The Consulting Industry

Consulting, ubiquitous as it might seem at HBS, is not a career to approach lightly. While you might sometimes get the impression that everyone has either done it before or is going to do it after school, this in itself is not a good reason to take the plunge. The interviews in themselves are not a piece of cake. Not only will you have to estimate the demand for sports shoes in North America next year, and analyze the distribution strategy of a paper towel company (or something equally as glamorous) but you’ll have the uncomfortable sensation that all your interviewers are assessing you with the “plane test” …more on that later.

Rather you should spend a little bit of time thinking whether you’re suited to the consultant role character-wise, and whether you will enjoy the lifestyle. Moreover, ask whether you see this as an interim assignment or a long-term career, and what you will learn from the experience either way. You should pay attention to how the industry is developing, and what the prospects are for consulting in years to come.
This article aims to help you explore some of these issues and come up with a well-reasoned argument for consulting, rather than taking the lemming approach. Finally, if you’re still convinced that this industry is for you, it will discuss some of the interview techniques that you’ll come across.

So what exactly do you do?
This question is the bane of every consultant’s existence. Friends ask it in bafflement, parents ask it, clients ask it – but it’s not that easy to answer. A day in the life of a consultant is particularly hard to lay out by virtue of the project or “study” nature of the role, and the broad range of industries, functions and geographies that it spans. That said, there are some common activities that an Associate can expect to participate in during the first couple of years of consulting.

The start of the project involves a hypothesis generation phase, normally carried out by the whole consulting (and client) team. This results in a number of specific ideas to prove or disprove, leading to a (hopefully) well-directed data-gathering and analysis phase. While consultants rely on a certain amount of publicly available data, information gathering tends to be a test of the Associate’s ingenuity at wringing appropriate information from the company (periodically hampered by legacy systems and incomplete historical data), and from external sources, via interviews, site/store visits and market research. All the time, the team uses the data to test and develop the initial hypotheses and build a “story” identifying the issues and offering solutions.

The process is normally punctuated by a series of progress meetings with the higher levels of the client, including often the CEO and the Board. Although it depends on the consultancy and the client, Associates regularly attend these meetings and are often given the opportunity to present their part of the project.

A large part of the Associate’s time may be spent managing the activities of members of the client team. How many interactions the consulting team has with the client depends largely on the working-style of the consulting firm. Some, like McKinsey, allocate Associates to a single study at one time, while others, such as Bain, staff consultants on projects in parallel. The result is that the former tend to spend more time at the client, since they do not have to balance the needs of multiple clients simultaneously. Thus they tend to build a day-to-day client team to help with the analysis, and often to lead the implementation phase of the project.

While the client team members often have a greater knowledge of their company and the industry, they may be less used to the consulting way of working. Thus a junior Associate may find himself in the position of counseling and directing fairly senior client team members – a task that requires a modicum of tact and diplomacy in addition to the usual management skills.

Other key parts of the consulting job profile to bear in mind are the considerable amount of travel and the long working hours. Travel can vary tremendously from study to study and firm to firm. Good indications that you will spend more of your time traveling are that the firm has a small number of offices but wide client coverage and that the work model is for the team to be at the client site rather than in the office.

Working hours are also highly variable across and within consulting firms. On average, consultants tend to work fewer hours than bankers do but more than management in industry. The length of working day peaks just prior to a client presentation. On the flip side, an Associate may enjoy a few days downtime in between studies under the single study model.

What does a consultant look like?
Based on the description above, you might already have gleaned a fairly good impression of whether consulting is for you. In addition, here are some general pointers of what the typical consultant looks like:

 Loves data and figures but not for number crunching’s sake, rather as a means of developing and illustrating a story.

 Does the helicopter thing well. A good consultant is a master of detail and can tell you where each number, each assumption came from, but in the next breath can pull back up to the key messages and relate it back to the overall strategy of the client.

 Is client friendly. “Would you put him or her in front of the client?” is a key question the recruiters will ask. Their answer will be influenced not only by a groomed appearance, but a combination of diplomacy and user-friendly character that means the partner won’t be perturbed to leave his associate in an elevator with the client CEO.

 Is a willing team player. Consultancy, more than most other jobs, is a team sport. Consultants brainstorm together, share offices or work in communal project rooms at the client, travel together, socialize together – they’re just not solitary animals.

Where’s the industry going?
Consulting, as the ultimate service industry, is very dependent on the prospects of industry as a whole. It’s cyclicality is somewhat moderated by the drivers for employing consultants. On one level, consultants cost a lot, and so tend to be hired more when the client can afford to shell out a couple of million bucks on a distribution strategy or a new mission statement. However, the time at which companies need consultants most is in a downturn when they are looking for a massive reorganization or 180 degree turn in strategic thinking to help them weather a stagnation. Thus, although the consulting industry is not recession-proof, it is less subject to big expansion and contraction cycles than other services such as banking.

That said, the current economic environment (Fall 2001) has seen a number of consultancies experiencing significant, and even first-ever, layoffs. The situation has been exacerbated by MBA students graduating in Spring 2001 accepting offers at a much higher rate than the past few years. Due to the craze, consultancies expected yields on full-time offers of less than 50%, and thus gave out a significant number of offers in Fall 2000. The telecom/tech/ crash, however, resulted in 2001 MBA students accepting their consulting offers in droves – yields over 80% were not uncommon. This has led to a glut of consultants in the market. Combined with summer interns and consultants returning to their former employers, the recruiting needs of most major consulting firms have declined precipitously. 2002 MBAs who are not returning to consulting or without a consulting summer job offer will find the environment intensely competitive.

2003 MBAs face a somewhat similar situation, although most firms hope that the economy will have improved sufficiently over the next year to warrant a return to more normalized recruiting patterns. Consultancies have continued to advertise for summer internships while canceling full-time recruiting. Potent
ial consultants, however, should be reminded that last year’s summer internship recruiting season was particularly selective and that this years will promise to be so as well. In addition, offerees should weigh their decisions carefully. A number of well known consulting firms have yet to give offers to their summer interns and others “raised the bar” to the point where less than 50% of summer interns were given offers. This is not meant to dissuade consultant hopefuls, merely to inform them of the importance of conducting adequate due diligence when deciding on a summer internship.
A big trend in consulting seems to be towards specialization. Until fairly recently, the conventional wisdom was that more was to be gained by developing a stable of generalists who could apply their learning across industries and geographies rather than a number of specialists. That strategy seems to be changing, as clients increasingly demand that consultants come in with prior knowledge of their industry. While most of the larger firms have kept the generalist entry point, they are requiring consultants to specialize sooner, and are sourcing experts as experienced hires who may follow a different (and possibly accelerated) career track from the typical MBA.

Another trend is for the traditionally strategic consultants to move into implementation. At the same time the historic systems consultants are increasingly moving upstream into strategy leading the two groups to compete head to head for some assignments. There are still differences – the strategy consultants do not yet have sufficient computer and systems skills and the systems players are having a hard time in convincing clients that they can really do strategic stuff too… but it is only a matter of time!

What’s the secret of cracking the case interviews?
“Cracking the case” can become an obsession in a prospective consulting candidate’s mind. In fact it is not the be all and end all of the interview process, and interviewees should focus equal time on preparing for the other parts of the interview, which rely more on their personality and motivation. This is where the “plane test” comes in. Recruiters will have a question in the back of their mind during the interview: “Would I like to spend four hours sitting on a plane next to this person?” This is less a reflection on whether you snore as to whether they think you are an interesting and affable person who is not going to send the nerves jangling when the team is pulling an all-nighter before a crucial presentation.

Recruiters will also be very interested on why candidates think that they want to do consulting. Consulting firms invest a great deal in the recruiting process and the summer internship. They are not going to be over-impressed when they discover that your reasoning was more that you wanted to spend 10 weeks in a foreign country and that you’d heard that summer interns get taken off to dinner and golf outings every other day.
As for the cases. While cracking them is a good thing, the recruiter is more interested in the process that you go through to get to the answer. Therefore, you should listen carefully to the question and additional information that the interviewer gives out, spend a minute thinking through how you might tackle the problem, talk through your approach making any assumptions clear and discussing how you might get additional information. If you get stuck half way through, most interviewers will give you further prompts to set you back on the right path. Often there may not be one “right” answer – and even if there is, a well-communicated approach more than compensates for a wrong conclusion.

Consulting is not for everyone so think carefully before hopping on the same bandwagon as all of your peers. Having said that, it can be one of the most stimulating and enjoyable jobs to take on leaving HBS. It’s one that will give you access to people and problems that you won’t encounter by going directly into industry, and that will allow you to learn and experience new things on a daily basis. Good luck!