notbobs

Always some misunderstandings about how consulting firms work whenever McKinsey comes up, so will shed some light as a former MBB consultant

Companies typically have a few "administrative functions" -- HR, Finance, Legal, Marketing -- in addition to Sales and R&D (Product / Eng). What some companies have (but not all) is a "Strategy" organization. The strategy organization, if a company has it, is usually <20 people, with a chief strategy officer reporting to the CEO. At a startup, founders are tasked with understanding the ins and outs of the business and designing a strategy based on that information. At a larger company, the CEO doesn't have the bandwidth to answer questions at an appropriate nuance (e.g., what is the first Latin American country that a food delivery app should launch in given consumer interest, competitive environment, local regulation, etc.). These questions would fall to a strategy team.

The reality is that there is not enough work year-round to employ strategy people all the time, so large companies would rather pay McKinsey $1m every couple of years to help do all the underlying research to answer questions rather than employ a strategy team at a higher cost per year.

Some other things we did for clients: 1. Provide some organizational benchmarks e.g., competitors give their sales people $5M targets per year, and you're only giving your sales people $3M targets. 2. Manage one-time projects e.g., F500 company acquiring another. Lots of (boring) administrative work of determining who reports to who once you merge these two companies 3. Provide some insight into new market segments a company can enter. For a company that sells widget X, what's the next widget they might be able to produce efficiently and sell to existing customers where there is a meaningful market and the company can leverage it's existing capabilities (related to the strategy piece above)

Lots of reasons a company might hire consultants, but generally no one in the organization wants to / has those responsibilities in their job description, so makes sense to do a one-time engagement.

I also found that even lower-level employees confide in consultants and consultants provide a fast-track to surface those issues to the CEO. Eg we were working for a consumer electronics company where the HW and SW orgs could not agree on anything and accused eachother of blocking their roadmaps.. Surfaced that to the CEO, and he made fixing that his top priority