To understand strategy consulting, we need to first understand what strategy means. The easiest approach is to think of strategy as choosing "where to play" and "how to win."
Strategy is an integrative set of choices that positions you on a playing field of your choice in a way that you win.
Let's think about this from the perspective of starting a cafe in a city full of cafes.
Instead of opting for the most crowded street that's saturated with similar businesses, you might look for an area that, while still busy, lacks a cafe with the specific ambiance you're planning to offer.
This could be a neighborhood known for its vibrant community but underserved in terms of cozy, quality coffee spots. Alternatively, situating your cafe near office buildings or universities where there's a steady flow of coffee-loving individuals could be a smart move.
Simply setting up shop isn't enough! You'll also want to think about what special touch you can offer that no one else does.
Let's say you open your cafe near a college campus. In this case, you might decide to offer your coffee at the most competitive prices in the area, ensuring that students see your cafe as the go-to place for affordable coffee.
On top of your unbeatable prices, you also create a student-friendly atmosphere with fast Wi-Fi, plenty of power outlets, and seating arrangements that cater to both solo studiers and groups.
You could also collaborate with student organizations for events or sponsor events on campus, further embedding your cafe into the university culture.
In short, your “where to play” is about picking the right spot where your cafe can shine the brightest. And your “how to win” is all about making your cafe the go-to spot by offering something unique and delightful that keeps people coming back. This is your (hopefully) winning strategy!
Now let's talk about strategy consulting. Strategy consulting is when you help an organization (usually a business) figure out where to play and how to win. This can apply to a whole company or just a part of it.
This is about setting the big goals for the whole company and figuring out the best way to achieve them.
As a strategy consultant, you might help a company figure out what kind of company they want to be and what makes them different from everyone else (their competitive advantage). Then, you might help them plan where to spend their money and effort to grow and beat the competition, making sure everyone in the company is working towards the same goals.
A business unit is a smaller part of a company that operates somewhat independently, focusing on a specific market segment or product line. For example, a global electronics company might have a business unit dedicated solely to smartphones.
If you're helping a business unit with their strategy, you might help them understand how they fit into the bigger picture (the whole company) and how they can best contribute to the success of the entire company.
You'd also look at the market they're in (e.g. the smartphone market) to see what its strengths and weaknesses are and then using those strengths to get ahead in the market.
At this point, you might wonder why companies hire strategy consultants instead of just coming up with strategies on their own. Let's go back to the cafe example to get an idea of why companies seek an outsider's perspective.
So you own a cafe right next to a bustling college campus, and your team is buzzing with ideas to make it the next big hangout spot for students.
The catch? Your cafe can't pursue all these ideas at once without stretching your resources too thin.
Enter strategy consultants. They act as the unbiased third-party, not caught up in the daily grind or too emotionally invested in the cafe.
They objectively evaluate all these ideas, identifying which ones truly have the potential to transform your cafe into the campus hotspot, discarding the less effective ones, and developing a strategy to make those top ideas a reality. Their outside perspective ensures decisions are made based on what's best for the business, not just personal preferences.
As a cafe owner, you probably aren't an expert strategist. Most likely, neither is anyone on your team.
Most companies are like this too. They don't have people devoted to strategy full-time – and even if they do, their strategy departments tend to be small – like a specialized unit within a large army.
That's because while strategy is crucial, it doesn't change frequently. So companies need a lot fewer strategy people (people thinking about how the company should be run and trying to improve it) than operations people (people who actually run the company).
This is why companies often seek the expertise of external strategy consultants when they want to make big changes.
For examples of real-world strategy projects that the consulting firm, McKinsey, worked on, see here.
While all types of consulting share the goal of improving businesses, strategy consulting stands apart in its focus on high-level, future-oriented decision-making. It's about charting the course of a company, whereas other types of consulting are more about optimizing the internal workings of a company.
Strategy consulting also tends to be more conceptual and analytical. Strategy consultants use market analysis, competitive intelligence, and financial modeling to craft strategies that propel businesses forward. Their recommendations may not always be about fixing something that's broken but about finding new paths to growth and success.
The outcomes are strategic plans and frameworks that guide a company's future decisions. Compared to other kinds of consulting, the impact of strategy consulting might take longer to manifest, as it's about setting the course for future success.
Businesses pay strategy consultants a premium because their work can shape the direction of a company for years to come, influencing everything from market positioning to investment priorities and operational improvements.
Because clients are willing to pay more for strategy consulting work, strategy consultants tend to get paid more than other types of consultants. For more specifics on entry-level consulting pay, check out What's management consulting? A guide for students.
As we mentioned, companies aren't looking to shift strategies all the time. So while strategy consulting pays the most, it's also the part of the consulting industry that has the least projects and is also most vulnerable to economic changes.
Strategy consulting takes around a 12% cut of the overall industry, making it similar in size to HR consulting. More than in other segments, the development of the strategy consulting industry is closely tied with overall economic growth, with high growth recorded during periods of prosperity, and dropping growth rates during downturns.
We hope this gives you a better idea of strategy consulting as a career. To get a better idea of what opportunities are out there, check out all the internships we have in the field of consulting!