers & Lybrand are aggressively pursuing business in the growth area. In the words of Dwight Gertz of Mercer Management Consulting: You cant shrink to greatness. SBU analysis is hot. If you can go into a firm and analyze which strategic business units are profitable and which are not, youll be of interest to consulting firms. If a telecom firm has a lousy phone cord manufacturing operation, outsource it. If your company has a low cost, profitable engine making operation, keep it. Maybe grow it. Consultants have lots of names for this type of thinking like growth share matrix analysis, ABM etc. Many firms are looking for generalists. Strategic thinkers with backgrounds in everything from romance languages to sociology. Some see a trend towards hiring more business majors who have concrete analysis skills. Depending on your point of view, this may be a disturbing trend. According to a hot consultant at Bain & Co: "Its a funny business. Almost 100% of the it comes from referrals. You do a great job for one company. And a board member there whos part of another company brings you in. You do a good job there and that leads to more business elsewhere. This means that it is crucial as a consultant to have a total client focus on every job. Your future in the business depends on how well you do in generating enthusiasm and answers that work on every engagement." One nice thing about consulting is that it is recession-proof. When the economy gets tubed, the first thing many firms do is call in consultants. This means that your job should be stable. Look for a relatively lean firm, though. Other than nonperformance, the best way to get fired at a consulting firm is to work for an overstaffed organization with lots of administrators. Be sure to ask about the extent and type of training that you will get as a consultant. Some firms favor the hit the ground running mold of consultant, while others would like to mold you to their culture and values through a training program. Training is a good thing and the best firms have lots of it. Leading consulting firms like Ernst & Young are increasingly trying to create virtual organizations which allow collaboration across geographical and organizational borders by exploiting videoconferencing and computer networks. This makes it especially important that you become comfortable using new technology. One of the largest practice areas of the Bix Six consulting firms is health care. Health care payment and delivery systems are changing rapidly, generating high demand for consultants to help health care organizations change through alliances, innovation, management care, access strategies and quality improvement. Another hot practice area is sales force automation. Many firms with large sales forces are finding that they can vastly improve their marketing effectiveness by providing seamlessly integrated wireless PDAs, contact management systems, easily accessible support databases, e-mail systems. Yet another hot practice area is value management. Value management is the practice of creating incentives in an organization to maximize cash flow returned to shareholders as measured by the change in a firms market value over time. A lot of firms provide value management services. The best ones back it up with training and communication for clients up and down the organization in order to create real change.