McKinsey, Bain, Booz-Allen, Boston Consulting Group. Many students are surprised that an entire industry exists for general business consulting. But it does. And it’s pretty powerful. Exactly what they do, however, is a more elusive matter.
Some history: In the early part of the 20th century, most or at least much of Corporate America was private. That is, the great companies on the planet were still in the hands of the founders. Private companies simply do things different from how public companies do things. In private companies, “greed” is very long-term. Companies don't really care if they’ve had a bad quarter or two as long as they see nice growth coming down the pipeline, like in the form of new products, improved distribution, better processes, etc.
But public companies can’t really live that way. Wall Street would bludgeon them with violent stock price swings and ambulance-chasing lawyers would sue them for “bad disclosure” or other elements that might get them a settlement. And public companies work for shareholders – some companies, such as Disney, have over a million of them. That’s even more than they have crying children at Disneyland on a Saturday during the summer.
Private companies often have one guy or a small family group that controls the direction of the company. And for that family group, certainly a hundred years ago, it was oft more important that Billy Rae was nice, rather than that he was competent; that Annie Mae was a good Christian rather than a fast typist, and so on. But then competition grew and many or most of the private companies who did business “the old fashioned way” were forced to change. Those changes in many cases meant “going public.” At the very least, it meant hiring professional managers – think: MBAs trained in how to optimize processes and test markets and develop new products... to run things.