From Problem Solvers to Power Brokers: The Evolution and Influence of Strategy Consulting
The field of strategy consulting was born in 1886 when Arthur Dehon Little, a chemist from MIT, founded the first consulting firm. Little's vision was solving complex, unique problems for businesses, resisting the emerging trend of standardization in consulting. Ironically, this resistance to conformity led his firm to decline, as other firms embraced scalable, repeatable models that allowed them to flourish.
The narrative here from adaptation to rigidity marks an important aspect of strategy consulting-innovation and institutionalization balanced, as it were. The industry evolved over the years and rose from being a powerhouse of ideas and legitimacy. Let us see how.
From Pioneer Ideas to Organized Structure
Companies such as DuPont tackled problems that consulting firms couldn't solve in the early 20th century, such as diversification post-World War I. The company developed the "departmental structure," organizing along product categories rather than around functions like sales or R&D. This model spread throughout industries with the support of early consulting firms like McKinsey and Booz Allen Hamilton.
During the 1930s, McKinsey implemented formal methods such as the General Survey, integrating formalized interviews with company managers and standardized recruitment. Although its growth was slower than that of its more innovative competitors, McKinsey's business-to-business strategy with companies like De Beers formed the basis of future success. By the middle of the 20th century, multidepartmental forms had become the cornerstone of corporate America and were eventually exported to Europe via companies such as McKinsey.
Changing from Form to Function
While early consulting efforts were focused on organizational design, the focus began to shift toward strategy in the 1960s. Alfred Chandler's thesis that "structure follows strategy" gained traction, though consulting evolved inversely—first structuring organizations, then strategizing to match.
The Boston Consulting Group, therefore, revolutionized the industry with tools like the experience curve and the BCG Matrix to guide resource allocation and strategic planning. Unlike the others, BCG put much emphasis on theoretical frameworks and, as such, established itself as a thought leader in the field.
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McKinsey retaliated by championing new models, including the 7S framework, that related corporate culture to competitive advantage. As strategy consulting became more established, it increasingly influenced corporate legitimacy as companies embraced consultant-backed practices in order to establish investor trust.
Consulting's Legitimacy
Conclusion
From its origins as a niche problem-solving field to its current stature as a multibillion-dollar industry, strategy consulting continues to shape how businesses operate. By blending insights from sociology, economics, and psychology, consultants teach firms to analyze environments, build robust strategies, and align operations with overarching goals.
The influence of the profession extends beyond business. It has institutionalized strategy as an academic discipline, inspiring a generation of students and professionals to think critically about organizational challenges. Without consultants, the field of business strategy itself might not exist.
As the industry evolves, one truth remains: consulting thrives on its ability to adapt, blending innovation with legitimacy to meet the ever-changing needs of businesses worldwide.
How has strategy consulting affected your industry or career trajectory? Write down your views below!