What is Strategy Consulting?
- Agrim Gupta
- Oct 30, 2023
- 9 min read
Everything you need to know from definition to projects
I hope this article gives you a simple and yet comprehensive introduction to Strategy Consulting. During the article I will use Strategy Consulting and Consulting interchangeably. After going through this article, you will definitely a thing or two more about Strategy Consulting. This article may also help you evaluate your choice of a career path in Consulting. Further, the contents of this article will likely be useful for you in crafting much more educated answers to some questions that you would face in the interviews. So let us dive straight into it.
What is Strategy Consulting?
To put it in the simplest manner possible:
“Strategy consulting is the business of advising other businesses on strategic topics”
There are 4 parts to that sentence.
The business...
...of advising...
...other businesses...
...on strategic topics.
Let us take a deeper look at this:
1. The business: Strategy Consulting is a highly lucrative business activity if done right. By some estimates, the industry is worth more than USD 30 billion in 2022 and might double in size before the end of the decade. It was one of the few sectors that were able to weather the COVID storm with a unique show of strength. Typical pricing and gross margins in strategy consulting are very high – making it a viable business even at small scale. BCG, McKinsey, Bain, Kearney, Roland Berger, Strategy& are few of the largest and most popular examples of firms that provide Strategy Consulting services.
2. Of advising: Every type of consulting is a form of advisory. In Strategy Consulting – your key audience (or client) is typically senior management (Vice Presidents, Directors, CEOs, CFOs, COOs and so on). Your clients are typically responsible for a business function and mostly have their own profit margin (P&L) to manage. They also typically have decision making powers – thus allowing them to implement your strategic advice.
3. Other businesses: Client firms can be from a wide variety of sectors and value-chain positions. Key sectors include Energy, Healthcare, Logistics, Retail, Technology, Finance, and many more. Your client can also be the government – ministries, authorities, consortiums – and even non-profits. Typically, larger firms with deeper pockets will employ the larger & more popular consulting firms in the hope that the strategic advice will be better. Most Forbes 500 companies have some form of Strategic Consulting projects ongoing at any moment.
4. On strategic topics: Strategy Consulting topics have a horizon of 3 years or longer. The topics focus around long-term growth, long-term brand management, long-term customer retention, long-term market dominance, long-term organisational culture transformation, public policy, and so on. The answer to such questions is not always obvious. It requires leveraging inputs from industry experts who have decades of experience in the topics.
What are the other forms of consulting?
Here are some popular examples for your reference:
Strategy Consulting
Management Consulting
Operations Consulting
Financial Advisory
HR Consulting
IT Consulting
Implementation Consulting
Marketing Consulting
Tax Consulting
…and many other forms of advisory
How is Strategy Consulting different?
Strategy Consulting is:
Less of: Detailed implementation, tactical actions, capacity augmentation & secondment, hyper-granular project plans and their management.
More of: Forward-looking, ideation, thought leadership, sharing experience & knowledge, working towards broader goals…
I know that the above probably does not help you much by not being definitive, but such is the nature. There is no real fine line between the various forms of consulting and often consulting companies try to cross-sell their different services across projects.
Strategy Consulting projects are typically shorter in duration than most other consulting projects. A typical strategy project is about 8 weeks - but can vary between 4 and 26 weeks easily - depending on the client and the project requirements.
Why is Strategy Consulting coveted?
Pay: Strategy Consulting offers some of the highest packages for a given age & experience in the market. With post-MBA base-packages ranging around $150k, it is surely an attractive option for people. Bonus amounts range from 20% to 60% of base pay depending on the firm, your level, and your performance.
Perks: Besides the attractive pay, you get to enjoy some creature comforts and perks such as hotel stays, free flights, free cabs, free food, all the miles & points that come with it, and then some.
People: Strategy Consulting attracts the best and smartest people from the crowd. You get to work with such similarly smart people and everyone helps in pushing each other to their limits and then some. Your professional and intellectual growth in Strategy Consulting will be a lot faster and better than being in other jobs.
Progress: Consulting firms place immense focus on learning & development. Most of them conduct bi-annual appraisal & review cycles where they identify your areas of development and then you get to work on those going forward. Consulting firms even train you for the next level if your promotion is coming up soon.
Pressure: Strategy Consulting involves dealing with CXOs, Ministers and vastly senior decision making authorities. When advising such people, pressure is imminent. You also get tremendous exposure and learning when you speak to such people. Understanding how the senior folks think is one of the best learnings I have got from my experience with BCG.
Progression: Strategy Consulting also has one of the fastest promotions cycles in the market. Typically you get promoted to the next level every 2-3 years. Consulting firms such as MBB also employ an “up or out” policy. If you are not able to secure a promotion within the specified window - you are better off working elsewhere. However, the tier-1 consults also have dedicated departments that help you in securing your next job. The though process is NOT that you are not good, but instead it is considered that you are better suited for a different job.
Why do we need Strategy Consulting?
When I was explaining my job at BCG to a non-consulting friend or relative - I have often encountered the following statement:
“Why does a company need to spend so much money on a strategy consultant? They could easily create their own strategy in-house, no?”
Well it is not that easy for a company to create its own strategy in-house. A strategy consultant adds significant value from multiple dimensions:
Consultants bring an in-depth industry & market view through their subject matter expert network, the partners, and the expert consultants
Consultants are able to look at the company in a cross-sectional manner. This allows them to create a more holistic and ambitious strategy. Employees within a company often suffer from the downsides of task specialization - they only know about their role and not about others to their sides, above, or below.
Consultants have the license to provide an unbiased opinion to their key client person without being mired in political pressures.
Consultants often think in a first-principle manner - allowing them to be unshackled from any restrictions that company employees might adorn themselves
Consultants are specialized in creating a strategic vision and are working on the project dedicated 100% of the time. Company employees instead would be held back by their day-job’s ongoing responsibilities.
Why are some of the criticisms faced by Strategy Consulting?
More often than not, consultants are subject to allegations of a wide nature from multiple parties. The two main critics are the following:
Client employees: Many client employees look at consultants with spite and fear. Regardless of what is the actual project you are working on, many company employees think that they will lose their job because of the consultant - even if you are working on a growth strategy project - which would probably be only talking about job increases and promotions. Many client employees put up obstacles, obfuscations, goose chases, and even complete defiance to support the consultant’s requests. People don’t understand that if the project is indeed about layoffs and cost reduction, it is the the company management who have hired the client to work on it. Further, it will be the company management and the Board who will approve any layoffs. Finally, a consultant has no decision making power at the client’s. So if someone loses their job, it is because their company decided to lay them off.
Anti-Consultant League: Many people also believe that a consultant disrupts and destroys more value than they create. They accuse consultants of guzzling clients’ money and delivering nothing. Many of these people are outsiders, fringe client employees, and often people who feel envious of Strategy Consultants. They forget that a consultant is only an advisor - the implementation of the strategy is still to be done by the company themselves. No matter how good a strategy is, if it is not implemented properly, it will likely not produce the right results.
What are the downsides of working in Strategy Consulting?
Work-life balance: It is a well-known fact that Consulting is not kind on work-life balance. Long working hours, unpredictable schedules, last minute rush, weekend work - the lot. However, things are not that bad - there is always a bias to public opinion. If managed well, it is a ship that could be navigated with minimum damage. A consulting job with zero personal compromises is very difficult to find - and you will always be annoyed if you keep trying to find the perfect balance. It is an active process that you must keep doing day in and day out.
Health: A fallout from the difficult work-life balance is health. Both mental health and physical health. There are ways to tackle both. And I am more than happy to share tips with any one who is keen on it. The idea is to not take too much to heart and always voice your life’s priorities. Consulting is a marathon profession, not a sprint profession. So the good managers and partners always make sure that the team’s voice is heard. If you stick to your principles, you will slowly gravitate towards people with similar practices and hence you will be able to carve out your own niche in the organization.
What are the exit options from Strategy Consulting?
Consultants are a confused lot when it comes to exit options. They might feel everything is within their reach - and hence can find it difficult to calibrate what is the best next step. The opportunities in front of you are endless. I will list down some of the exit paths taken by people in my network thus far and you will see why:
Own startups: People have started their own companies - ranging from a podcast agency, a yoga Youtube channel, a B2B e-commerce marketplace, a merchandize firm, a health-tracking app, a fantasy league company… and what not
Other startups: You could literally join any position in a budding startup. Consultants are perceived to have a high horsepower compared to candidates from other walks of life and are thus ideally suited for startups. I will not even list examples here as the list can be anything you imagine.
Technology Corporates: Product Management roles are scooped up by many consultants looking for their next step out.
Other Corporates: Departments such as Corporate Strategy, Business Development, and Financial Planning & Analysis make for a good target.
Financial roles: Private Equity, Venture Capital, and Family Offices are also an attractive choice - albeit the openings in the sector are generally limited.
Creatives & Freelancers: Again, the sky is the limit when it comes to your choices on this. Some people do independent consulting, while some even go for a completely different line such as coaching here on PrepLounge :)
What are some examples of Strategy Consulting projects?
I will give a short list of sample projects from my own knowledge - perhaps that can give you a good understanding:
Sample 1: A Private Equity firm wants to acquire a fitness chain with 1,500 gyms. They want to understand if this is a good idea of not? Is there scope to grow the chain and make it more profitable? How can this be achieved in the next 5-7 years? If it is possible, then what is the best commercial construct that will help them maximize their returns?
Sample 2: A national government wants to strengthen its relations with other select countries to further its own national agenda and boost welfare for its people. Which countries should it partner with? What should be the pillars of partnership? What are some example partnerships to begin with?
Sample 3: A national government want to revamp its sports performance on the international arena in various sports. Which sports should it focus on? What should be the improvement roadmap? What are the actions that the government needs to make to make this a reality? Is there any reorganization required at the ministerial level?
Sample 4: A multi-billion dollar petrochemical merger is taking place. What should be the strategy of the merged entity going forward in order to make the best use of the merger? What are the synergies? What are the initiatives that will need to take place? What are the reorganization requirements that will unlock the full potential of the merged entity?
Sample 5: A well-established boomer-era bank wants to re-invent itself and cater to the new market. What should it do? Should it rebrand itself? Or should it start an entirely new bank? What are the banking products that have the best future outlook? What are the customer preference trends that the bank should aim to capture before the market?
Sample 6: A major electronics company wants to develop a strategic roadmap to become carbon neutral over the next 15 years. How should it go about it? What are the initiatives that it should implement? How can it design products that are increasingly carbon neutral?
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