The consulting industry is a broader and rapidly growing industry that incorporates different consulting streams such as management consulting, strategy consulting, corporate consulting, independent consulting, etc. Management consulting and Strategy consulting are the major pillars of consulting services. Though both terms are used interchangeably in the business industry, still they have major differences in their functioning and purpose they serve.
Before understanding the difference between these two consulting services, let’s first have a brief idea about the term Consulting and Consultant.
In simple terms, Consulting refers to a business that is engaged in providing expert opinion and assistance to people of a particular/specific field.
In more defined terms, Consulting is considered as a provision of providing assistance and advice to businesses on different key aspects such as strategy, organizational structure, operations, and management of a company in order to meet its long-term plans and objectives. This type of assistance may consist of identifying various alternatives along with recommendations, implementing solutions, and making a provision of additional resources.
A consultant refers to a professional who carries expertise (in terms of knowledge and experience) in specific or all areas of consulting and provides expert consulting advice to a specific group of people in a particular field like business functions i.e. HR, Marketing, IT, R&D, Engineering, Operations, etc. Also, they provide expert consulting services to different industries i.e. engineering, education, healthcare, IT, manufacturing, etc.
When businesses require external support and opinion on critical problems they are facing or looking for specific ideas for growth then they take services of management consulting. Management consulting is to plan and implement solutions for an organization in order to achieve its objectives or to resolve complex issues. It’s a generic consulting service aiming at improving efficiency and performance of the client company that includes functional level consulting services such as Human Resource consulting, Sales & Marketing consulting, Information technology (IT) consulting, Finance consulting, etc.
The key people involved in providing such external advice solutions to organizations are known as Management consultants. By opting for management consulting services, companies are benefitted by taking external advice and can take advantage of the specialized expertise of these management consultants.
Strategy consulting is considered as a practice in which consultants having expertise in the domain provide their expert advice to organizations on strategic issues and future directions so that the growth and value of their business can be increased. Strategy consulting is the subset or a domain of management consulting that focuses more on corporate strategy solutions. The consultants that offer such consulting services are strategic consultants; who utilize their analytical skills and industry expertise to assist their clients in creating strategies for increasing their market share and revenue by redefining competitive advantage.
Strategy consulting mainly includes Corporate strategy and Marketing strategy services. The corporate strategy includes developing a strategy for market positioning, growth, Portfolio i.e. identification of growth drivers, strategy to allocate budget across various business units. Marketing strategy consists of relating products with products of competitors in terms of pricing, channel, and customer experience.
The difference between Management consulting and Strategy consulting is described below in detail:
DIFFERENCE BETWEEN MANAGEMENT CONSULTING AND STRATEGY CONSULTING (COMPARISON TABLE)
Difference In Detail
Management consulting is a comprehensive term that includes those third parties who provide expert opinion or guidance to a firm’s leadership in order to enhance its overall performance and competitive position.
Wherein, Strategy consulting is considered as a part of Management consulting as one of its subset in which strategy consultants assist clients by providing action-based strategies and valuable industry-specific insights to handle challenges of management and business.
For example, if an organization has issues related to profitability, tech innovation then it might prefer management consulting services for marketing, automation, and cost savings. In case, if the organization wants to have directional-change at a large-scale, then it may opt for strategy consulting services.
Management consulting is a generic and broader domain as it covers all the niche areas of business management and takes care of issues or problems of an organization in bulk. It includes defining problems, data gathering and analyzing, providing recommendations to management, and getting involved in implementing the strategies management consultants recommend along with the in-house team of the client.
On the other hand, Strategy consulting is a specific term and covers strategy management’s overall strategy. Though it comes under Management consulting, still it has a different scope of work that includes rectifying specific issues of management by identifying long-term strategies as per the organization benefit. Unlike management consulting, strategy consulting firms don’t participate in the implementation phase of their recommended strategies to the management. Moreover, technically, all strategy consulting firms are management consulting firms. On the contrary, all management consulting firms are not considered as strategy consulting firms.
The main focus of Management consulting is to support organizations in handling general business problems and improving the performance of the business. This includes handling the technical part of management consulting and resolving issues of different functional areas of an organization. Wherein, strategy consulting is more concerned for specific business problems that require strategic decision-making and its extreme focus is on increasing revenue.
4. Competency And Expertise
Strategy consulting gives great importance to industry expertise and different industry-specific groups are operating under strategy consulting firms. Also, these firms have specialists who have expertise in handling specific business issues and are considered as issue-based specialist consultants. In the strategy consulting team that is deployed for a client, specialists from both groups i.e. industry expertise and issue-based specialists are included.
In the case of management consulting firms, this deep competency level is hardly there as the specialists in these firms are available for some core areas and their focus is on generating value in these niche segments.
The main objective of management consulting is to enhance the effectiveness of the client organization’s performance, business strategy, and operational process so that the organization can generate revenue in the long-term. It also aimed at addressing known deficiencies, enhance efficiency, and upgrade specific skills of the client company. Moreover, organizations seek management consulting services to address issues related to their core functional areas in which strategic decisions are generally not required much.
On the other hand, strategy consulting is aimed at providing advisory services to businesses for unbiased decisions related to high-level, through its deep industry knowledge to provide the best outcome. To look for the right direction and focus areas for a specific situation of the client comes under its purpose too. Also, strategy consulting is in demand as most large companies are not able to spare their senior or top executives for strategic thinking and analysis due to their core responsibilities and also, expert advice is required to handle strategic issues that will impact an organization in the long-term. Being specialists in the industry of the client, they can identify the issues and challenges and are able to do quick value addition to the top executives.
6. Service Area
Strategy consulting usually serves the top executives i.e. CxOs, Board of Directors, Managing Directors in public sector companies, and large private companies. In comparison, management consulting mostly provides its services at a lower level in big organizations. For small organizations, their service area is deployed at many levels. Management consulting firms operate across a wide range of small, medium, and large businesses and provide a pool of services.
Management consulting includes management consultants that serve broad business-related issues or problems whereas strategy consulting consists of strategy consultants that are issue-based specialists who focus on issues that are specific to a business.
8. Working Mechanism
Management consulting work by addressing issues related to how to run the business and it provides solutions to specific problems of organization’s each department while the working mechanism of strategy consulting is more centered towards how to change the business and it considers the wider scenario by solving the queries of top-management people or key executives of the organization.
Management consulting is broadly categorized into two segments i.e. strategy which includes what is to be done and for what reason; and another segment is implementation part which includes identifying tactics for execution. Also, management consulting consists of different consulting services such as strategy consulting, HR consulting, IT consulting, Operations consulting, Project management consulting, Process improvement consulting, Organization development consulting, specific domain consulting like engineering, health care, etc.
But strategy consulting is a form of management consulting that doesn’t include further consulting as in the case of management consulting.
Another reason that differentiates management and strategy consulting is their suitability in different business situations. Management consulting is more inclined toward developing methods to produce faster solutions for the problems that they are hired to handle. Also, it is useful in case of a known issue or opportunity and there is a tried and tested solution available (experience expertise) to sort out the problem.
On the contrary, strategy consulting demands planning for a defined period to make strategies for promoting a new product, cost-cutting, etc. It is comparatively more centered toward problem-solving that works directly for the requirements of the individual client in order to achieve the complete satisfaction of the client. It is useful when unsolved issues are there whether it’s new or previous one such as developing new business, entry into new markets, unexpected events, mergers, etc.
The approach under strategy consulting is bespoke problem-solving which is aimed at directly tackling individual client requirements and issues that need to be resolved. This approach includes different activities such as identifying and validating a problem, to think over possible solutions, evaluating solutions, identifying the best solution, and preparing for implementing the solution. Organizations can look for the services of strategy consulting if:
- The organization’s problem or opportunity is not clear.
- The problem is clear but there is no agreement on the type of the solution required.
- The uniqueness of the business that there is no suitable standard approach.
Wherein, the management consulting approach includes providing advice based on experience or industry-leading methodologies approach. This approach consists of various tools, diagnostics, methods, and other alternatives to accomplish functional excellence. Also, offering expert advice of seniors and performance improvement are also few activities in it. The management consulting approach is the right choice when:
- There is a clear understanding of a problem and its solution.
- There is no fundamental change in the business and external consulting services are required to doing the current tasks in a better way.
- The business is lacking to meet established industry benchmarks or standards.
12. Success Factors
The success of strategy consulting lies in the ability of strategy consultants to confront typical thinking and bring new and customized solutions. In other sense, strategy consultants have to be curious, a good listener to understand the needs of the client, and are able to work comfortably in a problem area where solutions are not known. So, consultants should be able to speculate the problem and its solutions until an acceptable and right solution has been proposed.
Wherein, the Management consulting success factor depends upon the ability of management consultants to provide a consistent solution or service of high-quality. Critical elements to provide quality and consistency can also be good project management skills and the ability to manage a big team of consultants.
13. Career Model
In management consulting, the focus of the career model is on the development of specialists at all levels and progression is not mandatory in this. Career advancement is through the ability to manage teams, provide project work, and having command on single or more methodologies.
Wherein, strategy consulting includes compulsory progression at each stage of a career. In this career progression is through demonstrating thought leadership.
Merits of strategy consulting
- Customized strategic solutions
Startups and big organizations have a different set of needs, issues and for this, they require customized solutions. Strategy consulting helps in understanding their problems and brings business solutions to organizations that are tailor-made.
- Innovation strategy
Strategy consulting firms provide the correct network and channels for innovation. Through strategy consulting, organizations are able to understand required product development, implementation, and research and by this, their unique ideas can be turned into intellectual property.
- Goodwill and brand value
Organizations like startups require a good brand value and awareness among the target audience in the initial stage which requires a thorough strategy for planning and launching. Strategy consulting facilitates startup by providing the roadmap using which they can create their own brand value.
- Easier Merger & Acquisition process:
Strategy consulting supports organizations in outcome evaluation of potential merger or acquisition, smooth execution of M&A, and its due diligence process.
Merits of management consulting
- As specified earlier that management consulting is a broad term that consists of all areas of business management. So, it supports clients in better management of different functions of their business and target achievement by better utilization of available resources. Management consulting firms assist organizations in finding better solutions to their problems because these firms carry expertise and experience of handling similar problems or issues in other different businesses.
- Through process analysis in the company, these firms identify the issues and suggest the best alternatives for solving those issues. Management consulting also facilitates companies in implementing the change process. Organizations can take benefits of their services in managing different projects that include planning, organizing, and managing available resources and project finalization. Both Project management and Human resource management are considered as the main specialization fields of management consulting. HR consulting helps businesses in defining better employment terms and workforce management.
- In case of any business that is facing issues related to poor performance, de-motivated staff, the decline of sales & income, etc., then services of management consulting are considered as the best option. Management consultants who act as professionals; are able to identify the major problems of a company and provide professional advice to utilize different opportunities for a company’s improvement.