Some consultants attract more business and prestige than others. They are able to earn higher fees and produce greater results for their clients. Here are 10 key traits of what makes a great consultant... Embed this infographic: Copy the code in the box below and paste it into your own website <a href="http://ift.tt/1XUT0B5"><img alt="10 Key […]
10 Key Traits of Great Consultants is a post from: Consulting Success
McKinsey & Company do great work. On this blog, I have written about their leader, culture, high-visibility assignments at the CIA, and Department of Corrections. Overall, have enormous respect for the work they do, and the way their build their practice. By any measure, they are pretty monolithic at what they do. So, now I would like to take a look a their presentation structure and format. Let’s dissect a McKinsey presentation.
What are some key elements of a McKinsey presentation worth following? I was curious how good their presentations are. I have physically seen a dozen or so from clients who had McKinsey-ites passing through their halls. Online, they are pretty easy to find. Some of them are from industry conferences and others are from client engagements that the companies (oddly) leave online.
I reviewed a 39 pg presentation from 5 years ago by McKinsey for the USPS here. Generally, this deck follows a simple, but strong logic. It addresses a HUGE problem facing the US Postal Service and provides a smart roadmap for the discussion.
Please find some of my observations. Please add your comments too.
1) Stay Organized. It’s common for consulting presentations to have table of content pages which show is re-introduced at the front of each section – telling the audience where in the flow of the presentation they are. These are road markers. In the example below, this introduces the base case section, part 2 of 4.
2) Parallel structure in titles. I remind my teams that the titles of the pages are the most valuable real estate – use them wisely. Its storytelling, so the titles should come together cohesively. The titles should read well – similar structure, tense, tone, format. Like an essay, the points should be clear with transitions between the arguments.
3) Credibility through data and documentation. Consultants are known for their left-brain, data-crunching rigor. McKinsey is no different. Unless it is a straight marketing or organizational design piece, there are numbers on the majority of pages. They will create data through surveys or other means, if necessary. Clear footnotes indicate where the data comes from . . even if it coyly says “McKinsey Research”.
5) Create a simple framework for the problem. Consultants solve complex problems with lots of moving parts. As a result, it’s important that we bucket the ideas and details into an overarching structure which is easy to grasp and helps with the storytelling. Often this can be done with a simple income statement (Rev-Cost=Profits) or balance sheet (A = L+E). Here the reader sees from the color coding that there are several unfavorable revenue AND cost trends.
6) Find the right data. In professional services, it’s all about the client success – not ours. Therefore, you do what it takes to get the answers and (try to) bury your pride. In the following page, you see that McKinsey actually refers to BCG research on the topic; acknowledging their competitors’ work when appropriate.
8) A clear case for change. Too many recommendations – including the strategic ones by McKisney – end up on the executives shelves collecting dust. It is almost a joke. As a result, it’s key to make it in-your-face clear why action is needed. McKisney shows that $18 billion can be saved if these actions are taken, or $123 billion total. Billion with a B.
9) High level recommendations have details. In true Minto Pyramid fashion, there are back-up pages for the recommendations with specific action steps. Here the $10 billion in savings is broken into 4 initiatives and a few action steps:
Question – not sure how the argument on the right hand side supports this $10 billion target. McKinsey notes that the USPS already automates 90%+ of its processing, thereby questioning the feasibility of really improving that much. As a reader – my question is. . .is it possible or not?
10) Go beyond the obvious. Here comes the creativity. Yes, consultants do a great job of capturing internal know-how, structuring it in a smart story, and marrying it with best practices. That puts a consultant’s performance at a B-/B. Good, but not great.
The real “juice” in consulting comes from thoughtful inquiry, rigorous intellectual curiosity, creativity, and something new. Let’s remember. . . our clients are smart too. They don’t need you to just regurgitate what everyone knows.
Here, you see McKinsey proposing 30 new revenue streams for the USPS to consider, and the methodology to filter out the ones which are not profitable, or not controllable.
For those interested, open up this pdf yourself. What other elements do you believe McKinsey did right or could improve?
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I travel a lot. Like most management consultants, I am a road warrior. According to Marriott.com, I have stayed 152 nights last year. Perhaps 10% of that is from my wife who also uses my rewards number, but needless to say, lots of hotel, plane, car.
Funny sidebar – a friend was NOT traveling one week, and his credit card flagged him for using his personal card CLOSE to his home during a work week. The credit card algorithm could not fathom him being HOME during the week. Yikes. Dysfunctional.
I am in the professional services business. My place is at the client site – whether in an office, conference room, or hotel concierge lounge. The tools of my craft are a computer, dry-ink marker, cell phone, wifi connection, my brain, my heart, and my mouth. Yes, traveling, thinking, typing, and talking. T – T – T – T
What kind of “stuff” do I keep in my bag? Here is an abbreviated list of things that I carry around, find helpful, and recommend. Not in any particular order
What do you carry in your consulting bag that makes life easier, more pleasant, or less drama-filled?
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A new report my McKinsey Global Institute, Digital Globalization: The New Era of Global Flows documents this. I came across this report as I recently did some research on how disruption has hit the financial industry, and remarkably, digital flows, which were practically non-existent just 15 years ago, now have a larger impact on GDP growth than the centuries-old trade in goods.
Although this shift makes it possible for companies to reach international markets with less capital-intensive business models, it poses new risks and policy challenges as well. The world is more connected than ever, but the nature of its connections has changed in a fundamental way. The amount of cross-border bandwidth that is used has grown 45 times larger since 2005. It is projected to increase by an additional nine times over the next five years as flows of information, searches, communication, video, transactions, and intra-company traffic continue to surge.
In addition to transmitting valuable streams of information and ideas in their own right, data flows enable the movement of goods, services, finance, and people. Virtually every type of cross-border transaction now has a digital component.
Trade was once largely confined to advanced economies and their large multinational companies. Today, a more digital form of globalisation has opened the door to developing countries, to small companies and start-ups, and to billions of individuals. This opens up a huge business opportunity for developing disruptive fintech businesses. More about this in another blog article very soon.
Tens of millions of small and midsize enterprises worldwide have turned themselves into exporters by joining e-commerce marketplaces such as Alibaba, Amazon, eBay, Flipkart, and Rakuten. Approximately 12 percent of the global goods trade is conducted via international e-commerce. Even the smallest enterprises can be born global: 86 percent of tech-based start-ups surveyed by MGI report some type of cross-border activity. Today, even the smallest firms can compete with the largest multinationals. After all, on the internet any business is 13” inch across the screen.
The post The Explosion of Globalisation appeared first on Bearing Consulting.
The world has changed immensely in the 36 years since then. The demise of the bipolar capitalist-communist world, economic liberalisation, globalisation and the rise of multinational corporations and the border less internet have played their part in the changing the face of the global economy since 1980.
Howmuch.net has put together a Voronoi diagram showing the change in GDP of the world’s largest countries from 1980 to 2015. Using data from the International Monetary Fund (IMF), the diagram shows how the economies of these countries have changed during this time period.The size of countries and regions are shown as relative to the size of their economies in terms of nominal GDP.
The post The Global Economy since 1980 in 20 seconds appeared first on Bearing Consulting.
McKinsey published a 120 page report on the digitization of America here (2.6Mb). Some critics might argue the two main arguments are a bit obvious: 1) digitization drives productivity and 2) those gains are shared uneven across industries, companies, and people. It is a story of the digital divide – the “haves” and the “have mores”.
On the surface this is not a surprising point, right? Moore’s law has been driving productivity for the last 30+ years. See a good summary of that point from the report below (page 33). There are waves of technology – honestly – starting WAY before the advent of the microprocessor – Archimedes, Ptolemy, Faraday, Marconi to name a few.
Digitization drives profits. Technology drives innovation, new products, fascinating applications, better allocation of fixed assets, and in many consultants’ cases. . . saving you time. McKinsey shows in the graph below that over a 20 year time frame, the profit margin of non-financial industries grew from 5.6% to 9.0%, and those gains were not shared evenly across industries. Michael Porter’s industry attractiveness exercise.
IT manufacturing, Media and IT services grew profits the most spectacularly as seen in the graph below. Just as fascinating, is the fall of Telecom growth as the “old” technology got cannibalized by newer cell phone, and VOIP “newer” technology. The gains are not shared. “Haves” and “Have mores”
What I think is more remarkable, is how management consultants – in this case McKinsey – can take an immeasurably broad and amorphous topic as digitization driving productivity and make something actually readable. It’s all story-telling.
Put things in buckets. For anything vast, chaotic, inter-related, complex or messy – one of the key tenets of consulting is bucketing. Yes, bucketing. It forces you to think about the problem – isolate the drivers, assumptions, trends, and outliers. McKinsey does exactly that by breaking down the data, building it back up again with hypotheses and testing those recommendations. Standard consulting fare.
Digital assets, usage, and people. The first thing McKinsey does is categorize digitization into three major buckets (assets, usage, and people), which of course can be broken down further (page 15). Then they put the sectors on the left, rating the level of digitization from high to low. The sectors with lots of green are highly digitized, while those in yellow and red are not. Judging from the % share of GDP and employment, a lot of the laggards toward the bottom (especially government, healthcare) have the most to gain marginally from digitization. Large parts of the economy are not productive.
Are in one of the industries shown in red color above?
If so, you really need to think:
Look below. Simply put, the less digital the industry, the less it pays.
Paraphrasing some of the key thoughts in this report:
Power shifting to platforms and consumers. In the old day, the manufacturer or the supplier had the asset and the power (think Marx). Not any more. Platforms – Facebook, Linkedin, AirBnB – create value from synthesis, comparison, and navigation of choice. In the US, everything is so abundant that the scarcity is time. Platforms and digital intermediaries save people time. . Yelp, Uber etc.
Platform economics combines low marginal costs with the growth from network effects. McKinsey notes that within 10 years, Facebook has more users than the population of China. BOOM. low cost + network = hyper growth.
Traditional intermediaries get disrupted. Insurance broker and travel agent are two examples of jobs that are fast disappearing. McKinsey notes that from 2000 to 2014, online travel booking increased 10x, but the # of agents dropped by half.
Digitization drove enormous growth in the 1990s, less in the 2000. McKinsey admits that productivity in the US slumped dramatically in the 2000, bringing up the question of peak-digitization.
But it took 15 months to restore lost jobs after the 1991 recession, 39 months after 2001, and 43 months after 2008.
Large companies in particular now respond to downturns with a push to improve productivity—not by increasing output and innovation but by cutting employment
The robots are (kind of) taking over. Some of the messaging is depressing, even to libertarians like me. Too frequently, companies are getting more productive – not by creating more output – but instead, by reducing the human inputs. The thinking goes. . .”well, since we are stuck with this market share, and these products/services, I guess we can at least just cut costs.” It’s generally uninspired thinking, and honestly, you cannot cut your way to prosperity.
More work for more people. One win is that more people can participate in the workforce – people in far off places, people with low marginal opportunity cost of time (read: poor), people who might traditionally not be able to contribute (e.g., physical disabilities). Technology helps to flatten the field – turn everything into a global field.
Better use of resources. The Internet of things (IOT) holds the promise that connected devices will make our lives better – by tracking data, getting smarter over time, and optimizing usage. While consumers are just now getting a taste of that now (Google’s Nest, Tesla cars), large industrial companies like GE, Siemens, Philips, Rolls Royce have been doing remote diagnostics and smart connected devices for decades.
Smart supply chain. Here is where McKinsey makes a bold prediction. They say that digitization can boost US GDP by 2.2 trillion. A good portion of this comes from a smarter supply chain. This makes sense because in the simple macroeconomic formula for GDP (C+I+G+NX), a lot of that is honestly supply chain.
Whenever you go to the store to buy something it has changed hands hundreds of times likely coming from China to boat to a train to a truck to a warehouse to a store. The low price of oil right now probably masks this latent inflationary ingredient. Once all prices go back up everything is going to get more expensive to get you.
It is all changing. In true Schumpeter style, the APPLICATION of technology continues to evolve. . .just with the late majority start to pick up on the use of technology BOOM – the technology chasm moves again. Like the gazelle and lion quote, technology is helping people and companies run faster- with or without you.
The “have-mores” continue to push the boundaries of digitization, particularly in terms of augmenting what their workers do, while everyone else scrambles to keep up with them.
Startups = technology farm teams. Perhaps this is why large, stodgy companies are buying start ups. Rather than merely throwing money at ideas and basic research, they can pick up promising technology AND the people once vetted by the market. These valuations are not cheap – very susceptible to hype and bubbles; just look at the unicorns – privately held companies purported to have valuations of $1billion here.
Where do you fall on the digital industry spectrum? Do you agree with these findings? What more would you add for your industry?
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Bubbles arise when asset prices inflate above what underlying incomes can sustain. In the classic case of Tulip mania centuries ago, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. Then in February 1637 the Dutch woke up one morning and discovered that tulips were simply just flowers after all.
The world has yet to wake up to the mathematical reality that over $200 trillion in global debt and perhaps another $500 trillion of un(der)funded liabilities really cannot ever be paid back with current incomes and low level of economic growth.
No major economy in the world has decreased its debt-to-GDP ratio since 2007. Instead, since the Great Recession, global debt has increased by $57 trillion, outpacing world GDP growth. However, this unpleasant fact is dawning within the minds of more and more people with each passing day.
To reduce debt, Central Banks have tried to modify the phrase “under current terms” through debasing the currency of government bonds by re-introducing inflation. Try as they have, though, across the indebted countries they have been unable to create the intended inflation that would slowly erode that massive pile of debt into something more manageable. On the contrary, in a bid of last resort to reinvigorate the economies. country by country the central banks have ended up experimenting with policies to implement negative interest rates for lending, meaning depositors will have to pay to make deposits. The negative rates punish banks that hoard cash instead of extending loans to businesses or to weaker lenders.
With inflation very low and commodity prices in free-fall, these policy experiments have been low risk and, importantly, successful. The global economy not only avoided the Great Depression scenarios which forecasted the global banking system ground to fail, but 2016 is set to be the eighth year since the crisis where global GDP growth has been above 3%.
However, the intended end-effect, wide-spread low inflation, has not happened. Why not? Because the current economic stagnation is driven by digital disruption, falling commodity prices and the quantitative easening post-crises does not lead to increased consumer consumption, given the already high levels of debt in most households.
The weakness in most commodity prices, most recently the drastic fall in the price of oil, is lowering input costs for raw materials to the production process in most manufacturing industries. With energy costs near a decade-low and many raw materials prices also falling, firms can maintain profits even if they lower prices simply because input costs are falling.The elites of the post-crises age are prioritised clients of the banks, so by their current monetary policy, the central banks have simply concentrated the inflation to the sorts of assets the wealthy of the world buys: private jets, apartments in London, Monaco and Manhattan, fine art, jewellery, etc. So yes, the central banks post-great-recession efforts produced price inflation, just of the wrong sort.
Monetary policy and tools do not work in the post great recession society when the middle classes are already in mortgage debt and cannot increase their spending. Today 1% of the population of the world owns 50% of all assets and 10% owns 90%. Overall less people are poor, 1 billion have been lifted to middle class in the emerging markets in the past 30 years, but in the west most people are in general off with less money than they used to have.
This is important, both for how financial markets now work, and for which products and services they require. In a society of hyper competition and with on average less affluent people than before 2007, but with a much larger middle class, then e-commerce with low prices and cash becomes king more than assets, and cash moved quickly by efficient payment systems are much sought after.
In today’s hyper-interconnected world of global banking, if one domino falls, it will topple any number of others. The points of connectivity are so numerous and tangled that literally no-one is able to predict with certainty what will happen. Which is why the action now occurring in the banking sector is beginning to feel like 2008 all over again.
The deflation fears which drives the central bank actions have some credence. Most importantly, there appears to be a huge amount of spare capacity in labour markets. This means that wages growth will remain subdued and the wage/price linkage will skew inflation risks squarely to the down side. This means people will increasingly look for low cost options, continuing the internet e-commerce revolution not only by convenience, but also by increasing price concerns.
And this is the nub of digital disruption and slower economic growth. Before Uber, clearly there was spare capacity in privately owned cars, which sat unused for many hours each day. So too with apartments that were empty and unable to be let out by the owners when they were not there. Uber and Airbnb, and others disrupting asset markets, have tapped this idle capacity without adding to investment, and as they take business away from taxi companies and hoteliers, the rate of economic growth will remain held back.
The post The State of the Financial Industry in 2016 appeared first on Bearing Consulting.
