Independent Consultants vs. Big Firms: Forked Roads and Parallel Paths [Part 1 of 3]
They don’t advertise, but they don’t need to. Their very names—McKinsey, BCG, and Bain—are pedigrees in and of themselves, virtual synonyms for elite management consulting. Before the Big 3 existed, strategy was an afterthought; today they’re the industry’s standard-bearers. Their seminal, proprietary frameworks canonized strategy as an essential competitive advantage. They changed how businesses approach business.
And now it’s all changing again.
While thousands of associates have moved “up” in the big firms, hundreds of thousands more have moved “out” to become independent consultants. There’s more consulting talent than ever, everywhere. But though some executives remain steadfastly devoted to big names, many more are finding value in the highly targeted talents of elite independent teams.
In this series, we are going to take a look at the ways in which these two paths differ, starting with the people who actually do the work.
Afterwards, we'll look at how different types of consulting firms diverge from one another.
The More, the Merrier
It was the 1970s when the firms collectively known as MBB began to resemble the Big 3 we know today. They hired the best and the brightest from the world’s top B-schools, and this shiny new path attracted grad students in droves.
According to CB Insights, between 1970 and 1995, the number of MBAs granted annually grew from 25,000 to 90,000. Today, nearly 200,000 MBAs are granted each year, and MBB are there to grab the most elite graduates before the ink on their diplomas is even dry.
Knowing this, it would seem that MBB has a monopoly on top consulting talent—recruitment-wise, anyway. Attrition tells a different story. The churn rate at prestigious firms hovers between 18 and 20 percent annually, and only one in six new hires at McKinsey sticks around for more than 5 years.
The result of this constant turnover is a combined 66,000 alumni across just those three firms. Add in Deloitte, Accenture, EY and other top consultancies, and the number rises dramatically, with Accenture and EY contributing another 250,000 alumni—each.
Many leave to work for other firms or current clients, and some eventually “boomerang” back to their former firms, but the flexibility and freedom offered by independent work is proving irresistible to a growing number of highly skilled consultants.
In the UK, official statistics show that 31 percent of management consultants and business analysts are now self-employed. In the U.S., it’s around 17 percent and growing. The biggest challenge for independents—keeping their work pipelines full—was effectively eliminated by the rise of talent platforms like Business Talent Group. Now businesses can directly connect with this rapidly growing pool of top independent consulting talent.
Generally Speaking: Big-Firm and Independent Consultants
Though independents and big firm consultants are essentially cut from the same cloth, their beginnings tend to be where their similarities end.
At big generalist firms like MBB, the ones doing the bulk of the client work are usually freshly minted MBAs who have little-to-no real business experience. They might be talented, but specialized expertise takes time. Even the director/partner on any given project is unlikely to be a subject matter expert—as one former MBB consultant puts it, “their value is in pattern recognition,” having catered to a broad range of clients across a broad range of problems.
Highly skilled independents, on the other hand, are more likely to have already paid their dues as generalists, ultimately moving on to focus on specific industries and specific kinds of challenges.
At BTG, many of our independent consultants not only possess highly specialized industry expertise. They’ve also spent a fair amount of time in the C-suite. Two-thirds have both consulting and operational expertise. This unique dual perspective is less common at big firms because executive positions are usually achieved after earning alumni status.
“In our marketplace of independent consultants, there are tons of executives as well as crossover people who started out as consultants and then became executives,” Sandra Pinnavaia, EVP and Chief Knowledge Officer at Business Talent Group (BTG), said. “They can approach problem-solving from both directions, and it’s very powerful.”
Multiple perspectives strengthen any strategy. Harvard Business Review found that CEOs with a management consulting background were almost 30% more effective at improving the condition of the company.
Unbundling Expertise
It’s true that over the past 30 years, the Big 3 have worked to hone specific areas of expertise, yet they remain fairly siloed in their respective categories: Bain focuses on financial strategy; BCG skews heavily toward corporate development and innovation; and McKinsey leads the pack on governance, development, and healthcare.
With independent talent, those areas of expertise are available unbundled, ready to be cherry-picked and assembled into a highly skilled cross-functional team that can address less clear-cut problems—often at far lower overall consulting costs.
"You get very sophisticated thought leaders that you can engage directly,” Pinnavaia said. “They don’t have to come with a big team, which is the only way that you can buy them if they were working inside McKinsey.”
Direct engagement is another aspect of the value independents bring to high-end problem-solving and strategic work. In areas where big firms struggle to integrate real, live industry expertise into their consulting teams, talent marketplaces like BTG excel.
“A lot of independent consultants are super experts in certain kinds of problem-solving,” Pinnavaia said. “For example, in our talent group, we have the former heads of the pricing practices at both Bain and McKinsey. These guys KNOW pricing. And, similarly, you can bring in different types of independent consultants to do that across different kinds of functions, for different types of problems.”
Though high-risk, well-defined problems might be a good fit for big firms and their more generalized frameworks, today’s rapidly evolving business landscape often requires a more collaborative, tailored approach. Next, we’ll compare how independents and big firms approach strategic projects.
Next: Different Types of Consulting Firms »
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