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The 80/20 Rule And How It Can Change Your Life

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What is the 80/20 Rule and could it actually make 80% of your work disappear?

If you’ve studied business or economics, you’re well familiar with the power of the Pareto Principle.

The Man Behind The Concept

Vilfredo Federico Damaso Pareto was born in Italy in 1848. He would go on to become an important philosopher and economist. Legend has it that one day he noticed that 20% of the pea plants in his garden generated 80% of the healthy pea pods. This observation caused him to think about uneven distribution. He thought about wealth and discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies. The generalization became:

80% of results will come from just 20% of the action:

Pareto’s 80/20 Rule

This “universal truth” about the imbalance of inputs and outputs is what became known as the Pareto principle, or the 80/20 rule. While it doesn’t always come to be an exact 80/20 ratio, this imbalance is often seen in various business cases:

• 20% of the sales reps generate 80% of total sales.

• 20% of customers account for 80% of total profits.

• 20% of the most reported software bugs cause 80% of software crashes.

• 20% of patients account for 80% of healthcare spending (and 5% of patients account for a full 50% of all expenditures!)

On a more personal note, you might be able to relate to my unintentional 80/20 habits.

I own at least five amazing suits, but 80% of the time or more I grab my black, well-tailored, single-breasted Armani with a powder blue shirt. (Ladies, how many shoes do you own, and how often do you grab the same 20%?)

I have 15 rooms in my house, but I spend about 80% of my time in just my bedroom, family room, and office (exactly 20%).

I’m not sure how many miles of roads are in the small town where I live, but I bet I only drive on 20% or less of them, as I make daily trips to my kids’ schools, the grocery store, the bank and gas station.

On my smartphone, I have 48 different mobile apps pinned to the tiles, but 80% of the time I’m only using the eight on my home screen.

When I go grocery shopping, I definitely spend the most time in the aisles that are around the edges of the store: produce, the fish market, dairy, breads—and generally skip the aisles in the middle of the store (except for health and beauty).

As a massive introvert, I don’t actually socialize too much, but when I do, 80% of my time is spent with the same 20% of my friends and family members.

In my research into the productivity habits of high achievers, I interviewed hundreds of self-made millionaires, straight-A students and even Olympic athletes. For them, handling every task that gets thrown their way—or even every task that they would like to handle—is impossible. They use Pareto to help them determine what is of vital importance. Then, they delegate the rest, or simply let it go.

How You Can Use It

So how can you apply Pareto’s principle to gain more time in your life?

Are you an executive? You’re surely faced with the constant challenge of limited resources. It’s not just your time you need to maximize, but your entire team’s. Instead of trying to do the impossible, a Pareto approach is to truly understand which projects are most important. What are the most important goals of your organization, or boss, and which specific tasks do you need to focus on to align with those goals. Delegate or drop the rest.

Are you a freelancer? It’s important to identify your best (and highest-paying) clients. Of course, you don’t want all your eggs in one basket. But too much diversification will quickly lead to burnout. Focus on the money makers and strengthening those long-term relationships.

Are you an entrepreneur? The temptation always exists to try the new and exciting. There’s nothing inherently wrong with that, but it boils down to your goals. Are you trying to grow your current business? Would an 80/20 mindset help you to stay focused on your strategic plan and spend less time chasing endless new opportunities?

No matter what your situation, it’s important to remember that there are only so many minutes in an hour, hours in a day, and days in a week. Pareto can help you to see this is a good thing; otherwise, you’d be a slave to a never-ending list of things to do.

So, what 20% of your work drives 80% of your outcomes?

 

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Here’s What Hiring Managers Actually Care About – Aimée Lutkin

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You can’t jump into the mind of the person sitting across from you in an interview and know exactly what they’re looking for. But there are, fortunately, some basic qualities most hiring managers think are pretty important across the board. In a survey of 800 people who have been responsible for interviewing and hiring at their company, Netquote put together some general observations about the process. The things we’ve always suspected as being personally important—like our creativity—are actually pretty low on the scale of the manager’s scale. Here’s what they actually do and don’t want to know……..

Read more: https://lifehacker.com/heres-what-hiring-managers-actually-care-about-1830079581

 

 

 

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8 Time Management Hacks to Optimize Your Life In and Outside Work – The Oracles

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Time is everyone’s most valuable and scarce resource. Managing it effectively can be the difference between success and failure. These Advisors in The Oracles share how they manage their day to optimize their business success and personal life. To really manage and maximize your time — to squeeze every opportunity out of it — you have to appreciate how much you have. Take control of your time, and don’t allow others to. Get family, friends, colleagues, and employees to agree on the most important priorities……..

Read more : https://www.entrepreneur.com/slideshow/322152

 

 

 

 

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Do This One Thing If You Want To Stand Out In Competitive Environments – Esther Choy


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In one of the most-viewed TED Talks of all time, Simon Sinek said all business discussions and decisions must “start with why.” Most people don’t do this, he says. “Very, very few people or organizations,” says Sinek, “know why they do what they do.” Similarly, in our careers, we know our credentials. They’re what we put front-and-center in our resumes. Some of us know our competencies. But very few of us have considered sharing our character. And just as Sinek encouraged organizations to “start with why……..

Read more: https://www.forbes.com/sites/estherchoy/2018/10/21/do-this-to-stand-out/#328f2d09522a

 

 

 

 

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5 Ways To Go From Being A Good Boss To A Great Boss – Karlyn Borysenko

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There are a lot of bad bosses out there – that’s no surprise. In fact, 65% of Americans would choose to fire their boss over getting a pay raise. But what gets lost in the midst of trying to stop an awful lot of bad behaviors is the fact that there are a fair number of good bosses out there as well. These are bosses who genuinely care for their team members and want to do the right thing by them. Bosses in the “good” category are already doing a lot of things right, but still have room to move from “good” to “great,” and drive engagement and team productivity on a whole new level……

Read more: https://www.forbes.com/sites/karlynborysenko/2018/10/15/5-ways-to-go-from-being-a-good-boss-to-a-great-boss/#4ee9bf81488a

 

 

 

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Google Says The Best Managers Have These 10 Qualities – Zack Friedman

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It’s called Project Oxygen. Beginning in 2008, Google researchers wanted to understand what makes a manager great at Google. Here’s what they found.Project Oxygen…Google sought to identify the common threads among Google’s highest performing managers. Based on internal research, Google then applied its findings to its manager development programs….

Read more : https://www.forbes.com/sites/zackfriedman/2018/08/30/best-managers-google/#2e67c5054f26

 

 

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What Does Good Knowledge Management Look Like – Paul Whiffen

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What does good knowledge management look like?

In our article 7 steps to knowledge management success we looked at how to turn knowledge into action to make it real but what does good knowledge management look like?

To answer this question, once again, I called on Paul Whiffen and his two decades of experience in KM to explain.

“When introducing knowledge management strategy to an organisation, there are some familiar questions and barriers to overcome.

The most common ones I hear are:

  • we tried lessons learned before without success;
  • isn’t this mostly about when people leave or retire and we need to get their knowledge?;
  • we found it very theoretical and conceptual;
  • isn’t KM mainly about IT?;
  • it’s hard to convince the Business that KM has real value.

How can these be overcome?

1) Treat knowledge as an asset

We live in an increasingly knowledge-based world. My belief is that knowledge is a key commodity and we should treat knowledge as the main asset for individuals, companies and countries.

It is about distinguishing the theory of knowledge management from the practicalities of it. For an organisation to do this and to make the most of its knowledge it must regard it as an asset and manage it in a structured way.

2) Bring theory to life

To bring the theory to life, you need a structure which is both practical and pragmatic.

A KM framework includes the roles, processes and technology supported by governance and both a knowledge management and change management strategy.

3) KM framework

Within a KM framework, the roles, process and technology become embedded within an organisation and accepted and established as the ‘norm’.

Roles include

  • Central KM team
  • KM Plan Managers
  • Community Managers & Facilitators
  • Subject Matter Experts
  • Knowledge Domain Owners

Processes include

  • Team learning
  • Individual knowledge transfer
  • Knowledge sharing communities
  • Corporate process for managing lessons identified
  • Knowledge cafes and markets

With this belief, structure and framework as a starting point an organisation can develop the tools and skills for good knowledge management and make it real.

Indicators of KM success

When considering what good knowledge management looks like and the measurement of how successful a knowledge management implementation has been in an organisation I tend to look at the following key indicators:-

  • has a KM approach been authentically adopted?;
  • does the Business understand the value?;
  • is it being applied as part of ongoing business as usual?

For me, the key thing I have learned over the past couple of decades is that this is a knowledge-based world, and increasingly so.  Those organisation that proactively manage what they know and use knowledge management to future-proof themselves,  will outperform those that don’t.   I have seen organisations and projects struggle when they have neglected this, and flourish when they have taken it seriously.

Conclusion

When we have better knowledge

  • we make better decisions;
  • we innovate better;
  • we manage risks and opportunities more effectively;
  • it’s a more fulfilling organisation to work in.”

 

 

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Reputation Management SEO – Hannah Taylor

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The internet is a wondrous tool that allows you to promote your brand and tell your story. However, that doesn’t mean others can’t also share their perspective. Whether these publishers are sharing false or accurate information, you want to make sure you’re doing your best to maintain control of how your story is being told and perceived by the masses. Contrary to popular belief, not all publicity is good publicity.

So, what should an individual or company do when their brand name is returning negative or unwanted results on search engines?

Let’s take a look at some common questions I have been approached with over the years.

  1. Is there any way to completely remove negative content about my brand from the internet?
  2. What is Brand Reputation SEO (sometimes called reverse SEO or negative SEO)?
  3. What steps can I take today towards managing my brand’s reputation in Google search results?

Is there any way to completely remove negative content about my brand from the internet?

Sometimes. Maybe.

Some firms claim to offer this service, but it comes with a hefty price tag and is not guaranteed (Ironistic is not one of those firms). The only real method one can take to remove something from the internet is to contact the webmaster directly and request that it be removed. I find this tactic has a meager rate of success as many authors will not take further action. You also run the additional risk of fueling the fire, inspiring them to write additional content on the matter or promoting the existing content more heavily.

However, keep in mind that if the posted content is genuinely wrong and potentially damaging to you or your business, talk to your lawyer.  An official cease and desist letter from a law firm can work wonders at times! There are certain situations where you can have information removed from Google, but in most cases, you will need to contact the webmaster – especially if you want it removed from the internet entirely.

So, if this isn’t the best option – what is? Enter brand reputation management SEO.

What is Brand Reputation Management SEO?

Brand reputation SEO is one tactic to aid in online reputation management through traditional search engine optimization best practices. The concept is simple – when someone does a Google search for your brand name, you want to control as much real estate at the top of search results with positive content so that any potentially harmful or brand-damaging content is buried lower in search results.

What steps can I take today towards managing my brand’s reputation in organic search results?

Let’s take a look at how you can start gaining control over search results through reputation management SEO tactics. Below is the process I use when assisting clients in this very situation.

1) Planning & Strategy

Do your research.

Identify which keyword variations of your brand are returning the unwanted results. Focus on this list for your brand reputation SEO efforts.

Examine existing online properties.

Create a list of all existing sites (on separate domains) that you have control over. This could include your company website, your personal website, social media channels, YouTube videos, managed local listings, and so on. Then, evaluate where your managed web properties rank in relation to the unwanted search results – later, you will focus on optimizing these properties for the keywords identified.

Explore additional opportunities.

Next, determine other opportunities for content generation around your brand name on other domains. Is there an opportunity to put out positive press releases about your brand? Can you find other listings of your business that you could claim and manage? Are there other positive ranking articles by other authors that you could contact and request certain optimization updates be made? Are there videos you have or could produce to be optimized for your brand?

Plan your tactics.

Finally, put together a list of specific tactics you plan to use to regain control of your brand or name in search engine results. I’ve included some general recommendations below; however, these should be custom tailored based on your specific situation.

2) General SEO Tactics and Tips for Building Out Your Task List

Use these SEO best practices to include your name in all existing and newly created positive content.

Include your name as the title tag of the page or post.

The page’s HTML title tag is one of the most important aspects of SEO. Search engine crawlers will look at this to determine what the page is about – so we want them to know it is about you! Keep this in mind for things such as social media profiles and listings sites as well, as most of these sites will default to using your profile name as the title tag.

Include your name in the page URL.

When possible, make sure your name or business name is included in the URL. If you are optimizing for a keyword/name that has multiple words in it, include a special character (typically a hash) between words to indicate a space to web crawlers. For example https://www.ironistic.com/team/hannah-taylor/ or https://www.linkedin.com/in/fosschris/.

Include your name in the content.

Make sure the variation(s) of your name that you are monitoring is within the content of the page. You’ll want to make sure you’re not keyword stuffing but incorporating variations of the brand name naturally within the content.

Include images with keyword rich alt text and file names.

For the content pages you are working on, always include an image of the business or person for which you are optimizing for. Save the image file using a name that corresponds to what you are optimizing for and then add an optimized HTML image alt tag.

Additionally, you can post images on sharing sites such as Pinterest, Twitter, Flickr, Instagram and Facebook with optimized file names. These images may appear in image search results.

Build additional websites.

If you don’t have one already, consider building a website or multiple websites using the identified keywords as the domain and filling it with SEO rich content. The website we developed for Karen Curione is a great example of a resume site that is optimized for Karen’s name.

Karen Curione

Build domain authority.

For the websites you own and the positive content you want to promote, you’ll also want to monitor the domain authority and work on improving that over time through high-quality link building. Link building can be time-consuming and challenging, but it is an essential aspect in improving your organic rankings. Need to learn more? Here are 7 facts about link building for SEO.

Don’t forget about the power of video SEO.

Did you know that YouTube is the second largest search engine behind Google? Your brand name will get searched for directly within YouTube plus YouTube videos can also appear in Google organic search results! I have a whole bag of tricks when it comes to optimizing videos on YouTube so I’ll write about that in my next post. Sign up for our email using the form to the right to see future posts!

Consider adding PPC to your bag of tricks.

If you’re looking for a quick win on taking up some valuable real estate with positive content about your brand, consider running a paid advertising campaign to bid on the keyword you identified earlier. Your ad will appear at the top of the search results and will effectively “push” negative results further down the page.

3) Monitoring & Reporting

This isn’t an overnight fix, so you’ll want to be sure and monitor your progress over time. I recommend setting up some sort of keyword-based web monitoring through free or paid tools so you can be alerted of new negative or positive content around your brand, such as Google Alerts (Free) or Brand24 (paid).

I also strongly recommend putting together progress reports on a regular basis. Take screenshots of the search engine results from your keyword list previously identified before you start implementing the tactics below. Then, periodically take screenshots of the same results so you can compare over time. I like to highlight the negative mentions in red and report on how many unwanted results are showing up on the first. Do this for any search engine (Google, Bing, Yahoo!, YouTube, etc.) that you are concerned about.

4) Get to Work

At this point, you’ve evaluated the situation, put together your plan of tactics, and are ready to start monitoring your progress. Now the real work begins. Start by identifying the “low hanging fruit” based on what you think will have the most significant impact and focus on those tactics first. I suggest putting all of the tactics you’ve identified into a task list and prioritizing them based so you can make sure you’re spending your time in the best way possible.

Feeling overwhelmed?  Ironistic can help! We can put together a customized brand reputation SEO strategy for your specific situation and work with you on an ongoing basis to execute tactics and report on our progress.

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Killing Strategy: The Disruption Of Management Consulting –

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Since former Boston Consulting Group consultant Clayton Christensen first used the words “disruptive innovation” in 1995, nimble startups have challenged incumbents in every field from music to manufacturing.

The industries that have proven the most vulnerable to disruption have been those with:

  • One or a few major players
  • Relatively outdated business practices
  • Slow technology adoption

Oddly, management consulting is rarely named in discussions about industries vulnerable to disruption (unless you ask Christensen), despite the fact that it meets all of the above qualifications.

But the disruption of management consulting is not a hypothetical. Management consulting has already been beset on all sides by competitors and new technologies. They have maintained status and growth through prestige, branding, and long-time client relationships, but they’re ultimately no more immune to the forces of disruption than any other industry.

Like the taxi industry, management consulting is primarily human-driven. Hourly or per diem billing, rather than outcome or value-based pricing, is still the general rule (even as industries like law move away from billable hours). The increasing pace of technological change means that more and more, consultants’ recommendations are out of date nearly as soon as they’re made.

Consulting, in other words, is inefficient, inflexible, and slow to adapt. Any of these weaknesses alone would threaten disruption — possessing all of them points to a major fight ahead.

McKinsey, Bain, and BCG, of course, have weathered existential crises before. These consultancies offer a highly brand-driven, prestigious, and hard-to-quantify product to Fortune 100 companies with plenty of cash to spend.

If you dig deeper into the specific types of services that these firms offer their clients today, however, it’s clear that a tectonic disruption is hitting management consulting just as it has hit many other industries before. It may be a slow and gradual change, and the big names may well endure — no matter how thinned their ranks — but a change is coming.

The invention of strategy

Before Bruce Doolin Henderson opened the doors of Boston Consulting Group on July 1, 1963, the concept of “competition” barely existed in American business culture, let alone strategy.

There were great, successful companies. Companies made plans. Those companies were not, however, thinking analytically and rigorously at a high level about the classic three C’s of strategy: their customers, their costs, and their competitors.

“What companies didn’t have before the strategy revolution was a way of systematically putting together all the elements that determined their corporate fate… the pre-strategy worldview lacked a rigorous sense of the dynamics of competition.” —Walter Kiechel

Before BCG, McKinsey, and Bain, those who owned and ran businesses in America generally dismissed “strategy” as something for generals and political campaigns.

The first management consultants changed that. As business became more complex and global in the 1960s and 1970s, consultancies brought both cutting-edge methods of market research and data analysis as well as access to academic and industry experts to bear on the major challenges of business. They helped companies build more efficient supply chains, improve their product positioning, figure out what markets to exit and which to enter, and more.

Those consultancies pioneered many of the major tools and frameworks companies still use today to develop corporate strategy: the 2×2 matrix, the Experience Curve, SWOT (Strengths, Weaknesses, Opportunities, Threats) diagrams, Porter’s Five Forces, and many more.

As they found success, BCG, McKinsey, and Bain began hiring the brightest, most technical business school students they could find. The MBA became, for the first time, a truly respectable career choice. Between 1970 and 1995, the number of MBAs granted per year rose from 25,000 to 90,000.

The total number of MBAs granted in the US rose from about 4,000 a year in the 1940s to more than 170,000 a year now.

Today, nearly 200,000 students graduate with MBAs every year. The strategy industry is worth $250B, and the value of strategy is obvious to every company, from the smallest startup to the biggest Fortune 500.

According to estimates, McKinsey makes about $8.8B a year, BCG about $5.6B, and Bain & Company about $3.8B — $4.5B. Each one is still growing.

From one perspective, the position of management consulting as an industry has never seemed more secure. But just as their clients are always under threat from new players and technologies, consultants too are not immune to the forces of disruption.

The four functions of consulting

“The underlying principles of strategy are enduring, regardless of technology or the pace of change.” —Michael Porter

Since the early days of management consulting, firms have sought to differentiate themselves by doing more for their clients. In some cases, they’ve even embedded themselves as if they were part of the team.

That’s not always a good thing. The habit of being “part of the team” has landed both McKinsey and Bain & Company in hot water for insider trading and other scandals over the years.

In most cases, though, it’s also why these firms are so successful. Consulting is much more than trading advice for money. Consulting is a bundle of different types of services and functions bound up in a prestigious, highly expensive package. Companies that work with firms like McKinsey, BCG, and Bain expect — and get — a lot out of those relationships.

When the client-consultant relationship is functioning at its best, the consultant gives the client:

  • Information: The data and analyses that take the client’s world, industry, and market position and make sense of it.
  • Expertise: An experienced operator’s perspective on a problem and the different ways that it can be solved.
  • Insight: The rigorous, analytical application of expertise to data to come up with insights that will help the company succeed.
  • Execution: The roadmap to choosing and implementing the changes to be made.

In some cases, of course, management consultants are hired to give cover to unpopular decisions or even to send a message to one’s workforce. In The Firm, Duff McDonald argues McKinsey in particular “might be the single greatest legitimizer of mass layoffs in history.”

“If you were a CEO and felt you needed to cut 10% of costs but didn’t feel you were getting buy-in from your employees,” he wrote, “the hiring of McKinsey generally got the point across quite clearly.”

When client and consultant are working together as initially envisioned, however, those four values — information, expertise, insight, and execution — are the “package” that consultants offer, and each one of these values has been disrupted in ways big and small over the last several years.

Information about customers and competitors is more available than ever. Expertise has been disaggregated. Insight has been productized (and in some cases, commoditized). And execution has, in many cases, been brought in-house or outsourced to freelancers.

As Soren Kaplan has pointed out in Inc, there is a lot about how management consulting works that would lend it to being vulnerable to disruption:

  • It’s highly dependent on manual (computational) human labor — something that computers are doing more and more of.
  • It traditionally has very high margins (and doesn’t bill based on outcomes but time spent).
  • The value is largely time-bound in the sense that the advice often gets outdated quickly.
  • The value is also largely driven by information asymmetry (knowing things other consultants or companies don’t) which is harder to maintain in the internet age

Despite all of this, BCG, Bain, and McKinsey are still growing. The industry is still worth a few hundred billion dollars. If the big management consultants are about to fall, it doesn’t necessarily feel like it.

On the other hand, when we look at each part of the consulting value chain with a critical eye, we can see vulnerabilities, disruption threats lurking, and smaller, more boutique firms booking success after success.

As the original prophet of disruption put it, “we’re still early in the story of consulting’s disruption.”

To understand just how this has all come about, and what the post-disruption future looks like for the big management consulting firms, we took a look at each of the four consulting functions. Our goal was to understand exactly what type of value the consulting firms are offering—and where various disruptors are, or are not, displacing them.

1. Information

The rise of market research firms and databases has made it possible for companies to collect valuable, actionable data all on their own. The rise of business analytics tools has made it possible for them to collect equally, if not more valuable information about the performance and operations of their companies—also on their own.

The availability of this data does not mean that management consulting firms no longer play a role in the collection of information to solve client problems. There are cases where it is more convenient and easier for CEOs to hire a BCG or a Bain to come do this work. It does mean, however, that those cases exist in a more narrow context.

The companies that are relying on consultants for data analysis today are not just your run of the mill Fortune 500 companies. They’re either working on extraordinarily complex data sets, or they’re so far behind the technological curve that they need full-service help.

There was a time when companies would come to management consultancies with virtually all of their strategic problems, and the consultancies would hire the best and brightest out of college to sit at desks and manually collect the data that would be used to solve them. They would use every available resource to understand industries, markets, consumer sentiment, and companies’ product lines. Then a senior partner would come in, make sense of the data, package it, and present it to the client.

At that time, clients’ understanding of their own business was generally at a primitive level.

For decades, one the most effective sales techniques in consulting was asking a potential client whether they knew how much business they were doing across all divisions with their largest customer, and how profitable that business was. The answer, as Kiechel points out, was usually “no.”

Since those days, both internal company data and industry/market research have become more accessible than ever before. Today, knowing the answer to a question like that is table stakes.

A job listing for “Analyst — Healthcare Analytics & Delivery, New Ventures” on McKinsey’s website.

All the major consultancies have built out teams to do data analysis for their clients. McKinsey hires experienced data engineers to work directly with clients, helping them build out a more sophisticated data analysis function.

BCG runs a team called BCG Gamma specifically for data scientists and consultants to work together in analyzing data in areas from “marketing, risk assessment, and customer service to manufacturing, supply chain management, scenario simulation, and competitive intelligence.”

From the FAQ for BCG’s Gamma program.

In other words, the big consulting firms hire people to work on the big questions that come along with the data.

If you’re a hospital looking for a rigorous analysis of the best way to lower your treatment costs while keeping the level of patient care high, you might go with McKinsey. If you’re a global logistics company looking to analyze your entire supply chain to predict places where costs might rise in the future, then you might go with Bain. Either way, the odds are low you have the right team to understand that problem yourself.

Various analytics tools on the market are useful for questions that are smaller in scope, as well as for incorporating data better into the day-to-day decision-making culture.

Tools like Looker, Tableau, Microsoft Power BI, Qlik, SAS, and Domo allow companies to instantly generate reports and dashboards on phenomena like:

  • Customer lifetime value across demographic and behavioral cohorts
  • Conversion rates (site-to-item and item-to-cart) across an entire product line
  • Efficiency of marketing spend and ad targeting

These kinds of analyses can drive big business value. But they’re not easy to set up and become fluent in. There’s a complexity to getting these tools operational that compounds at scale.

When your company has 100, 1,000, or 10,000+ people, building an internal analytics function means changing the culture, building a new team, and making big, lasting changes to how your company works.

That’s a struggle that consulting firms can help address.

For example, Bain & Company highlights a case study in which it worked with a major beverage manufacturer interested in taking more advantage of digital channels. According to the case study,

“…the pace of disruption — fueled by the rapid emergence of new technologies — can make the digital world challenging to navigate. When BeverageCo sought to take advantage of digital, they had many isolated initiatives (such as online advertising and a corporate Facebook page) underway, but lacked traction in any of them. The company also lacked a cohesive vision that promoted collaboration between digital and the traditional corporate structure.”

This company had an online presence generating data, but lacked leadership or a vision around how that online presence should work or how that data could truly benefit its core business.

As a result, the company’s web traffic and sales conversion rates were lower than its competitors’ rates; its social media presence was limited; and its existing CRM tools failed to capture online insights to help the company better engage consumers.

Bain worked with the company to help define its digital strategy, using data to analyze the competitive landscape as well as identify existing internal digital strengths and weaknesses.

While self-serve analytics tools might make it easier for companies to collect and analyze data, they don’t make it easier to build a data-driven culture and vision for the company.

In fact, the growth of self-serve analytics may even drive more data janitoring/data collection projects for management consultancies — as more and more companies realize that they need to be using data to be competitive, many will naturally seek out consultants in order to get help.

At the same time, there may well be a slice of consulting work that does get disrupted as more and more analytics and data tools emerge that make data easier to handle for the enterprise.

Returning to the beverage company example — at the end of its analysis, Bain offered these recommendations:

Notably, the main recommendations from the Bain case study above are pretty rudimentary, and relatively easy to get up and running at any company:

  • Identifying KPIs (key performance indicators) to use to measure progress
  • Installing a CRM that can generate data on consumer relationships
  • Building an SEO strategy for e-commerce

These are more difficult to get going at scale, but they’re not highly advanced from a technological point of view — meaning the data collection aspect is not what’s differentiating the Bain offering in this case.

What’s truly differentiating Bain’s offering in this case (and the management consulting offering in cases more generally) is not so much what the consultant brings as what the client lacks.

The “BeverageCo” from the example above can’t just start using Power BI to understand its business at a deeper level, because it doesn’t even know where to start.

As technology progresses, however, it’s likely that the bar of difficulty is likely to fall lower and lower. Startups working on business intelligence and analytics know they’re fighting for a prize worth many billions of dollars, and dozens upon dozens have emerged to help Fortune 500 companies get the kinds of insights they might otherwise be getting from a Bain or a BCG. But even if “big data” doesn’t obviate the need for expert guidance completely, it can open up a space for more specialized consulting firms who deal specifically with applying the insights from analytics and market research.

For today, Bain, which has helped hundreds of businesses through their “digital transformation,” has that prestige and expertise. That gives their clients confidence that they know what they’re doing.

Expertise has been a cornerstone of the management consulting value proposition for decades. That does not mean, however, that it is completely safe from disruption.

2. Expertise

One of the conventional criticisms of consultants is that they send generalists into companies to do an expert’s job.

Complex problems, the thinking goes, can only be solved by someone with relevant experience.

That’s exactly why consulting firms have long cultivated people with special types of experience outside their walls. From academics and industry veterans to leaders in business and government, these experts can provide consultancies with an operator’s perspective on many types of client problems.

Detail from McKinsey’s recruiting page tailored specifically to “experienced professionals.”

Having a wide network of experts helps consulting firms come up with better solutions for clients. It helps them build up their prestige. Employing the world’s foremost experts in specific fields — say, CPG supply chain management — can even give them defensible advantages in those areas.

Until fairly recently, consulting firms were the only places aggregating expertise from all those different avenues. Today, it’s much easier to get access to “experts.”

You don’t need to work with a Bain or a BCG to talk to someone with in-depth knowledge about supply chain management.

But the specialization of the management consultancies’ knowledge bases — a trend that began during the 1980s — means that even today, much of the world’s operating experience in pillar topics like supply chain management is bound up at firms like McKinsey. While experts may be easier to find, management consultancies have gained hard-fought advantages in solving certain kinds of problems.

Expertise didn’t run most of the big consultancies (at least, not at first). At McKinsey, almost all senior partners were proud generalists. Junior partners, or those with less clout, specialized. Fred Gluck, who left a career as an electrical engineer to join McKinsey as a technology analyst, was a major influence in the other direction.

As Gluck was ascending to the rank of senior partner at McKinsey, BCG was winning clients with its rigorous, strategic approach to consulting. The BCG “strategy buffs” (as Gluck deemed them) were analytical, always looking to improve their art, and highly empirical.

McKinsey had always practiced the situational, “it depends” style of management consulting. Gluck wanted to change that and build a culture of expertise inside the firm.

To do that, he organized internal training on strategic techniques and tools, while also building relationships across academia, think tanks, successful companies, and other institutions. The goal was to use all available resources to turn McKinsey into the world’s leading strategy firm. By 1980, Glucks was responsible for “virtually all McKinsey’s endeavors to systematically build expertise in particular subjects and industries.”

Revenues of the big three management consulting strategy firms. McKinsey’s adoption of strategy coincided with its ascendance as a top revenue-generating firm.

In the wake of McKinsey’s success with building out its core knowledge base, gaining expertise in important fields of industry study became a primary concern for other big management consultancies

Each naturally developed a different focus, depending on the clients they served and how they wanted to differentiate themselves from the others.

Bain, whose co-founders would go on to start Bain Capital, had a particular expertise in finance from the beginning. Over time, they’ve taken on a larger proportion of PE clients, worked on more leveraged buyouts and M&As, and generally handled more finance clients.

MCG, which was the first strategy-first management consulting firm, today has a reputation for being the most “academic” of the big firms, with a focus on corporate development and innovation (that is, helping companies adapt to the digital world, grow, and reorganize).

Many of McKinsey’s earliest partners and client relationships focused on management, operations, and logistics. Over time, McKinsey developed a particular expertise on topics like governance (both corporate and political), development, and healthcare.

A decade after Gluck took over the mission of making McKinsey a “knowledge-centered” company, the McKinsey Global Institute (MGI) was born. The Soviet Union had just collapsed, China was beginning to open, and US firms needed international expertise — something McKinsey stepped in to offer with MGI, which combined macroeconomics with on-the-ground analysis from trained consultants.

Today, some types of specific problems call for specific consulting firms. If you are considering a leveraged buyout, it makes sense to work with Bain, which has advised on thousands of such buyouts. If you are confronting an industry upstart, you might look to BCG, and if you’re working on problems of regional governance in Southeast Asia, you might look to McKinsey.

But outside those fields, the expertise function of consulting has been largely unbundled. Today, the same types of experts that big consultancies have hired for decades can be consulted independently, without needing to pay for the rest of the management consulting package, thanks to so-called “learning networks.”

Companies doing this in Europe include Third Bridge and AlphaSights, while in America, the standout is Gerson Lehrman Group (GLG). GLG and others like it vet experts similar to how a consultancy like McKinsey would, then hires them out to answer companies’ questions on an on-demand basis.

Whether you’re an investor who needs to understand the future of US coal production or a technology executive looking for an expert on AI, you can work with GLG to find the right source, then pay by the hour for a confidential, informal chat (or series of chats) on whatever topics you choose.

While GLG describes itself today as “a learning membership connecting business people trying to solve problems to experts that can solve them,” the company was started as a publishing business.

The idea was to get experts to help write guidebooks that could help investors at hedge funds and other firms understand the investments they were making in particular industries.

Over time, GLG found that its investor clients were much more interested in having casual, one-off chats with its experts than in reading its reports. The fund managers GLG talked to, according to the New York Times, said “many of their best insights came through casual conversations, not from formal reports.”

GLG retooled the company to focus on connecting experts with people who needed them. Ironically, with this new business model, the company found that management consulting firms — often hungry for very specific, niche expertise — were some of its best customers.

Today, GLG’s experts include former ambassador to China Jon Huntsman Jr., former Obama campaign manager David Plouffe, and former Under Secretary of Defense for Intelligence Michael G. Vickers, among other high-profile names in government, finance, and business. Clients can even use GLG to have a conversation with people like Pamela Thomas-Graham, a former executive at Credit Suisse and partner at McKinsey.

“You could call what we do consulting, but it isn’t, really,” GLG President and CEO Alexander Saint-Amand told Recode. “We’ve done millions of projects. Our members have answered almost 100 million questions on our various sites. But the primary experience is a one-to-one phone call or meeting.”

The popularity of expert networks has risen significantly in the last decade as banks, hedge funds, and others have found the value in on-demand industry experts. In 2008, companies less than $100M on expert learning networks. By 2017, that number was $800M and rising.

Integrity Research estimates annual expert network spending will pass $1B before 2021.

Whether the rise of on-demand expertise will challenge the position held by big management consultancies remains to be seen.

Today, the specific types of operating expertise that McKinsey, BCG, and Bain have invested to acquire over the last several decades offer a powerful, differentiating value proposition. That expertise has been hard-won, and it’s something that can be easily provided by the on-demand economy.

At the same time, with the growth of these expert networks, it’s not hard to imagine the range of situations that truly call for the help of management consultancies being narrowed. Ten years ago, it would have been justifiable to work with McKinsey solely because the world’s experts in a particular topic are there. Today, it’s highly likely that that very same expert (or a comparable one) is reachable for either an on-demand conference call or a longer, freelance engagement.

Ultimately, however, expertise is not what the consultancies imagine they are selling anyway, as Bain’s early motto makes clear:

“We don’t sell advice by the hour; we sell profits at a discount.”

3. Insight

Inherent in Bain’s idea of “profits at a discount” is the promise that consulting is more than just someone coming up with a plan for your company.

At one point, it had more or less sufficed for a consultant to “come up with a strategy.” In the 1960s, however, consulting became a function that was actually supposed to get results.

BCG led the way. With its famous “$1M framework” — otherwise known as the growth-share matrix — BCG didn’t just change how people thought about their businesses; its insights altered how people built businesses too.

At the time, the predominant pressure in American business culture was to diversify. High tax rates on corporate gains meant that the best way to spend profits was to make acquisitions. At the same time, powerful antitrust laws (like the 1950 Antimerger Act) made it difficult for companies to acquire other companies in their own industries.

Buying companies exclusively in other industries, however, had the effect of turning formerly focused corporations into overextended conglomerates — many of which would begin to fail over the next decade.

The late 1960s’ enthusiasm over conglomerates quickly waned as the bust phase of the cycle kicked in towards the end of the decade. The new conglomerates were unfocused, overextended, and inefficient. BCG set forth to try and fix that.

Helping companies focus was the aim of BCG’s growth-share matrix — called the “$1M framework” because its application alone could merit BCG $1M in client fees.

The point of the growth-share matrix was to help a company understand which of its (often many) businesses should be nurtured, which should be ended, and which needed further study.

The matrix was a box, separated it into four boxes, measured along two axes: relative market share (x) and market growth (y). Each line of business was plotted within this matrix with a bubble proportional to the size of that business.

Consultants would plot out all of a company’s businesses, revealing which dominated markets, which were growing quickly, and so on.

The real power of the matrix emerged when companies also plotted competitors. Plotting 3 — 4 different competing conglomerates, the errors that individual companies were making in the lines of business they chose to nurture became much more apparent.

American Standard was a lighthouse case study for this process for BCG.

Like many other big corporations of the time, American Standard was involved in dozens of different businesses, and it was impossible for any executive to maintain a complete understanding of each one. Virtually all of its available investment capital, however, was going into just one specific line of business: small air conditioners.

Plotting American Standard on the growth-share matrix revealed that while its small air conditioner business was in a market that was growing quickly, its share of that market was a magnitude smaller than that of air conditioning giant Carrier.

American Standard’s small air conditioner business was, in other words, what BCG came to call a “question mark business” — a business with high growth but low market share. Question mark businesses were possibly worth investing further, but they weren’t sure bets.

Even worse investments were low-growth businesses. With high market share, they were tempting to maintain, but would often suck profits indiscriminately without much return. BCG deemed these “cow” businesses.

With low market share, they were simple under-performers, or “dogs,” and should be cut immediately.

The only sure bet in the growth-share matrix was a business with high growth and high market share: the “star.”

Using the growth-share matrix, American Standard realized that its pet project was completely unsustainable and had to be sold. Fortunately for the company, because small air conditioners was a high-growth industry, it was easy to find a buyer willing to pay a premium.

In the end, BCG gave American Standard not just a good strategy, but the right tactical advice — and taking that advice resulted in a huge long-term victory for the company.

The growth-share matrix became BCG’s “$1M framework” because it packaged the consultancy’s clearest and most original strategic thinking into a neat and digestible visual.

The framework was simple, but it also presented a whole new way for companies to think about their businesses and where they invested their time and money. It was a genuinely innovative insight into allocating capital, dressed up as a 2×2.

Bain (whose partners actually coined the phrase “$1M framework”) would create its own “insight product” in 2003 with the Net Promoter Score. Today, there are so many different tests, diagnostics, scores, and tools companies can use to measure customer satisfaction that the idea of paying Bain to help run a customer survey almost seems absurd.

In fact, virtually every management consulting framework (including the growth-share matrix) has been explained in books, MBA courses, essays, workshops, seminars, and blogs run by ex-BCG, ex-McKinsey, and ex-Bain consultants.

The lion’s share of these frameworks have been picked apart so thoroughly that anyone could attempt (some) implementation of any of them.


The publication of these frameworks does pose a threat to the value proposition of management consulting firms.

As Clayton Christensen writes in the Harvard Business Review, the most prestigious management consulting firms today operate like a black box. Companies bring them a problem, and they produce a solution. Visibility into what happens during that process is highly limited.

Clients judge whether or not the solution will be good based on indirect signals: the consulting firm’s brand and prestige, the specific domain of knowledge required to solve the problem, and the company’s prior experience with that firm and consultants in general.

Their ability to judge whether the solution was effective after the fact isn’t great, either: outcomes are often expected 6 — 12 (or more) months after the fact, and those outcomes are often contingent on many other business and industry factors. When there’s no direct, lower-level output metric to measure, it can be highly difficult to assess whether a consultant’s recommendation “worked.”

But with the “tools of the trade” publicized — and holes poked into the black box — clients are empowered to ask more questions, expect more rigorous performance benchmarks, and have more of a say in negotiating what they feel is a fair deal. By demystifying the management consulting process, books, classes, and blog posts bring more transparency to the marketplace of ideas.

Over the years, we’ve seen companies move from hiring consultants to building out entire strategy functions inside their company — teams, staffed by ex-consultants and others, who can perform the role of a management consultant internally.

They can do this because of consulting turnover. According to Kennedy Research, turnover at prestigious consulting firms averages around 18% — 20% a year.

McKinsey, the big consulting firm that has pressed the hardest for growth, has more than 30,000 alumni. These alumni graduate with great strategy credentials, and they have to do something with them. Clayton Christensen writes,

“We know that many companies have hired small armies of former consultants for internal strategy groups and management functions, which contributes to the companies’ increasing sophistication about consulting services… Typically these people are, not surprisingly, demanding taskmasters who reduce the scope (and cost) of work they outsource to consultancies and adopt a more activist role in selecting and managing the resources assigned to their projects.”

If companies are hiring ex-consultants to do strategy, and working less with the big consulting firms, it would certainly spell a recipe for disruption.

However, in 2016, the management consulting industry grew again, more than 7% from the year before, with total yearly spending at a new high of $58.7B.

If the glut of ex-consultants on the job market and “tools of the trade” in the public domain were true existential threats, you’d think the management consulting industry would be shrinking. It isn’t, and the key to understanding why may lie in the fact that $15.8B of total management consulting spend — more than a quarter — was technology consulting.

It’s not difficult to imagine a need for technology consulting amidst some of the biggest credit card and personal information thefts in history. After technology, the next fastest-growing sector of consulting was risk and regulatory consulting. It’s not hard to understand that either, given the impact of Brexit and GDPR on corporate planning.

The frameworks developed by big management consultancies may be public knowledge. The consultants who implemented those insights may be on the job market. But that does not replace the utility of consultancies when it comes to new and emergent issues.

Consulting firms are tasked with looking ahead to figure out what major development will matter to their clients next. That’s the only way they can stay alive, which has been true ever since BCG’s designed its growth-share matrix to help 1960s conglomerates regain their sense of focus.

As it happens, many companies went on to follow BCG’s advice, either directly or indirectly: the most famous among them being General Electric.

In 1981, Jack Welch became CEO of GE and began pulling the company out of a bureaucracy-caused tailspin. Welch instituted a new rule that GE would only be involved in an industry if it could be the #1 or #2 player in the industry. He sold off 408 underperforming businesses, laying off 100,000 people who worked at them.

BCG praised GE as the perfect example of a “premium conglomerate” — a company that stayed focused despite its diversification. Even more impressive, however, was the level of execution on that focus. The public didn’t see GE as a threatened or weak company, and share prices were fine.

When Welch decided major layoffs were strategically important, it was a tough pill for many of GE’s defenders to swallow. And yet, that ability to execute is what changed GE from “fine” into the most valuable company in America for six of the nine years between 1996 and 2005.

4. Execution

Coming up with a strategy and actually helping a client implement that strategy are two completely different things.

But contrary to the narrative that consultants just tell companies what to do, without helping them do it, consulting firms have actually been aware of this for a long time. The strategy side of consulting has always existed alongside the execution side.

From the 1960s through most of the 21st century, the strategy side was dominant. Today, the wide availability of tools that help companies collect and analyze huge amounts of data, on-demand domain experts, and previously “black-boxed” consulting resources and ex-consultants have taken a chunk out of the strategic value proposition of the big management consultancies.

Subsequently, it’s the execution side where those firms are staging their resistance.

By the mid-1970s, every consulting firm knew the average client company needed help executing on their recommendations. The strategies they were prescribing had gotten complex, the result of an intellectual-industrial arms race started by the “strategy buffs” at BCG. Each consulting firm dealt with this pressure differently, but one firm emerged as a standout: Bain & Company.

Bain & Company had always prioritized intimate client relationships where it could drive greater value, preferring a few high-value engagements to having more numerous but less valuable relationships. The company made three crucial decisions early on about how it would work with clients to make that happen:

  • It would only work with only one company in any given industry.
  • It would only work with clients on multiyear contracts.
  • It would commit large amounts of time, money, and manpower to helping those companies get results, including (at times) sending Bain employees to work on-site to learn on the job.

To maintain confidentiality, “Bainies” did not carry business cards (no one at Bain did for the first seven years of the firm) and would only refer to clients by codenames. The depth and secrecy of these long, intimate relationships led to Bain’s reputation as the “KGB of management consulting.”

Bain’s habit of embedding itself as part of the team made it a darling consultant of the 1980s. Wall Street enshrined “shareholder value” as the ultimate good, and Bain made shareholder value its North Star metric.

This would occasionally get Bain into trouble.

For example, Bain was working with Guinness when it was uncovered that four men — the so-called “Guinness four” — had been manipulating the stock market in order to inflate Guinness’s share price.

At the time, Bain had 35 consultants working at Guinness headquarters and was bringing in $20M a year. One of those consultants, Olivier Roux, was “on loan” as a controller, financial director, and member of the board.

At the same time, that embedded team of Bainies helped Guinness sell 150 companies from its portfolio and make a powerful expansion move into hard liquor with a few strategic acquisitions. Profits for Guinness grew six-fold after these changes, and Bain was never officially accused of any wrongdoing.

Today, Bain — like every major management consulting firm — is focused on the rise in need for digital and technological consulting.

As more and more companies face their inevitable “digital transformation,” BCG, Bain, and McKinsey are helping them understand exactly what they should do. Most importantly, they’re helping them execute.

In the 1960s and 1970s, a corporation would have gone to BCG for help understanding which lines of business to cut and which to invest more money in. BCG’s recommendation would have been to cut this business, take the money from this one and give it to this one, and so on. The execution of that recommendation is something any CEO could handle.

But today, there’s often a much wider gap between idea and execution. “Build a multi-platform analytics stack so you can predict how your users’ demand will change dynamically in the future” isn’t the kind of plan that you can simply execute on without expertise.

As the management consulting firms handle this new world, they’re doing less and less outright strategy work and more and more work on execution.

That’s why McKinsey launched McKinsey Solutions, a suite of analytics software products that are sold to and embedded within a client. Solutions is a proprietary analytics tool that lets companies access some kinds of insights on their own, with McKinsey there as a convenient outlet for actually putting those learnings into practice. This effectively flips the conventional consulting model on its head.

Rather than going to McKinsey for advice, and having them crunch the numbers to develop insights, this model allows a company to look at data to form its own hypotheses. After that, it can go to McKinsey for help making further sense of the data and for how best to respond.

If the proliferation of data, expertise, and insight are going to threaten McKinsey’s core value proposition of helping businesses get results, it only makes sense for the company to hedge against this problem. With Solutions, McKinsey is staking out ground that it can defend no matter what disruptive forces attack the rest of the “consulting stack.”

Among those disruptive forces are independent freelancer networks like Eden McCallum and Business Talent Group (BTG). Eden McCallum and BTG bring ex-consultants and other strategically trained, experienced operators together to form lean teams for client projects, and contract them out without the overhead of working with a conventional management consulting firm.

There are billions of dollars a year in massive, business-rethinking kinds of projects that CEOs can only justify to their board if they hire a big name like Bain or BCG. But McCallum and BTG aren’t necessarily angling to take on the entire consulting market today. They don’t need to try and overcome the branding of those firms to beat them, because they can chip away from the small end. They can build a client base among companies looking for more niche help and more routine projects with better defined parameters and clearer expectations.

“In consulting, as in every other industry, the unlocked entryway is in the basement of the established firms,” Christensen says, “While consulting’s core apparatus is focused on bigger and bigger client engagements, small customers are unguarded.”

A new CPG brand trying to figure out how to price its products has a fairly routinized problem on its hands. That’s not a problem that necessitates a McKinsey-level of involvement — and the company can probably get similar results by working with a pricing expert sourced through somewhere like BTG.

Disrupting the disruptors

One model for the disruption of management consulting could be the “inside counsel” revolution that began sweeping the legal world in the 1970s.

Corporate legal departments were once regarded as backwaters for lawyers. The real clout, and money, lay in outside corporate law firms.

Over time, as outside law firm fees rose higher and higher, companies started to look for alternatives. Globalization was driving new transnational legal issues, and this increased complexity made it beneficial for business leaders to have legal support close and on-call at any time. Moreover, with an explosion in the general amount of litigation and activism across the world, corporations realized they needed to “make” expertise “inside the organization,” as attorney Ben Heineman puts it, rather than “buy” it outside the organization.

Forty years later, it is usually the corporate GC (general counsel) who most closely advises a company’s CEO on legal matters — not some senior partner at a corporate law firm. While corporate law firms have their purpose, corporations now mostly prefer to keep their legal work in-house.

Similarly, consulting and strategy teams could be increasingly brought in-house, rather than hired externally.

As Clayton Christensen points out in the Harvard Business Review, the inside counsel model is made possible by the fact that general counsels and their staff today have access to powerful legal workflow and on-demand staffing tools like Axiom. They can get customized support from networks like AdvanceLaw. And they can outsource more basic tasks like “large-scale document and data review” to firms like LeClairRyan, which run leaner and cheaper than a conventional law firm.

A lot of the value that traditional management consultants have offered their clients has been similarly disrupted by technology. But as we’ve seen, consulting firms are nimble. It may help that they themselves invented the concept of “disruption.”

Of course, there’s no guarantee that consulting firms will survive forever in their current state. Every day, there are more ex-consultants ready to share their expertise. Every day, the tools that companies can use to form their strategy get better and more advanced. And every day, consulting firms need to prove that they can be relevant in this new world — and not simply the prestige name Fortune 500 CEOs hire to get the board off their back.

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