What Defines a Management Consulting Firm?

"So, are you a 'solo practitioner'?" Few questions get asked of a rainmaker not affiliated with a well-known established strategy consulting firm as regularly as this one. The asker is merely doing their due diligence, rightly so if they're interested; smugly if they're not. But in either case, the question puts another glaring spotlight on the misconceptions in the lower corporate ranks of what professional consulting is. And more troublesome, a misconception of what defines a firm.

Why is the concept of firm so misunderstood? Think about all of the people you know in recent memory who have started their own company. You've heard concepts ranging from publications, retail stores, marketing or ad agencies, fashion, food, or maybe even a dot-com (yup, people still start those). Maybe you have a CPA, attorney or doctor buddy who's decided to go out on their own. But have any of your friends ever mentioned to you that they're launching their own management consulting firm?

Of course you probably know innumerable professionals who have been laid off from a big company or deferred from a large consulting firm. And of course they decide to become "consultants". But they never launch a consulting firm. It's just them. (A common rationale for not launching a firm is that they work better by themselves, but being a solo practitioner is the loneliest and least intellectually stimulating thing on earth which no knowledge worker chooses to do.)

Perhaps you're fortunate enough to know someone who's actually launched a consulting firm. And it's pretty successful, too. But he was a senior partner at some big firm and it was his choice to quit. He brought over clients, revenue, and staff and he's off and running. It's new and exciting, but not quite an entrepreneurial consulting enterprise.

The point is that launching a professional strategy consulting firm is about the most challenging business one could launch. Why? Because in order to launch one, it helps to have high-level relationships, a couple of advanced degrees, decades of experience, and a whole bunch of people with similar credentials. And if that weren't enough of an obstacle, convincing a prospective client to pay for this is not something an inexperienced consultant is particularly adept at. An inexperienced founder quickly realizes that knowledge alone does not a client attract.

By my estimate, the average lifespan of any solo practitioner or inexperienced firm is about 6 to 18 months (about the length of one good engagement) because (s)he/it fails to succumb to that most unfortunate irony of entrepreneurship: one can't end up doing what one originally set out to do (advise on strategy) because all of one's time must be spent selling. And one doesn't know how to sell.

The most regrettable catch-22 of professional consulting - the only way one concludes that one wants to launch a consulting firm is if one has worked in one before, but once one works at a big firm, one doesn't want to consult anymore; if one does launch a firm, one realizes that one has no idea what one is doing and aborts the idea - also means that little is contributed to defining what a professional service firm should be since the foundation of one's consultative approach is essentially based on what they learned where they worked last. In other words, new innovative ideas on the business of professional management consulting aren't thought up.

What defines a firm isn't the global network of offices; isn't its plush and well-appointed offices with breathtaking views; nor its "vast, unmatched" resources. What defines a professional management consulting firm is how it learns, thinks, and advises its clients; how and how many individuals execute these things with a common style, format, and structure, (the way things are done around here); and the culture that gets created along the way. As a result, concepts like recruitment, selection, training, methods, and mission are absolutely critical to defining a firm. A working environment can be anyplace for a consultant, so what ultimately connects them is the collaborative execution and relationships that develop under the umbrella of an organization.

Still don't get it? Well, what defines your family? Is it your blood and assets? Or is it your unique dysfunctionality, your routines and rituals, and people you associate with? After nearly three years since the dissolution of Arthur Anderson, former employees still reunite to celebrate their culture. Has the accounting industry lost a major competitor? Yes. Is the firm of Arthur Andersen dead? No.

Write to Al Berrios at editor@alberrios.com


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- Our Research Approach: iResearch Methodology

- Our Difference: The Application of Social Sciences to Strategic Thinking


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