Corporate-Consulting and its History
Corporate consulting, a term commonly used today, traces its roots back to the establishment of the first management consulting firm in 1886 by Arthur Dehon Little. Initially specializing in technical research, Little’s firm marked the inception of a field that would soon experience significant growth. However, as the industry began to adopt increasingly uniform standards, Little, the pioneer, diverged from the prevailing trends.
In 1914, Booz Allen Hamilton emerged as the first management consultancy serving both industry and government clients, setting a precedent for the evolving landscape. McKinsey & Company, founded later, established itself as the first modern, pure management and strategy consulting company. Marvin Bower, McKinsey’s CEO from 1950 to 1967, played a crucial role in shaping the professional identity of consultants, emphasizing recruitment from top MBA and Law programs.
A pivotal development in organizational structure occurred with the DuPont Company, which, departing from traditional functional divisions like sales and production, introduced a product-centric departmental structure. This shift, exemplified by divisions dedicated to explosives, stains, and paints, contrasted with the previous framework based on functions such as sales, production, and research and development.
Between the 1940s and the 1960s, consulting firms played a significant role in shaping multi-departmental structures within organizations. However, a notable shift occurred in the mid-1960s when consultants transitioned from emphasizing structural guidance to selling strategic insights. By the late 1980s, consultants had assumed a new role – they became key players in legitimizing corporate strategies. The proliferation of strategic consulting resulted in a convergence of practices, termed by Paul DiMaggio and William Powell as institutional isomorphism.
A noteworthy observation is that until the mid-1960s, companies were hesitant to publicly acknowledge hiring consultants, as it was perceived as a signal of organizational challenges. European firms were pioneers in breaking this trend by openly announcing their engagements with American consulting companies, a move aimed at affirming the legitimacy of their strategic decisions. It is crucial to recognize that consultants fulfill the below-mentioned two primary functions within organizations.
- Collecting information
- Demonstrating legitimacy
They were tasked with deriving conclusions from their observations and available information, transferring these insights from one organization to another. This formed the basis of the guidance they provided to the companies that sought their services.
What do Corporate Consultants Offer?
- Experience:
Consultants bring significant value through their expertise, specialized skills, and influential impact. Engaging with diverse businesses enables them to possess extensive and profound insights into business trends, industry challenges, and emerging technologies and processes beyond what internal employees may have. Harvard Business School underscores the consultants’ essential role in disseminating innovation and new knowledge within their respective industries.
- Cost Savings:
When enlisting the services of a consultant, you incur expenses solely for the required services, precisely when they are needed. This approach can lead to significant cost savings compared to employing a full-time professional with equivalent expertise for comparable tasks. Additionally, consultants specializing in various areas such as lean manufacturing, proactive funding, and financial planning can pinpoint areas where excessive expenditures occur, assisting in cost reduction measures.
- Time Savings:
Consultants’ wealth of experience equips them with knowledge of established best practices. For instance, a lean consultant can swiftly recognize inefficiencies in a client’s manufacturing process. Engaging a consultant eliminates the necessity for business owners to reinvent the wheel or expend valuable time on tasks that can be efficiently handled by an expert contractor.
- Objectivity:
Consultants offer a valuable perspective detached from business challenges. Unlike business owners who may be emotionally invested, consultants can impartially identify and address various challenges, whether it involves implementing new technology or navigating a merger or acquisition. This objectivity becomes particularly crucial in family-run businesses where emotional dynamics may complicate discussions, making it challenging to address core issues openly.
- Customization:
Consultants don’t present standardized solutions; instead, their significance lies in comprehending each client’s unique business and objectives. They tailor their advice and strategy consulting to address the specific challenges that each business encounters. This personalized approach ensures that a consultant’s solutions are far more effective than generic advisory services. For instance, a legal consultant can identify and apply compliance requirements specifically applicable to your business, ensuring eligibility and relevance.
Considering the Decision to Hire a Business/Corporate Consultant? Even though business consulting services have advantages, some business owners might hesitate to use them. Researcher Lance Lindon expressed a concern that consultants “would borrow our watch to tell us what time it is.” This means some business owners feel consultants won’t offer new insights. Additionally, some owners and managers might avoid consultants because they’re uncomfortable sharing their business problems with outsiders.
Yet, you can ease both worries by selecting a consultant with the right expertise, someone who can genuinely contribute to the growth of your business.
When picking a consultant, keep in mind that the most effective ones address both your technical and emotional needs.
The Journal of International Management Studies lists some important soft skills for consultants, including the ability to gather, organize, and analyze information about a business. Consultants should also have empathy for the client’s situation, keep client information confidential, adjust to the client’s readiness for change and available resources, and fit into the client’s environment.
Consultants need to comprehend why you hired them and view the consulting process as a partnership. Building this partnership can be crucial for a business owner to save time and money, reduce stress, and set the company up for long-term success.