Booz Allen Hamilton is the one to keep an eye on.
From the Wall Street Journal, August 2:
If AI can analyze information, crunch data and deliver a slick PowerPoint deck within seconds, how does the biggest name in consulting stay relevant?
Companies pay dearly for McKinsey’s human expertise, and for nearly a century they have had good reason: The elite firm’s armies of consultants have helped generations of CEOs navigate the thorniest of challenges, synthesizing complex information and mapping out what to do next.
Now McKinsey is trying to steer through its own existential transformation. Artificial intelligence can increasingly do the work done by the firm’s highly paid consultants, often within minutes.
That reality is pushing the firm to rewire its business. AI is now a topic of conversation at every meeting of McKinsey’s board, said Bob Sternfels, the firm’s global managing partner. The technology is changing the ways McKinsey works with clients, how it hires and even what projects it takes on.
And McKinsey is rapidly deploying thousands of AI agents. Those bots now assist consultants in building PowerPoint decks, taking notes and summing up interviews and research documents for clients. The most-used bot is one that helps employees write in a classic “McKinsey tone of voice”—language the firm describes as sharp, concise and clear. Another popular agent checks the logic of a consultant’s arguments, verifying the flow of reasoning makes sense.
Sternfels said he sees a day in the not-too-distant future when McKinsey has one AI agent for every human it employs.
“We’re going to continue to hire, but we’re also going to continue to build agents,” he said.
Already, the shape of the company is shifting. The firm has reduced its head count from about 45,000 people in 2023 to 40,000 through layoffs and attrition, in part to correct for an aggressive pandemic hiring spree. It has since also rolled out roughly 12,000 AI agents.
“Do I think that this is existential for our profession? Yes, I do,” said Kate Smaje, a senior partner Sternfels tapped to lead the firm’s AI efforts earlier this year. But, “I think it’s an existential good for us.”
Consulting is emerging as an early and high-profile test case for how dramatically an industry must shift to stay relevant in the AI era. McKinsey, like its rivals, grew by hiring professionals from top universities, throwing them at projects for clients—then billing companies based, in part, on the scope and duration of the project.
AI not only speeds up projects, but it means many can be done with far fewer people, said Pat Petitti, CEO of Catalant, a freelance marketplace for consultants. Junior employees will likely be affected most immediately, since fewer of them will be needed to do rote tasks on big projects. Yet slimmer staffing is expected to ripple through the entire consulting food chain, he said.
“You have to change the business model,” Petitti said. “You have to make a dramatic change.”
Avoiding a ‘suit with PowerPoint’
One immediate change is that fewer clients want to hire consulting firms for strategy advice alone. Instead, big companies are increasingly looking for a consultant to help them put new systems in place, manage change or learn new skills, industry veterans say.“The age of arrogance of the management consultant is over now,” said Nick Studer, CEO of consulting firm Oliver Wyman.
Companies, Studer added, “don’t want a suit with PowerPoint. They want someone who is willing to get in the trenches and help them align their team and cocreate with their team.”
At McKinsey, Sternfels is trying to cement the notion that the firm is a partner, not adviser, to clients. About a quarter of the company’s work today is in outcomes-based arrangements: McKinsey is paid partly on whether a project achieves certain results.
Advising on AI and related technology now makes up 40% of the firm’s revenue, one reason Sternfels is pushing McKinsey to evolve alongside its clients. “You don’t want somebody who is helping you to not be experimenting just as fast as you are,” he said.....
....MUCH MORE
Some might dispute that consulting firms are paid to help clients improve their business, instead being paid a few million per contract to stroke the egos of the upper management that hires the consultant, praising said upper management for recognizing they had an issue, hiring the consultant and by the way the golf tournament is on us, no billables.
Some prior thoughts on consultants:
October 2013 - Clayton Christensen: The Next Industry Headed Toward Disruption--Consulting
October 2014 - Johnson Controls Fires Consultant After Affair With CEO (JCI)
October 2020 - "Killing Strategy: The Disruption Of Management Consulting"
April 2022 - "How did McKinsey advise CNN+ so badly*?"
An oldie but goodie:
The Devil tells a Consultant, "OK, I can make you richer, more successful and more famous than any Consultant alive. In fact, I can make you the greatest Consultant that ever walked the planet."
"Great" says the Consultant, "What do I have to do in return?"
The Devil smiles, "Well, of course you have to give me your soul," he says, "but you also have to give me the souls of your children, the souls of your children's children and, just for good measure, you have to give me the souls of all your descendants throughout eternity."
"Wait a minute," the Consultant says cautiously, "What's the catch?"
August 2024 - Consultant
October 2024 - "Consultants Keep Winning the AI Wars"
A few weeks ago Bain and Co. published a report that created some hubbub. Here's Bloomberg, September 24: "AI Market Will Surge to Near $1 Trillion by 2027, Bain Says".
I was asked why we didn't link to or reference the story and the simple answer is, the report reads like an advertisement for Bain's services. Here's Bain's press release announcing the publication, September 25: "Market for AI products and services could reach up to $990 billion by 2027, finds Bain & Company's 5th annual Global Technology Report".
February 28 - "Elon Musk spells danger for Accenture, McKinsey and their rivals"