Here the experience of a green horn - we call him John-- from a business school. He shares his post-MBA perspective on the management consulting industry. After he was interviewed, he left a big consulting firm for a startup company.
Before we go to this green horn's answers to direct questions, let us know what a startup is. A startup is a company designed to grow. It is not necessary that it should work on technology, or take a venture funding, or have some sort of 'exit'. The essential thing is growth. Startups are so hard that you cannot hope to succeed. You should be only after growth. If you get growth, everything else falls into place. That means you can use growth as a compass to navigate every decision you face. Now let us see how this novice answers the questions and how he fares.
John is a former consultant of a company. Here he shares a post-MBA perspective on the management consulting industry. After he was interviewed, he left the company for a start-up company. Now let us see how this novice answers the questions:
Does your family ever express confusion about what you do?
Yes. My dad once said while we were talking about my job, "We'll have to talk more sometime about what you actually do." It's hard to conceptualize that a consultant could just come in to a client company and be useful in such a broad range of areas. I've worked on things like an industry strategy assessment that asks "What is the future of financial services?"-and that's so heady and abstract-way down to strategic things like "We need to eliminate 20 percent of cost out of our factories." And I've worked on all the stuff in between: Evaluate this company as an acquisition, evaluate this market, or reorient our division.
What is your favorite project to date?
Probably working for a beef farmer and marketer! We were asked to do a domestic strategy case. They were under some profitability pressure because they're exporters and the export prices had dropped terribly because of producers overseas who produce fifty times what they make. These competitors could mass-produce beef and undercut our client's prices. The company was faced with the challenge of selling more here in the domestic market, and they were uncertain what was going to happen. They asked us to do a market assessment. So what we did was pretty classic. We interviewed the whole management team, ten people, and asked what they thought was happening in the market and how the company operated and met the challenges of the market. We formed our hypothesis-John operates on an "answer-first" principle-- then gathered some initial data and evaluated our hypotheses. We did a huge interview in the market. We gathered information from the distributors and also from purchasers like restaurants, supermarkets, and caterers. Actually, our answer changed very little.
To give you an example, we had a product strategy, which advised our client to develop more value-added products like precut steaks in addition to its regular supply of beef. In terms of distribution channels, we thought they should exploit the growing catering and retail channels. And in terms of operations, we advised them to build a new value-added factory, which would produce the precut steaks and other value-added products, and basically start up a separate operation.
Did you actually get to travel and visit the farms?
We spent time with the management, who taught us a lot about cattle ranching. We took a fantastic tour of the company's facilities. We were the envy of the office. I've been getting these big steaks sent to me as gifts from the client.
So you had a lot of interaction with clients and vendors.
We did a lot over the phone but we also went to the big markets and did in-person research. The education was important because it's a small company. In a big firm like an auto company you might say it's not as important to get a feel for the culture, but here it was. We were looking at individuals.
Do you feel accepted by client organizations, or is it a battle to win credibility each time?
It's a mix. Clients who have hired consultants before are shaped by their previous experiences. If they've been burned before by consultants, they can have a pretty tough view. If they've had a good experience before, then they tend to be welcoming.
You've worked in investment banking previously. What do you think are the key differences between investment banking and consulting?
First, investment banking is an execution job. You know what your product is, so at the beginning you set up the work plan and it's the same every time. In consulting, it's more projects dependent and creative. There's a lot more variety in the projects, so there's no generic execution.
Which do you like better?
You get a rush in investment banking that you won't find in consulting. Consultants talk about the crunch in getting ready for board meetings but it's not the same as doing a divestiture, a takeover, or an IPO [initial public offering].
It's not as immediate in terms of the impact. In investment banking, you see the results right in front of you. The company has $100 million more than when you started working for it. In consulting, even though we say we have great results, you don't see them right away. I like the greater breadth of consulting projects, though. You get more client exposure. In consulting it's not how much can you execute, but can you do the right kind of thinking to structure the project.
What are some of the biggest misperceptions people have about consulting?
I've actually been pretty surprised by how creative the consulting job is. You have to develop your own structures to solve problems. So it's a struggle for some people. And it's very different from having the structure handed to you like in banking. I was thinking the other day that if I couldn't hack it in consulting, I could go back to investment banking, and that wouldn't require the same sort of intellect.
What mistakes do you think candidates make in the recruiting process?
People don't seem to do a lot of research about the firm. At business school, you can always find someone who's been at the firm to talk to. There are lots of candidates who come in and say consulting sounds interesting but don't really know what it is. So I would recommend that people spend more time researching what consultants do.
What's an example of a "case" question you ask candidates during an interview?
We have a good one now that we use, which is "How would you evaluate the market for disposable diapers in the U.S.?" And you take the candidate from key market drivers, to substitutes, and through to a market estimate. We're testing more the ability to do 80-20 analysis, the ability to use common business sense. The candidate might respond, for example, that there are 250 million people in the U.S., that there must be 25 million people under ten years old, and that babies wearing diapers are one to three years old and there must be five million of them. And finally, we test the ability to synthesize findings. We ask, "Let's assume you have thirty seconds to deliver this message to the CEO, what are you going to say?" The point is for people to communicate in clear, sharp points.
Another question I ask is: "You're on a desert island with no one else except for an average-size supermarket. How long can you survive on the food in that supermarket?" I get pretty interesting answers to that one. I'm looking for someone to be able to go from the size of the supermarket, to the squaremeters of food, to how long it will last them. I'm looking for the ability to structure the problem. Eighty percent of the success of the interview will be around structuring.
What is the most important characteristic you're looking for from a candidate during an interview?
I'm looking for aptitude and cultural fit. On aptitude, I look for the ability to structure problems and good business sense, and on the fit side, I look for people who are entrepreneurial and results-oriented.
How would you distinguish consultant John from a consultant at a competing firm?
They're enjoyable to be around. Though there's stress in their lives, it's work hard, play hard. They're fun, interesting people. All the way from the partners to the first-year people. I have other data points. I think the culture at the competing company, for example, is a lot more formal than at the company where I worked.
Where do you think this job fits into your overall career path?
In the short term I might still be at the company, up to manager. But more likely this is a stepping-stone to me doing my own business.
