Written by Jay Farber.
Consulting sounds like a dream job to a lot of people, and for many it is. If you’re thinking about looking for jobs or internships in consulting, though, everyone will expect you to know the basics of the industry. Here are six things everyone interested in consulting needs to understand.
- There are two types of consultants
If you tell any adult that you could be interested in consulting, there’s one comment that you’ll hear more than any other: “It feels like everyone’s a consultant these days!” This statement implies that people in general don’t understand a basic distinction in consulting. This is the difference between industry consultants and career consultants. Industry consultants typically have 10+ years of experience in a given industry, and help companies make decisions based on their experience in and knowledge of the industry. For example, someone who has worked managing UPS’s supply chain management division for decades may decide to try being his own boss, and start a consulting practice helping other companies improve their supply chain practices. Career consultants, on the other hand, are those who spend their career developing the types of skills that consultants use, including research, presentation, and analytical skills. They add value based on the research/analytics they perform, in addition to their ability to add insight to a particular problem.
- There are three (main) types of consulting
Even after differentiating the career consultant from the industry consultant, there is another extremely important division between three types of consulting: management/strategy consulting, economic consulting, and IT consulting. There is a lot of overlap between these groups, and many consulting companies have different departments specializing in each of these. Here are the main areas of distinction, though:
|Management/strategy||Economic consulting||IT consulting|
|Who is your client contact?||CEO, Senior Vice President, or other senior management||Attorneys||CTO, senior management|
|What skills do you need?||Business sense, communication, analytical/problem-solving , presentation||Statistics, math, communication, analytical/problem-solving||Business sense, math, communication, problem-solving (programming experience is typically not required for entry-level positions)|
|Where do your solutions come from?||Research, analytics, problem-solving insights||Statistical, econometric analysis, problem-solving insights||Technology implementation, problem-solving insights|
|Big names||McKinsey, Bain, Boston Consulting Group, L.E.K., Deloitte Consulting||Analysis Group, Cornerstone Research, NERA Economic Consulting,||IBM Global Business Services, Accenture, Capgemini|
|Sample case||Why is profitability falling in the microwave division of GE, and how can we fix it?||How much in damages did MF Global cause its investors through its improper trading practices?||How can the sales force of a company create a centralized, constantly up-to-date record of all communication with potential customers?|
That said, the distinctions do not end there. There are human resources consultants, creativity consultants, change management consultants, supply chain management consultants, and legal consultants, for example. Consultants may specialize in an industry (e.g. healthcare) or a capability (e.g. growth strategy). There is almost no end to the variety of work that consultants do.
- Consulting is NOT finance
People who are interested in business coming out of college in many cases gravitate toward finance and consulting, and as a result people tend to group them together. They do have a lot in common: both are industries where smart, analytical thinkers do well, both offer an avenue into many types of business roles (including business school), and both have the potential to be lucrative. But this doesn’t mean that they’re the same. The differences are too many to discuss here, but check out here and here for interesting blog posts that will help you start to understand the differences.
- Why companies hire consultants
Consultants typically charge exorbitant fees to do some research, make a presentation and an accompanying report, and then jet out of town never to be seen again (until the next project). Yet in each engagement they may make something to the tune of tens or hundreds of thousands of dollars. Where is the value added? If you’re a businessperson who hires a consulting team, you probably did it for one or more of these reasons:
- Consultants add experience from their work with other related companies
- Consultants add more brains to a problem, increasing the chances of finding a solution
- Consultants do the research and analytical work that you don’t have time or resources for
- Consultants represent an outside viewpoint–someone who can look at a problem without a personal stake in the company’s politics
- Consultants may have particular expertise that the client doesn’t have
- What consultants do all day
If you don’t like working with Microsoft PowerPoint or Excel, consulting may not be the field for you. Especially in an entry-level consulting position you will be tasked with making endless PowerPoint slides, conducting interviews, doing primary and secondary market research, and working with your team to attack the problem at hand. It typically ranges from about 30%-90% group work depending on the type of consulting (economic consulting tends to be less group-oriented) and type of project (if there are lots of distinct parts, for example, you might be tasked with doing all of the analysis for one part on your own before everyone meets to compare results and come to a final conclusion).
- Why you want to be a consultant
This is something you’ll have to answer for yourself, but do take the time to think about it. It’s not a field that’s right for everyone, and there are just as many drawbacks to entering the field as there are advantages. If you want to learn more about consulting or other economics topics, though, a good place to start is joining our e-list to find out about events and job/internship opportunities. Sign up by sending an email from your preferred address (include your name please!) to email@example.com.