McKinsey has been in the news a lot lately. Big tech has also allegedly used consulting companies to create the lists of people to lay off. Why do executives, who are essentially hired to make these strategic decisions rely on consulting companies? 1. Is it to make someone else liable for the consequences? I know they aren't legally liable for anything, but is this done to blame someone externally of things go wrong? 2. Is it to gain an insight on what competitors are doing? Consulting companies are known to serve all the major players in the industry. 3. Are you paying money to get access to information you otherwise wouldn't have? Like consulting companies serving both the governing bodies and the governed industry. Or is it a combination of all of the above?
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It really depends on the company (client). You are mostly right, but generally executives… 1) don’t trust their intuition or internal strategy teams to make key decisions, and need some outside body to confirm what they already know (the cost of the consultants is usually a fraction of the financial consequences of key decisions) 2) don’t have the man-power or expertise in-house to structure and execute major programs outside of the day-to-day business (this is generally true for incumbents that don’t operate in competitive markets) Your #2 doesn’t make logical sense, any company that has a competitive advantage would not contract with consultancies, and then the insights would not be transferred. If the next best company understood this as well, they wouldn’t contract either (etc., etc.) Your #3 can be true, but from my experience it doesn’t happen often. These type of stories end up in the news, so the general public thinks this happens more often than reality. Note: I am former MBB.