Strategic consulting (SC) is often called strategy consulting , strategic advisory or consulting advice. This concept is considered by most consultants as the most “elite” and prestigious segment in the professional services industry. A strategy is defined as a plan for the implementation of the long-term objectives of the organization. All the largest companies regularly interact with consultants to develop and implement business ideas.
Strategic consulting is aimed at supporting clients of large businesses to develop a corporate, organizational or functional strategy and assisting public sector institutions in economic policy.
Short story
The first strategy company was created in 1886 by Arthur Degon Little, a chemist at the Massachusetts Institute of Technology, followed by other specialists who gradually institutionalized the consulting industry.
Although Arthur Little opened this direction in business management, he refused to continue to follow the general global trend, which began to develop on homogeneous standard standard solutions, which contradicted the opinion of the author. He was categorically against any systematization and sought to come up with a unique solution in each case, so he refused to join the professional association of strategic development consulting.
Ultimately, his strategy stopped developing. Unlike other companies, which took for themselves much less risk, transferring ideas from one organization to another. In fact, the profession grew on the basis of homogeneity, not innovation.
The next stage of development is associated with DuPont. For a long period of time, DuPont was a monopolist in the field of explosives in the United States. When the war ended, the company had to think about other products and markets. They decided to apply their technology to the production of chemical products (such as nylon) and paints and varnishes. To organize new production facilities, DuPont took the opportunity to solve the problem with the help of a special departmental structure, since the existing consulting firms of that time could not solve reconstruction issues. This experience later spread to other major strategic consulting centers, such as GM and Standard Oil.
Consulting companies such as McKinsey or Booz Allen Hamilton are also interested in this more successful model. Since the 1930s, most of the activities of such corporations have been devoted to the implementation of experience in various industries.
Then James McKinsey, who led McKinsey in the 1930s, introduced some very bright ideas to the production. He launched a survey, interviews with company managers using a questionnaire. He also streamlined the firm’s commercial approach. Martin Bauer, his successor, took it one step further by developing a new recruitment and cultural adaptation method for employees.
McKinsey has set up a strategic consulting system for the company, one for sales and one for serious, stereotypical consultants. The company was much less successful, but in the long run, McKinsey was the right choice. Unlike its competitors, McKinsey signed a contract with large business clients, for example, with the diamond giant De Beers.
From the 1940s to the 1960s, consulting firms made a great contribution to the growth of “multi-unit” structures, which today are the basis of large financial groups. Consultants began to actively disseminate this model in Europe. By the end of the 1960s, the company had a base in the UK. Since the mid-60s, centers began to sell a strategy, not a structure. By the end of the 1980s, consultants were playing a completely new role in firms.
An example of strategic consulting for that time is the Boston Consulting Group. In 1975, the British government commissioned a study from the company about the future of the motorcycle industry in the UK. The results exceeded all expectations, national firms saw their sales fall, mainly due to Honda, which had captured the US market.
A new trend appeared in the USA in the 1980s, when a number of legal laws included managerial responsibility. Insurance fees due to possible management errors exceeded all possible amounts. Subsequently, the firms were forced to switch to management reviews in order to legitimize the decisions of their managers and the consulting market again pulled forward.
World market
In 2011, the market for strategic consulting services was estimated at $ 26.5 billion (approximately 1.8 trillion rubles). After the crisis years, global growth has been slow due to the recovery of the US and European markets, which together represent the vast majority of global industry. Since 2014, the strategic consulting industry has been growing at a growth rate of 4.7% in 2015 and 5.8% in 2016; it was valued at more than $ 30 billion (2 trillion rubles) in 2017. This type of consulting occupies about 12% of the total industry, which is equal to the volume of HR consulting.
The development of the UK industry is closely linked to global economic growth. So, during periods of prosperity of industry, its growth was high, and, on the contrary, a decrease in growth rates was recorded during the general recession of the economy. Strategic management consulting consists of eight disciplines:
- Corporate strategy.
- Transformation of a business model.
- Economic policy.
- Mergers and acquisitions.
- Organizational strategy.
- Functional strategy
- Digital strategies and operations.
Corporate Theory
This method, also called strategic management, involves the development of strategies and goals for business units. Consultants in this area are regularly attracted to support, in particular, the development of strategic planning in consulting. Common examples of such consulting projects include evaluating options, supporting business planning processes, and developing growth programs when companies enter new regions or launch new products.
Like corporate strategy, firms focus on developing promising strategies for fundamental changes in business practices caused by major changes in the external environment. In addition, the transformation of a business model has a wider range than strategic consulting, and this means that it can be applied to a number of organizational and operational elements to achieve a common goal.
Their list includes price offers, customer segments, cost structures and organizational structures. Due to the devastating nature of technology in recent years, consultants who support the work of BMI, in many cases work at the intersection of digital design and IT strategy.
Economic Policy Service Area
It includes a series of economic advisory services that are supported by government and international political institutions. Most of the proposals cover fiscal policy, which relates to government actions regarding taxation, budgets and expenditures, and monetary policy. It also examines the actions of the Central Bank in relation to money supply and interest rates or government interventions in areas such as the labor market, national property, housing, etc.
Further proposals within the segment include impact assessments, for example, studies of socio-economic benefits, analysis of financial evaluations in cases of economic disputes, economic studies for antitrust cases or competition investigations and merger procedures for both corporations and authorities.
Strategic consultants, together with corporate finance consultants, M&A lawyers and investment bankers who are also actively involved in these matters, pay special attention to strategic and commercial activities until the transaction is completed. Strategic consulting centers serve companies and investors, for example, when building business cases, in order to understand the economic factors of mergers and acquisitions and to continue to support clients with due diligence regarding potential goals.
Other areas where consultants can play a role in mergers and acquisitions include support for alliances and joint ventures, asset management and the development of initial public offerings (IPOs).
Organizational Leverage for Enterprise Development
An organizational strategy considers the leverage that an organization must manage in order to implement an enterprise strategy over time. First of all, proposals include designing organizational structures and corporate governance, assessing organizational competitiveness, etc. A functional strategy includes developing strategic plans for organizational functions that can range from sales and marketing to finance, HR, supply chains, R&D or procurement .
Over the past decade, strategic management and operational management have been increasingly intertwined. As topics such as process, operations, and technology management are becoming increasingly important elements of implementation. Consequently, several proposals that have historically centered around strategic advice have been expanded to reflect operational considerations, and as a result, the area of strategy and operations has gained importance.
The domain is served not only by consulting firms that have switched to operations, but also by operations specialists and have increased their skills and large technology firms. In the future, it is expected that the lines between strategy, operations, and technology will be further blurred.
In accordance with the development of technology, digital strategies have come to the forefront of strategic work. More than ever, they have contributed to success, which is why they have recently shown unprecedented growth. The service area combines the elements of strategy and IT organizations and covers such proposals as developing a strategy for digital operations, developing corporate IT or online strategies, developing analytic approaches, applying cloud technologies, as well as providing high-level architecture and application management.
Comparison of management methods
Strategic and management consulting have significant differences. Companies seek external advice and support, when they encounter any complications, they resort to management consulting. Professionals who provide external advice are called management consultants. Management consulting is a general view of this activity. This is a basket for other small specialties, such as personnel consulting, financial consultations. Organizations not only benefit by receiving external recommendations, choosing management consulting, but also gain access to obtaining specialized expertise.
Strategic consulting is a practice when consultants with extensive experience provide companies with recommendations regarding their goals and future direction, offering profitable tactics to accelerate growth and add value to the business. These consultants use experience, industry wisdom and analysis to help their clients find strategies that will increase revenue and market share while improving their competitive advantage. These two species are interconnected, so they do not have many differences. Here is some of them:
- Strategic consulting, as a rule, is aimed more at leaders and the board of directors, large organizations and public sectors, while management consulting is carried out at lower levels of corporations and in small organizations.
- Consultants specialize in issues that focus on specific business issues, while management consultants work on broad business issues.
- Strategic and management consulting is carried out in companies of different levels. Management consulting is carried out in large, medium and small organizations, in contrast to strategic, which is mainly carried out only in large organizations.
Company development prospects
IC is a part or a special area of classical management consulting. On the one hand, IC is the company's expectation regarding a change in framework conditions, such as technology, markets and laws. On the other hand, strategic recommendations also relate to the respective objectives of the company, which may include, among other things, continued existence, consolidation of certain market positions or the search for possible return on capital. Typical tasks of the IC include review, further development of new areas, concepts and measures to improve and develop a business model.
The review includes consideration of the current position, which is always strategic and at which the company makes appropriate decisions. If a position is chosen subconsciously or unconsciously, this does not necessarily lead to optimal development and market positioning.
The analysis of this position is the task of strategic consulting. Cases may include negative events, reorientation of a company or individual business sectors. In addition, SC is associated with the subsequent adjustment process. It is based on analysis and is necessary due to external and internal changes. Examples include changes in interest rates, reorientation of sales, and the advent of new technologies. The need for such consultants in the UK increases especially in cases where the company is newly created, merged or a change of ownership exists.
Procedure, specific specifications and requirements
IC mainly follows the general scheme of consulting projects. Based on the assessment of the situation, action options are developed, researched and selected. Implementation of the chosen option is carried out, later implementation in the company is followed and supported. Specific characteristics and requirements are due to the complexity of strategic issues.
Clarification of the strategic level and focus of the project includes adjusting the level of the strategy at the acquisition stage. If at the same time questions of different levels arise, the order of their consideration is agreed with the client. The mental hierarchy indicates that in such cases, the level of the company or group takes precedence over the business level and functional level.
Strategy development requires corporate goals. Therefore, consulting involves a fundamental explanation of these goals, and often their reformulation in dialogue with management until the final definition of the project. This process can be repeated in practice if the targeted correction makes sense due to strategically relevant information. From the point of view of the consultant and the project manager, it is necessary to quickly obtain clarity regarding the existing or necessary information base. The basic information is compiled, checked for relevance and combined with a description of the situation. Any misinterpretations should be eliminated at an early stage. By agreement with the client, a common knowledge base for strategic analysis is created.
At the stage of analysis of the strategic starting point, the methodological competence of the consultant is used. Against the background of the company's position, strategic approaches are developed in the form of action plans. The consultant and the project manager are responsible for collecting existing ideas, presenting new ideas and supporting generation through suitable events, such as brainstorming workshops. The innovative content of the future strategy is explained at this stage of the project.
The responsible decision in favor of the strategic option lies with the management of the company. However, the consultant should be able to make recommendations and justify it in terms of quantity and quality. In any case, it must ensure systematic decision making. This primarily includes a financial assessment of each alternative, for example, in the case of a business strategy in the form of a business plan.
List of Consulting Services
Strategic consulting services are adapted for most common service lines of business planning, strategy and continuity:
- Conflict Management.
- Budgets.
- Competitive analysis.
- Market analysis.
- Development of services.
- Calculation of value or potential selling price.
- The initial draft and structure of the contract of sale.
- Navigation consulting on the traps and dangers of selling a company.
- Analysis of cost or asking price for goods and services.
- Marketing and sales, including e-commerce.
- Marketing plans.
- Marketing Audits.
- Market analysis of strategic consulting services for large companies.
- Development of services.
- New launch of the service.
- Advertising plans.
- Advertising audits.
- Pricing Analysis.
- Analysis of competitors.
- Analysis of web pages, including usability.
- Design updates, search and optimization strategies, and web advertising strategies.
- Risk assessment.
- Review and audit of the risk management system.
- Development of a risk management system.
- Assess or develop safety guidelines.
- Risk and safety training.
Features of the Russian market
Despite the fact that strategic consulting in Russia has all the features of a young market, it is developing very rapidly. The main development trends can be noted:
- Increasing the level of trust in consultants, as a result of which demand for large and medium-sized firms has increased. This is primarily due to the fact that competition in economic sectors is increasing, and firms need to research and develop new solutions for increasing efficiency. In order to develop these solutions, consulting consultants are involved.
- Competition in the expensive price sector. Supply growth is far ahead of demand. Most of the large Russian companies already have experience working with consulting companies and have regular suppliers of these services, while others resort to various tricks (time limits, dumping) for long-term relationships and the choice of another consultant.
- Due to the increase in competition and the emergence of price confrontation at tenders, there is a decrease in prices for SK.
- The emergence of demand in large firms. The latest firms that do not have the practice of interacting with consultants implement their plans with the assistance of international consulting firms.
Thus, it can be argued about the great prospects for the establishment of insurance companies in Russia, both in terms of sales growth and the number of firms, and in terms of the quality of services provided.
2018 strategic consulting and company ratings are presented in the photo in the article.
Digital strategies support the market by creating IT strategies, providing plans for introducing technologies into a business strategy, and providing business functions. They are well placed to implement systems and tools and a high-level IT architecture.
Analysts distinguish between two types of firms in the Russian market:
- consulting organizations "clean game";
- “Strategic practices” of multiservice companies with a service line of a universal consulting company providing relevant services.
Thousands of organizations operate around the world that provide such strategic services, but the rating of strategic consulting companies depends on the global reach and reputation of firms operating at the top of the market.