intro to consulting prework 1

Pre-reading for:

Introduction to Consulting Careers Know and Develop Yourself

J-P Martins, Consulting Careers Team

September 2012

Contents

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What do I need to know about consulting careers at LBS?

What is consulting?

…and is it for me?

Who are the consultants?

…and which would suit me best?

How do I get hired into consulting from LBS?

…and how does Career Services help?

What is a management consultant?

3

Any professional who provides advice and assistance to others, usually for financial reward. This covers many roles operating in almost any industry

‘Consultant’

Identifies, diagnoses and solves business problems and issues

‘Management Consultant’

That’s very general - what distinguishes what management consultants do?

Management consultants: Identify, diagnose and resolve business issues Provide resources

•  People •  Access to data and expertise •  Impartiality

Operate at many levels Work with others

•  Clients •  Case teams

Work on projects (‘cases’ or ‘engagements’), lasting from a few weeks to several years

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Provide an objective view of the way forward and/or help the client to achieve something they can’t do alone

Logic

Speed

How do they do that then? – Workplan, analyse, communicate!

5

Business Problem

Problem Framing •  Impact

•  Insight

Problem Structure and Hypotheses •  Key elements

•  Early hypotheses

Issue Prioritisation •  Speed

•  80:20

Next iteration? New priorities?

Output Communication •  Buy-in •  Implementability

Synthesis and Recommendations •  Solutions •  Actions

Analysis •  So what - insight •  Justification – how

do you get the data to prove it?

Work Planning •  Efficiency •  Leverage

Strategic Problem Solving Process

Sorry, what do they actually do?

The case team leader (typically 2-3 years post MBA) will:

•  Ensure the problem is correctly defined and scoped

•  Understand what the client needs to achieve

•  Sound out approaches and potential solutions (hypothesis based)

The team (consultants & clients) will work together to solve the problem:

•  Work through the issues in a logical way

•  Discuss approaches and solutions as a team

•  Conduct desk research, interview and observe clients, ask awkward questions, collect and analyse data, consult experts

•  Substantiate conclusions with data, data, data

•  Obtain buy-in from team members and client’s senior management

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Example project 1: Merger between two global airlines

7

Problem: Asked by CEO of XYZ Air to assist build a business case for merger, to present to Board

Project: Two teams, each led by a manager with 2 or 3 consultants/associates, three month timeframe Identified likely areas of synergy and estimated quantity of each ‘Killer’ analysis was reconstructing the other airline’s operating and maintenance schedule by working backwards from published timetables Also lots of detailed working through organisation charts and expense details with XYZ Air’s senior managers Developed detailed brand and service strategies to minimise top-line erosion Workshopped findings with select senior managers from both airlines

Findings: Validated key assumptions and overall value - £1+bn synergies

Work was presented to Board – they continued to move forward with the project Merger was eventually announced to markets, but rejected by regulators

Results:

Example project 2: Operational improvement at flight catering centre

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Problem: Asked by GM Catering of XYZ Air to advise on cost reduction and operational improvement at regional flight catering centre

Project: One team, led by a manager with 2 consultants/associates, three month timeframe (one of 8 or 9 such teams running simultaneously in the same client) Hand-picked 15 client team members to perform the project analysis and act as change champions First day was met by a walkout of all staff leading to no food on planes for a 6 hour period

Identified likely areas of opportunity and quantified each §  Included sifting through all discarded meals from one day’s flights to identify what

passengers really want to eat, rather than what they say they want

§  Benchmarked potential savings against wholesale outsourcing

Findings: Over £1m annual saving possible from reduced flight delays, re-scoped food menus and efficiencies in ingredient procurement

All recommendations accepted and implemented – XYZ went on to further reduce scope of economy class hot meals as it realised these really were not valued by public

Results:

Example project 3: Energy coal supply and demand study

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Problem: Asked by Group CEO Energy of Global Mining Co to produce bottom up forecast of energy coal prices for next 15 years based on comprehensive supply and demand study

Project: Sino-Australian team: 2 managers with 4 consultants/associates, with 1 senior manager and two engineers from the client, 3-month timeframe (based in China for 2 months) Completed survey of 300 Chinese mines using local market researchers, and exhaustive electricity demand projections based on GDP growth and demand elasticities Modelled all new planned power stations over next 15 years and likely impact on demand

Thoroughly researched Chinese road, rail and sea transport infrastructure Built global supply and demand model using company information

Findings: Ground-breaking (then!) view on explosion of Chinese natural resource demand Confirmed availability of low cost coal production to meet this demand, despite likely short term transport bottlenecks, and unviability of some of Global’s assets in the long term

Reviewed Global Mining’s cost position and made advised strategy for each mine

Strategy not adopted – Global Mining instead reacted to short term price rises, raising long-term price forecasts, and overinvested in acquisitions which destroyed value

Results:

Contents

10


What is consulting?






The appeal of consulting is different for different people – here’s a starter list…

A fantastic opportunity to accelerate or transform your career

Extremely selective hiring – it’s like winning a prize

Immense capability of your colleagues – smart, charming, driven people

Great employers – training, benefits, offices, personal development

Remuneration’s good – particularly if you stick around a few years

•  Base UK salaries for MBAs £70-90k range for MBAs (+ sign-on)

Professional service – serving clients

Opportunities to travel

Variety: of problems to be solved; of industries/organisations

Intellectual challenges

Interpersonal challenges

Influence (power?)

Ability to create completely new intellectual capital

Value creation

Opportunities to develop, coach and train others (clients, juniors)

Looks good on your CV

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…but it’s not going to suit everyone (1 of 2)

You may not be good enough?

•  Hiring is very selective

•  Fewer than 10% of applicants from LBS get into the top firms

•  You have to be highly driven and work hard

•  60+ hour weeks remain normal, and 80+ hour weeks are not unknown

•  Travel commitments can be onerous

•  Consultants need to work with their clients. This may mean extensive periods of travelling, living away from home 4 days a week

•  Things change

•  Constantly. Project allocations, travel arrangements, meeting times, holiday plans, development targets…

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…but it’s not going to suit everyone (2 of 2)

You’re not the smartest fish in the pond any more •  Your colleagues are bright and enthusiastic – many did better at school than

you •  Your bosses really do know what they are talking about now, and sometimes

you’re the one who doesn’t •  ‘Up or out’ •  Your performance will be constantly evaluated •  Every six months or so, you will be appraised by a career development

committee •  You may be promoted at any of these appraisals •  If not promoted at regular intervals (usually around 2 years) you will be

asked to leave •  Annual turnover at these firms is often around 25%

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How does a consulting career work?

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Associate Consultant1

• Business Analyst2

• Associate3

• Consultant4

Consultant1,3

• Associate2,4

Case Team Leader1

• Engagement Manager2

• Project Leader3

• Senior Associate4

Manager1 • Associate

Principal2 • Principal3,4

Partner1,3 • Partner/

Director2 • Vice

President4

1 Bain, 2 McKinsey, 3 BCG, 4 Booz Note: Timings very approximate

Typical MBA entry level

2 years post MBA

4-5 years 6-9 years

Market is looking pretty good, and doing an MBA at LBS positions you well!

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54 54 61 59

54

100

39 40 45

30

47 57

MBA 2006 MBA 2007 MBA 2008 MBA 2009 MBA 2010 MBA 2011 MBA 2012

MBA consulting hiring from LBS in recent years (index: MBA2011 = 100)

Summer internships Permament hires

?

Source: LBS MBA employment reports Index = # students in class x employment rate x % going to consulting

Fewer MiFFTs get hired, especially into strategy consulting

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5 11 11 7 10 6 4 6

MiFFT 2007 MiFFT 2008 MiFFT 2009 MiFFT 2010 MiFFT 2011

MiFFT consulting hiring from LBS in recent years (index: MBA2011 = 100)

All consulting Strategy consulting

Source: LBS MiFFT employment reports Index = # students in class x employment rate x % going to consulting

Contents

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What is consulting?






The consulting industry is big, and hard to navigate and research

$200+ bn worldwide

BLT (consulting specialist executive search firm) list 370 firms in the UK alone

And this list misses some firms that I know and that hired this year

A handful of brand names dominate most people’s thoughts on the industry, and your aspirations I’m sure…

18

There are many different ways to segment the industry

Whether you’re a novice, onlooker, participant or player…

•  Which firm do you know best?

•  Which segment or category of consulting do you think they fall into?

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The most useful way to segment firms is by fees and size

20 Illustrative only Source: ADD Resources

High

Low

10 100,000

Revenue per Consultant

Size of Firm (# consultants)

Global Elite (‘Top Tier’)

Strategy Boutiques

Global ‘Full Service’ Specialists

McKinsey BCG

Bain

ATK

Mars & Co

Diamond

PRTM

ZS Associates Atkins

Diamond

IBM

Accenture

Deloitte

CapGemini

Booz

All these segments are interested in recruiting from London Business School

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Global, Full Service Accenture, Deloitte, IBM, PA Consulting Part of much larger firms, leverage accounting, auditing, corporate finance, systems relationships

Functional & Sector Specialists

Finance: Oliver Wyman, McKinsey Corporate Finance IT: McKinsey BTO, Axon, Sales and Marketing: ZS Associates, Wolff Olins HR: Watson Wyatt, Hay, Towers Perrin

Specialise in a sector (eg FS, FMCG, transport, construction…) or function (eg finance, HR…)

‘Small’ Boutiques e.g., Greenwich Associates, Mars & Co, Very many firms, some quite small

Internal Consultants e.g., Diageo, Reuters, Shell, Deutsche Post, Vodafone, Oracle

Often do the same work as consultants Many different titles

‘Top Tier’ & Big Boutiques

McKinsey, BCG, Bain, Booz & Co, Roland Berger, A T Kearney, Monitor, Marakon, LEK, OC&C, Parthenon Group

Generalists: §  Across sectors §  Strategy, M&A, PE, Operations, Processes,

Organisation

Who do you want to work for? (1 of 2)

77

44%

324

56%

Pre-MBA Aspirations

Non-consultants

Consultants

401 100%

22 Note: data for MBA 2011 class only

Consultants: pre MBA vs. Aspirations

Who do you want to work for? (2 of 2)

48 45 39

12 5 4 4 4 3

McKinsey BCG Bain AT Kearney IBM Monitor Accenture Parthenon LEK

23 Note: data for MBA2010 class

Which consulting firms – your preferred recruiters

The old term ‘strategy consultants’ doesn’t describe what ‘Top Tier’ firms do

Corporate strategy Corporate development Business unit strategy Functional strategy eg

•  Marketing •  Product innovation/R&D •  Maintenance

Process/operational improvement Organisation design Post merger integration Private equity

•  Pitches •  Due diligence •  Portfolio improvement

But many other firms do this kind of work too •  Boutiques •  Sector specialists •  Functional specialists •  Global ‘full service’

24

The ‘Top Tier’ firms have similar business models and products

‘Top Tier’ Firms McKinsey BCG

Bain +/- Booz

+/- AT Kearney

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Why They Look The Same

Similar people

Recruit highly selectively from top business schools

Partnerships

Rigid up or out, rapid progression to partner for a few

Blue chip clients

§  Eg FTSE 100

§  Leaders in their field

Issue/hypothesis based workplanning

Data driven analytical approach

Slide driven communication

Moved from short term projects to long term relationships, many years ago now

Work on all aspects of management

§  Whatever matters most to the Chief executive and board

Equally comfortable in implementation as ‘strategy’

Observed cultural differences between McKinsey, BCG and Bain

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Influence

Value

Ideas

Bain

BCG

McKinsey More specialised, including

specialist hiring

Generalist, Private equity focus

Generalist

You need to do your own research

How would you characterise these firms?

What about all the other firms that recruit here?

Don’t you think you’d better have a point of view by the time you apply to any of them?

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Contents

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What is consulting?






You can’t all get jobs in the ‘top tier’

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Illustrative Top Tier Recruiter 2008-9

Applications 1st Round Interviews

2nd Round Interviews Hires

160

190 52

40

17

16

4

6

350 92 (26%) 33 (9%) 10 (3%)

Blue = Spring (‘summer internship’) recruiting Red = Autumn (‘full time’) recruiting

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Medium Firms (incl. ‘Top Tier’)

More focused on consulting than ‘Full Service’

Many famous brand names Career building step

Prestige

Large Firms (‘Full Service’)

Systematic training

Many offices Recruiting not as competitive More specialised entry points

Scope for career change

Generalist ‘Strategy’ Firms Higher price points demand innovation Greater focus on bespoke approaches

Comparing types of consulting employer

Small Firms Bigger fish in a smaller pool

Talent more visible Greater breadth of work?

Recruitment less competitive

By size…

‘Specialists’ and ‘Full Service’ Firms Lower prices mean they’re selling experience

More ‘formulaic’ approaches

By price point…

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What matters to you?

Brand name, security

Financial reward

Quality of workmates

Clear, predictable career track

Personal development

Environment/culture

Partner prospects

Quality of work and clients

Turning experience into consulting

Intellectual challenge

Consultants Aspiring Consultants

Source: ADD Resources

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What matters to you?

‘Top Tier’ Boutiques ‘Full Service’

Work/life balance

Speed of promotion

Type/level of work

Earnings progression

International work

Brand name impact

Job security

Quality of colleagues

Ease of getting hired

Source: ADD Resources

Promotion track may also differ between firms

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Associate Consultant1

• Business Analyst2

• Associate3

• Consultant4

Consultant1,3

• Associate2,4

Case Team Leader1

• Engagement Manager2

• Project Leader3

• Senior Associate4

Manager1 • Associate

Principal2 • Principal3,4

Partner1,3 • Partner/

Director2 • Vice

President4

1 Bain, 2 McKinsey, 3 BCG, 4 Booz Note: Timings very approximate

6-9 years Slower in ‘Full Service’ Faster in Boutiques

How is your experience seen by recruiters?

34

Entry level roles Areas of

weakness/ question marks in some areas

Higher level roles

(especially around sales ability outside

‘top tier’)

Entry level roles Good

quantitative/ problem solving

experience Good performer

across other dimensions

Specialist firms

Specialist roles, generalist firms

Generalist roles, generalist firms

Irrelevant Valued Balance Sought Relevant

Non-Consulting Experience

Consulting Experience

Generalist roles, generalist firms

Specialist firms

Specialist roles, generalist firms

Contents

35


What is consulting?






‘How to get a consulting job’ on a single slide? – Easy!

Smart

Charming

Driven

Richard Branson

Mark Zuckerburg

Stephen Hawking

Tony Blair Barack Obama

Ashton Kutcher

Bill Clinton (in his day!)

Michael Phelps Aung San Suu Kyi

Mo Farrah Eddie Izzard

Bill Gates LeBron James

If you had this magical mix, I guarantee you wouldn’t need me to review your CV or to practise a single case… 36

A more actionable checklist involves four areas of competency

§  Maturity

§  Track record (sporting, clubs)

§  Integrity

§  Inspirational

§  Willing to take personal risks

Problem Solving

§  Intellectual capacity

§  Analytics/quants.

§  Creativity

§  Business judgement

§  Comfort with ambiguity

Personal Impact

§  Presence

§  Confidence vs. ego

§  People skills

§  Team player

§  Sense of humour

Leadership Drive/ Aspiration

§  Driven by results – action oriented

§  Enthusiasm

§  Desire to excel

§  Other interests

Could I put you in front of a client on Day 1? Could I spend 24 hours flying from London to Sydney with you?

37

Typical hiring criteria are three ‘meets requirements’ and a spike

38

Problem Solving

Personal Impact Leadership Drive/

Aspiration

Unacceptable

Meets Requirements

Truly Distinctive

Candidate Evaluation

The recruiting process assesses ability, motivation and fit

39 39

§  Do you have the appropriate skills and experience?

Can you do the job?

§  Are you really motivated to do the job? §  Are you driven to excel in the job?

§  Will you fit in to our teams? §  Will our clients think you’re ‘one of us’? §  Will we enjoy working with you?

Do you want the job?

Will you fit into our company?

After application screening, the interview process usually involves 2 or 3 rounds

Interview Round 1*:

Ding!

‘Fit’ interview Case Study interviews (2) Fit and Case may be combined

* McKinsey has the IPS test before the first round

Interview Round 2:

Ding!

‘Fit’ interview Case Study interviews (2 or 3) Usually with partners ‘Weak spots’ tested

JOB OFFER!

Ding!

Additional Tests (sometimes):

Role play Group exercise ‘Business acumen’ test

Spring recruiting on a page (MBA2013)

424

159 92

1st round interviews 173 individuals

2nd round interviews 89 individuals

Offers 68+ individuals

41

“This year is shaping up to be a record year for us at LBS”

– top tier recruiter

Note: Numbers subject to change – final numbers will be published in our annual MBA Employment Report

Who came to Campus to see the first year MBAs last year?

McKinsey BCG Bain Booz AT Kearney Accenture (ADP only) Parthenon KPMG (new – MBA-specific programme)

OC&C (return after a few years’ break) ZS Associates Roland Berger Monitor Delta Partners Solon Note LEK not here last year ‘because of the Olympics’

42

The slides that follow…

Are based on data from MBA2013 for summer internship recruiting this year

These data are not final nor complete

We measured three things across the group

•  CV score – how strong the candidates’ experiences and achievements are (NOT how well written were their CVs)

•  CAC score – how well they performed in quality controlled mock case interviews

•  GMAT – how well they did in their GMAT exams

43

More interviews for high CV and CAC scores

44 Note: 424 1st round interviews

45 Note: 159 2nd round interviews

More interview success for high CV score, CAC score and GMAT

46 Note: 92 offers so far shared among 68 students – more expected

More offers for high CV score, CAC score and GMAT

Firms do not appear to use GMAT as a pre-selection tool

47 Note: Data reflects extent to which firm round 1 GMAT differs from class average

48

CV score, on the other hand, is quite a good indication of shortlisting behaviour (strongest in the most selective firms)

Note: Data reflects extent to which firm round 1 CV score differs from class average

As expected, CV score may be an even better differentiator of interview performance

49 Note: Data reflects extent to which firm round 2 CV score differs from class average

CAC score’ effectiveness confirmed, but not for final round

50 Note: Data reflects extent to which firm CAC score differs from class average

51

Geography appears to have been more important than ever

Summer Consulting Team – last year’s programme

Presentation 20 Feb 40 students

Deadline Wednesday 22 ~30+ applicants?

Shortlisting Thursday 23 16 candidates

Inform candidates Friday 24

Interviews Friday 2 March 6-8 offers

Team starts with offsite 11-12 June

6-8 MBA students work as a self-managed consulting business over the summer and beyond

Last year – 11 projects for 8 clients totalling ~£180k revenue

CS gets 15% (7/5% to a scholarship and 7.5% towards our budget

Target 50% conversion to strategy consulting post MBA

Consulting team runs selection and provides training, mentoring, ongoing support

52

The one month emergency action plan – for emergencies only!

Week 1

• Email to find people interested in practicing case interviews with you

• Practice answering fit questions. Focus on concrete examples illustrating your achievements, role on teams, leadership and analytical abilities

• Reach out to 1or 2 people in industry and network. Get at least 1 lunch scheduled for weeks 3/4, after you’ve practiced cases. Don’t only ask them to look at your resume; they can also give you a practice case with instant feedback

Week 2

• Read or practice 2 cases per day. Practice at least 3 market size estimation questions during the week

• Every day, read 2 FT articles. For each, identify the main business issue, and spend 15m developing an issue tree for the case as if for interview. Discuss with your case buddy, and see what other areas they would have considered. You’re striving to learn to structure things in a MECE way

• Practice 1different fit question per day, in front of a mirror or with a friend

Week 3

• Practice at least 1 case a day with friends. If you run out of cases, have a friend make up one based on recent business news stories

• Continue reading business articles and practicing behavioral questions

Week 4

• Continue reading business articles, practicing behavioral questions, and doing mock case interviews with friends

• Meet with someone from industry. Ask about the company, their experience, and if they can give you a case/provide feedback on your resume. It’s vitally important to have someone review your resume before things get too serious. It's also useful to get a professional opinion on your current case-cracking ability

53 Source: College2consulting.com

Contents

54


What is consulting?






How can we help? Career Services

CVs:

•  Consulting firms are very good at reading CVs

•  Get yours into the MBA format •  Focus on achievements, consulting skills •  MBA CV process kicks off 10 September

Cases:

•  LBS casebook (new edition ~ 5 October) •  Online case prep tool •  Consulting Club CaC •  MBAs have access to Super Saturdays and

workshops

Fit: •  Mock interviews •  Book with coaches •  Ask them to be rigorous, demanding, drill

deep on specific examples •  MBAs – Mastering Interviews workshop

Public domain

Lots of resources

All the main firms’ websites

Booz even has an iPhone app

•  http://itunes.apple.com/app/business-case-interview-prep/id466833493?mt=8

Commercial providers

•  We can’t recommend •  Follow me and others I follow on Twitter •  Google •  Ask around

55

First year MBA consulting careers skills programme

56

Great consulting CVs

Intro to consulting and strategy careers

Creative problem solving Mastering consulting interviews

Summer Consulting Team 2013

On Campus Recruiting

~3 Sept …for the undecided

…for the committed

18 Oct Other career options in strategy

11 Feb 2013 Alternative pathways to consulting

30 Apr Make the most of your internship

~10-14 Sept Presentations by stream

~1-12 Oct Detailed reviews

~15-26 Oct Recalls

~5 Oct ½ day intro

~8 Oct Tools & techniques

~13 Oct, 24 Nov

Crack a Case Super Saturdays

~12 Jan 2013 Crack a Case Super Saturday

~22 Oct Further problem solving tools

~5 Nov Creativity tools & techniques

~6 Nov on Workshops

~16 Nov ½ day workshop*

~17 Nov Mock interviews (externals and PLP)

* Incorporating Winning consulting cover letters and Personal brand

~7 Jan 2013 Commences…

~18 Feb Launch

First year MiFFT consulting careers skills programme

57

Great consulting CVs

Intro to consulting and strategy careers

Creative problem solving Mastering consulting interviews

On Campus Recruiting - permanent

~3 Sept …for the undecided

…for the committed

18 Oct Other career options in strategy

11 Feb 2013 Alternative pathways to consulting

30 Apr Make the most of your internship

MiFFT programme CV process is already underway

Ongoing: LBS Casebook

•  New version expected ~5 October

Online case prep tool

Consulting Club Crack a Case programme

~8 Oct Tools & techniques

~22 Oct Further problem solving tools

~5 Nov Creativity tools & techniques

MiFFT mock interview programme is run separately

24 Sept 2012 Commences…

On Campus Recruiting - internships

7 Jan 2013 Commences…

MiFFTs – apply now or in January?

Autumn pros

No precedent for MiFFT consulting internships

Other applications need to be made in autumn – would be silly to delay those to find out what will happen in spring

Best to find out about likely outcomes sooner rather than later

Less likely to be compared to MBAs with extensive preparation

Firms most likely to hire MiFFTs tend not to have structured internship programmes anyway

Spring pros

More time to prepare

Best chance of securing an internship

58

This is not advice. There is no substitute for drawing up your own well-researched list of pros and cons and reaching your own conclusion

Recap – what is consulting and is it for you?

Management consulting is a broad field, concerned with solving clients’ business problems at all levels

Value, rigour, speed and independence are key

Consultants work in teams, and apply a rigorous problem solving process

Consulting has many attractions, but will not suit everyone

Only you can tell if it’s for you – take today as a starting point and research the sector, and firms…

59

60

Recap – who are the consultants and which would suit you best?

I hope this has given you some ways to think about which firms to apply to

Don’t apply only to McKinsey, BCG and Bain

If you do apply to the top tier firms, have a backup strategy

Choose firms based on what drives you, your strengths, and research on the firms concerned

Recap – how to get hired

It’s very clear what most of the recruiters are looking for:

•  Problem solving ‘smarts’ •  Personal impact ‘interpersonal skills’ •  Leadership (potential…) •  Drive

Ask yourself

•  Do you really stand out on these dimensions?

•  Does you CV/cover letter really reflect that? Recruiters have a multi-stage process that focuses on you underlying competencies, especially problem solving, primarily using tests and case interviews

•  It’s a big time- and emotion-sink •  It’s highly selective, <10% of applicants

succeed with each top tier firm

Maximise your chances Pick firms that resonate with you, your skills and experiences Pick offices that resonate too Don’t just apply to the ‘top tier’ – what are your Plan B and Plan C?

Geography is the most important factor – think

carefully about where you apply

intro to consulting prework 1

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