Aspiring management consultants and professionals within the industry often ask why McKinsey, BCG and Bain, which are also referred to as MBB, are considered the most influential consulting firms world-wide. In this post we will attempt to shed some light on this subject.
In our experience MBB are ranked as top-tier in management consulting business because they score highly on 32 criteria listed below. These criteria make up the complex model we use to rank firms. You have to look beyond such obvious factors as schools from which the firms recruit or the strength of the alumni network and consider such less obvious aspects as the values of the firm to see why MBB score so well.
32 criteria which shed light on why MBB rule consulting
Below we will list and comment on 32 criteria on which MBB score at the top of the food chain in management consulting. The 32 criteria are divided into 3 groups (structural, short-term and long-term). These criteria serve as an input for our real time Strategy Rankings.
1) Does the firm advertise?
The best firms do not advertise since they are unwilling to make promises in the market. They however maintain extensive indirect advertising via elaborate recruiting events and research publications.
This thinking originates from Marvin Bower and is visible in how MBB manage their marketing efforts. This is unfortunately changing as Bain and BCG start to more towards advertising. McKinsey is also slowly experimenting here.
2) Is it willing to apply it’s value system at the expense of revenues?
Look for consulting firms which have turned away work when it has gone against their values. Very, very few firms turn away work. Most say they do, but the reality is you will struggle to find recent examples.
Examples from the 1960’s and 1970’s matter little. They are usually romanticized versions of the truth. If a firm cannot reference an example from the last 6 months, is it applying it’s value system?
3) Is the quality and approach consistent between offices and regions?
This is a very important criterion. The quality must be the same across all offices and regions. All consultants must be trained in the same way and to same standards. If quality is not the same, it implies the partnership is unwilling or unable to enforce high standards. It also implies staffing international teams will be challenging since it is unclear what to expect from different members. Such inconsistency leads to mistrust.
MBB consultants from emerging economies are, usually, considered by the respective firm as capable as consultants from any developed economy. The story is very different for companies like Deloitte or KPMG which are not global partnerships, which don’t operate like global partnerships and which do not believe the quality between offices/regions is the same.
That said, McKinsey has recently opted to bring in Turnaround and Implementation Group partners who are not always members of the global partnership. This trend will be problematic for McKinsey should it continue.
4) Does it have a consistent and distinguishable brand?
Inconsistency in the branding or poor branding is a problem. It speaks to poor quality control and a lack of understanding of how to position a premium business. MBB do not change their brands every 2 to 5 years.
Also consider if they were professional in the interview process? If they took weeks to get back to you, were rude or forgot about the interview, then run for the hills. The best consulting firms manage all parts of their image well, including interviews. Weaker firms have weaker recruitment standards and often behave in a less than professional way during case interview process.
5) Are its senior people home-grown or recruited?
Consulting values are passed from senior partner to senior partner. Senior partners at top consulting firms usually have extensive tenure. Recent senior hires are unlikely to preserve the values since they do not necessarily have them.
MBB tend to grow their own talent and MBB partners often have extensive tenure and usually exit into industry roles. By contrast senior partners in other consulting firms tend to hop from firm to firm. Bain is an exception here since it tends to bring in partners from external firms, provided they have a book of business.
6) Does the firm have a defined problem solving approach?
If you join the firm from the industry and it allows you to apply your own methods to solve a business problem, without problem-solving training, that is a major warning sign. Not undergoing core strategy training and simply applying past industry knowledge on studies indicates that the firm’s approach adds no value to your ability to be a consultant and firm’s quality standards are subpar.
No amount of education, other than quality core strategy training, is likely to be enough to equip you to solve complex business problems to the standard of MBB. This needs to be taught. A consulting firm not doing this is taking a huge risk.
7) Is the firm dominated by one or two regions/offices?
A consulting firm of equals never has one or two permanently dominant offices. Dominant offices change over time as trends change, global issues change and managing partners change. A dominant office implies that office’s consultants tend to benefit more and other offices are seen as “foreign” at best.
Bain is again an exception since it maintains a head office in Boston. BCG also tends to maintain a head office. McKinsey does not.
8) Are its stars home-grown or recruited?
Join a consulting firm which knows how to produce stars. A firm which mostly recruits star consultants does not know how to produce them and, therefore, cannot develop its own people. Therefore, how can it develop you?
MBB are known for grooming stars at all levels, including senior partners and future industry leaders. Many of which go on to the top spots at clients and drive more business to MBB. In fact, McKinsey calls itself a leadership factory. By contrast firms like PwC, Deloitte, Accenture and KPMG tend to hunt for stars at mid-career, preferably from MBB, and bring them on board to generate more business and to balance weak internal training & development efforts.
9) Is the firm actively investing in key developing markets?
If a consulting firm decides to enter a market, it must be willing to invest for the long-term to build a sustainable base. To evaluate this criteria consider the percentage of offices in emerging markets, the year entered and the number of times an office was exited / re-entered.
Markets like Brazil, United Arab Emirates, Russia, Dubai, Romania and Chile are important for long-term growth. Yet, firms chasing short-term profits will eschew these investments or enter / exit based purely on short-term profits.
10) When recruited do you join an office, region or the entire firm?
To evaluate this criteria measure the percentage of time an average consultant of the firm serves on studies outside his / her geographical hub. This is important. If a consulting firm is truly global, then you may have joined the Paris office but can seamlessly work anywhere. If you cannot, it is a warning sign about the strength of the partnership. Global staffing is only possible worldwide in a single, global partnership.
Otherwise it is sporadic and regional due to relationships between similar partnerships, like the US and Canada sharing consultants.
11) Is the consulting firm international?
A consulting firm with international offices across major commercial centers can serve multinationals who are usually spread between countries and needs consultants who can understand the local environment. If the firm is not international, it is probably a niche firm. Such firm is unlikely to be very successful at serving multinationals and, as a result, will struggle to gain exposure to complex business problems.
MBB score well for this criteria. McKinsey has offices in 61 countries, BCG has offices in 46 countries, and Bain has offices in 33 countries.
12) Are competencies tested in the interviews via case studies?
The best firms do not place value in where you worked before. They place value in your ability to solve business problems. They test this ability. The best consulting firms will have strenuous tests both written and oral in the form of math and case questions. To evaluate this criteria count the percentage of times a candidate is hired without a case interview or is given a weak/partial case question.
13) Is it easy to access knowledge, experts and required IP?
Consulting value is largely underpinned by the ability to find, understand and extract the key nuggets of information from previous work. A powerful, global and easily accessible knowledge management system is essential. To examine this criteria evaluate the difficulty of sourcing past work / intellectual property from foreign offices.
Can you easily access work from the Bangkok office if you are based in Boston?
14) Does the firm have multiple offices?
To evaluate this criteria count the number of offices. Multi-office firms have grown and understand the challenges of preserving their values as they grow. It probably is capable of working across cultures and that is a strength.
MBB score very well for this criteria as well. McKinsey has 105 global offices, BCG has over 82 offices, and Bain has 51 offices.
15) Are performance metrics heavily skewed towards sales and profits?
To evaluate this criteria count the percentage of the performance review for directors, principals and senior managers / associate principals weighted towards sales and the percentage of planning meetings weighted towards budgeting. No matter what a firm says, if it rewards you purely or primarily based on sales and profits, then it has the wrong values. Partners must be measured on the value they bring to clients, not on the profits they generate, which is a by-product of outstanding client service.
16) Does the firm define itself by who it is not?
Firms who can only articulate their value when mentioning a competitor usually do not have a distinctive value. They can only tell you who they are not. That is not the same as succinctly explaining a value proposition.
Be wary of consulting firms who say, “There is only McKinsey and us in the market.” This shows an enormous amount of immaturity. Also worry about firms who say, “We play in the space between McKinsey and Accenture.”
17) Does it hire from the best schools and universities?
The best consulting firms hire from the schools which attract the best students internationally, regionally and per a country (Harvard, Wharton, Sloan, Booth, Stanford, Columbia, Yale, Oxford, etc).
18) Is the advertised research/work produced by the same unit/team?
This is important and widely overlooked. Some consulting firms hire smart people, often with no consulting experience or skills, to sit in a nice office and produce research. Such researchers are producing insights void of actual client experience as they have never been on studies.
This is a problem since the research may sound compelling but is wholly theoretical. You want to join a firm which trains consultants to extract insights from consulting engagements and write them up as articles. This is a critical skill to have.
You want to join a firm which trains everyone to do great work and eventually write great articles. You want to join a firm which can train YOU to do this. MBB score really well for this criteria as well.
19) Is it a single partnership?
This is one of the most important criteria. Single partnership consulting firms can make tough decisions, ensure consistency and enforce quality. Where partnerships are legally separated, it becomes very difficult to enforce quality.
Single partnership firms can make tough decisions, ensure consistency and enforce quality since all the partners belong to the same legal structure and there is one profit and loss statement. Where partnerships are legally separated, there is no incentive and mechanism to improve quality, there is no system to maintain minimum quality standards across multiple partnerships, since there is no way to enforce these standards.
20) Does it have a strong and consistent value system?
The consulting firms which are highly admired see their profits as an outcome of having strong values. Values-based firms keep their culture alive via sharing stories of moments when their culture trumped profits.
Less prestigious firms crassly talk about growth and profits. They tend to promote growth and profits in their performance metrics, press releases and recruitment discussions.
21) Does it have an up-or-out policy?
Not everyone can make it, even if they come from Harvard Business School, and that’s okay. However, the consulting firm must be willing to let them go. It must have and enforce an up-or-out policy. Otherwise it is willing to keep people purely for the training investment made or their resume and not their performance. To evaluate this criteria count the percentage of a class managed out over a 3 year period.
22) Does the firm market itself or underplay the challenges of consulting to recruit?
Weaker consulting firms need to try harder to recruit quality candidates. They market the firm too heavily and underplay the tough expectations, in the hope this may lure candidates in a competitive market.
23) Is it large and/or is it proud of its size?
Count of references to the firm’s size and growth rate as opposed to its values and client commitment. There are insufficient graduates in the world to staff a very large management consulting firm while adhering to high recruitment and development standards. The investment to find, train and mentor management consultants is so prohibitive that at a certain size, quality will invariably begin to collapse. If a firm is touting its 20,000+ workforce, that should raise serious warning bells about the type of work it is doing and the firm’s recruitment standards. Also, firms which see strength in their size are cultivating the incorrect driver for sustainable quality.
24) Does the firm appear in the Harvard Business Review?
To evaluate this criteria count the number of HBR articles, adjusted for the spread of authors across offices and the quality of the material. The HBR is, barely, the most influential business publication in management circles. Unless a firm is published there, as opposed to being mentioned there, it will struggle to position itself in elite business circles. This includes HBR blogs.
25) Is the firm quoted in prominent publications like Forbes, WSJ and NYT?
To evaluate this criteria count written op-eds, articles and source qoutations in major national publications worldwide. Articles wholly about the firm, about a theme of the firm or about a partner score more highly than a media mention of the firm or a qoute from a partner. Leading business publications work with the best firms, assuming they have a policy of engaging the media.
26) Is the firm noted for producing Fortune 1,000 executives?
Quality management consulting firms are training grounds for future executives. If you struggle to find a large number of alumni who are executives at Fortune 1,000 firms, then this is not an influential management consulting firm. CFOs from the UK, Canada, Australia and South Africa are excluded from this measure since they are typically alums of the Big 4s audit divisions, not the consulting arms, and adding them will skew the rankings.
27) Does it consistently command premium fees in the market?
The market decides which consulting firms are the best. If firm’s rates are low, then it is an average firm. Think of a firm’s billing rate as its stock price. MBB rates once again put MBB at the top of the food chain in management consulting.
28) Does the firm produce recognized intellectual property?
An influential consulting firm produces ideas and analyses which are highly sought after. To evaluate this criteria measure the ease of recognition of the firm’s more influential thinkers. If you cannot name the major thinkers, research platforms and appearances in the influential media, then this firm is struggling to differentiate itself and is not elite.
29) Is the firm’s work referenced by other elite consulting firms?
Count of the number of references of a competitor in a firm’s online footnotes and endnotes. Firms which see themselves as peers tend to cite the others work. By reviewing all online reports, we can construct a type of vote-of-confidence analyses to see how firms view their competitors. In this way we see lots of citations between McKinsey and BCG but fewer between BCG and Accenture, for example. Think of a citation as a vote of confidence in a rival. The principle is similar to Google’s back-link analyses.
30) Are its ideas, work and samples heavily trafficked on the internet?
No matter what anyone says, if a consulting firm is producing influential work, its ideas are usually, illicitly, trafficked on the internet. The one exception to this rule is likely one of MBB, Bain & Company, who keeps an iron grip on documents.
To evaluate this criteria measure requests on online forums and document exchanges seeking a firm’s templates, manuals and studies.
31) Does the firm produce recognized thought leadership publication(s)?
If a firm needs to explain its publication to you then it is a problem. Look at MBB. Does the McKinsey Quarterly, BCG Perspectives or Bain Insights need an introduction? No.
It takes time to build credibility in research. If a firm needs to explain its publication it implies the firm may not have made consistent investments to take research seriously. It also implies the firm may not be consistent in its publication priorities so that the market forgets about an initiative launched.
32) Does it pay a premium salary?
If a consulting firm wants you, but is unwilling to pay you a premium salary, then it is not commanding premium rates and its work is not valued. Walk away.
Do not simply add up the score for all 32 criteria. Conditional issues apply in that a high score for two firms for the same metric will have different implications on the health of a firm.
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