Consultants rule the Earth. Here’s everything to know about them

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It’s one of those companies that is everywhere, shapes everything, but seems strangely invisible outside of, say, Office space. Consulting – once a niche service for struggling businesses – has become a multi-hundred-billion-dollar global industry that quietly dictates how Fortune 500 companies, governments and nonprofits operate. The industry sells “expertise,” as well as ways to outsource judgment and mark complex or unpopular choices under the guise of “best practices.”

Born in the early 20th century from the principles and clocks of “scientific management,” the profession boomed after World War II, when businesses and bureaucracies seemingly became too big for their own managers to understand. By the 1980s, companies like McKinsey and Bain had become global power players, transforming corporate strategy into an export business. Today, consultants advise on everything from AI ethics to the Pope’s Quickbooks.

Critics call it a shadow government. Defenders? A shortcut to expertise. Regardless, the consultants have achieved something remarkable: convincing the world that their advice is literally worth billions. And now I strongly advise you to scroll down below to find out more.

By the numbers

7 digits: Annual compensation of McKinsey’s top partners, according to third-party estimates – a reminder that “consulting” can be an extraordinarily profitable product.

70%: Share of large-scale business “transformations” that do not achieve their objectives, despite (or because of) the consultants who guide them. The figure comes from McKinsey & Company marketing materials.

$200,000: Starting salary for some consultants joining top firms, including Deloitte and PwC.

1.4 million: Employees of the big four firms (Deloitte, PwC, EY and KPMG))around half of whom work in consulting and consultancy.

$157 billion: Market capitalization of the publicly traded consulting company Accenture.

The Priesthood PowerPoint

What started as a small-scale trade in efficiency hacks has become something of a corporate priesthood. And who are the priests? Well, the big consulting firms recruit overwhelmingly from elite universities and top MBA programs – Harvard, Wharton, Yale, London Business School, and occasionally engineers from Stanford who can also talk about chips. Associate promotions at large firms are often indistinguishable from Ivy League promotions.

Yet the playbook hasn’t changed much since proto-management guru Frederick Taylor timed metallurgists with a stopwatch in the 1890s: distill complexity into models, compare competitors, and, of course, recommend restructuring. What has changed is the scale of the phenomenon. Following the wave of deregulation in the 1980s, consultants spread across the world. In the 2000s, they moved into technology implementation and outsourcing. These days, they present themselves as translators between companies and AI robots – or agents, as the case may be.

Certainly, demand shows no signs of slowing down. Now more than ever, executives crave the illusion of certainty, and consultants provide that illusion – for a hefty fee. A could I would be tempted to think that AI would further disrupt the consulting industry, given that various models have been built on the sum total of human intelligence. But then there’s the integration of AI itself that needs to be consulted on, right? This would suggest that the future of Accenture — and its colleagues — is assured, even if because AI encourages these same businesses reduce their the consultant counts.

Quotable

“Management consultants: They waste time, cost money, demoralize and distract your best people, and don’t solve problems. These are the people who borrow your watch to tell you what time it is and then walk away with it.”

—Robert Townsend, in his 1970 book Improve the organization.

Brief history

1886: Arthur D. Little, chemist turned entrepreneur, founded what is widely considered the world’s first consulting firm, advising companies on technical innovation.

1911: Frederick Winslow Taylor publishes The principles of scientific managementbringing his gospel of the stopwatch to the workplace – and creating the philosophical model for consultants everywhere.

1926: James McKinsey launches his eponymous company, which will ultimately redefine management as a science and “strategy” as a product.

2001: Accenture splits from Arthur Andersen, nimbly avoids Enron fallout and becomes the world’s largest consulting brand.

2020s: Faced with AI disruption and ethics scandals, from opioids to Saudi megaprojects, the consulting industry is beginning its delicate shift from PowerPoint to rapid engineering.

Fun fact!

House of liesTHE Showtime series about cutthroat management consultants, was based on a real memoir by former consultant Martin Kihn. Star Don Cheadle won a Golden Globe for playing a character based on Kihn — but Kihn later joked that he was never as cool in real life as Cheadle’s Marty Kaan.

Look at that!

A day in the life of a management consultant? That looks depressing! At least according to this one minute video performed by a real one, live, in the de rigeur button-down shirt and Northface vest.