You know the names: McKinsey, Bain, BCG. For decades, these three firms have dominated the management consulting space. And for good reason: their ranks include some of the most experienced and successful business strategists out there. So do their alumni.
According to Kennedy Research, the annual turnover rate at leading consulting firms averages 18 to 20 percent. Recently, CB Insights released a report that looks at how these “graduates” of the Big 3 have helped propel the current wave of disruption that’s rippling through the industry.
Expertise, on demand
Consultants who leave prestigious firms are finding ample opportunities in the freelance market. After all, these newly independent consultants offer pedigreed expertise—à la carte. Many also have executive experience at top companies, making the advice they can offer even better tailored to the realities of a big company. As the gig economy grows, so do their prospects.
There are more than 60,000 Big 3 alumni out there right now. So perhaps it’s no surprise that marketplaces like Business Talent Group (BTG) have sprung up to help them connect with clients at leading companies. BTG’s network includes more than 2,800 McKinsey, Bain, EY, Deloitte, Booz, BCG, Accenture and Capgemini alumni, as well as more than 2,000 alumni of specialty and boutique consulting firms.
As CB Insights notes, “Having a wide network of experts helps consulting firms come up with better solutions for clients.” We agree.
Some consulting marketplaces do little more than make introductions; others, like BTG, vet candidates as thoroughly as any leading firm would, then match them with projects that best fit their skills and expertise. We can also combine subject-matter experts with strategists or experienced executives with project managers to keep them on track. Our clients get targeted expertise without the overhead of traditional firms.
For this reason, more and more companies are ditching the big firms in favor of more precise, fit-for-purpose engagements with independents.
Data in every direction
But access to expertise is just one disruptive factor. The CB Insights report notes that greater availability of data is also contributing to the industry’s modularization. Enterprises no longer need the data part of the consulting package, because they can gather it themselves using widely available software and technology-based tools.
As BTG’s CEO, Jody Miller, said in a 2013 Harvard Business Review article, “Democratization and access to data are taking out a huge chunk of value and differentiation from traditional consulting firms.”
Of course, collecting data and analyzing it are two different things. Commonly used data analysis tools are often sufficient for smaller-scope questions, but when big questions come along, consultants come in handy.
As CB Insights puts it, “When data is abundant, consulting firms act as sense-makers. They aggregate, filter, and deliver the precise information that will help companies solve problems. They look for answers to higher-level questions in the data.” It’s a role that independent management consultants are also finding their way into.
The democratization of strategy
Insight is no longer solely the domain of big firms, either. Though Bain, McKinsey and BCG are credited with developing some of the most effective strategic frameworks, these frameworks have been so widely distributed by big firm alumni that they’re no longer a secret.
“Virtually every management consulting framework (including the growth-share matrix) has been explained in books, MBA courses, essays, workshops, seminars, and blogs run by ex-BCG, ex-McKinsey, and ex-Bain consultants,” CB Insights notes.
This has brought greater transparency to the once-opaque processes of the industry’s most prestigious firms. Whereas clients used to rely on social proof to gauge the effectiveness of proposed strategic solutions, now they have the insight they need to ask pointed questions and set clear benchmarks for the project’s success.
Interestingly, however, this hasn’t slowed industry growth. CB Insights reports that in 2016, the management consulting industry grew by 7% from the year before, reaching a new high of $58.7 billion in annual total spend. This is largely because even with all the tools of the trade at-hand, enterprises still need help executing on strategy.
Execution as a disrupter
While strategy work at traditional firms has declined over the last 30 years—now accounting for only about 20% of the total work share, according to Tom Rodenhauser at Kennedy Consulting Research & Advisory—execution has become the industry’s bulwark.
The emergence of new technologies has widened the gap between idea and implementation, making room for new consulting models to disrupt the industry and take hold. For example, McKinsey launched its own offshoot, McKinsey Solutions, to provide embedded analytics tools to clients, which McKinsey itself could then conveniently help develop into action plans.
Independent consulting marketplaces like BTG and Eden McCallum are also finding their niche in this space. The CB Insights report notes, “If a new CPG brand is trying to figure out how to price its products, it has a fairly routinized problem on its hands. That’s not a problem that necessitates a McKinsey-level of involvement—and the company can probably get just as good results by working with a pricing expert sourced through somewhere like BTG.”
Looking to the future
As the talent pool of Big 3 alumni grows, and as analytics and strategy tools become increasingly accessible, traditional consulting firms will face growing pressure to prove their continued relevance. At the same time, the proliferation of expert networks has given clients more options than ever before, making for a robust marketplace of ideas with readily available resources and support for strategic implementation.
About the AuthorMore Content by Emily Slayton