Why the whole consulting world wants to compete with McKinsey

In the course of researching our 2012 Management Consulting Market report we've been asking consulting firms how the competitive landscape has changed for them. Specifically, we've been asking whether they're coming up against competitors they haven't encountered before. In all the conversations I've had so far only one consulting firm has ever been mentioned in response to that question: McKinsey.

There are a number of things we can read into that: the first is that McKinsey, countering the loss of appetite amongst clients for traditional strategy consulting, is trying to move into different areas. There's been a lot of talk about McKinsey trying to move down the value chain and while we remain unconvinced that they're actually doing so (they may be moving into operations, but they're sticking to the strategic end of the function) the idea that they're showing up in areas they previously weren't isn't altogether surprising.

The second is that the consulting firms I'm talking to are moving upstream into strategy - crossing the bridge from the opposite direction and coming across McKinsey as they do. Certainly that marries with the growth plans we hear about from a number of firms occupying ground lower down the value chain.

But here's the thing: nobody ever mentions another strategy firm. Not one person I've spoken to so far has mentioned BCG, Bain or Booz. It seems highly unlikely - if not completely impossible - that if there really is movement in both directions then nobody has caught the slightest glimpse of anyone other than McKinsey. I suspect that's because saying that you're competing with McKinsey is as close as you can get to say that you're a bit like them. And being like McKinsey is a very attractive thing to be.

So what is it about McKinsey that other firms want for themselves? Well, there's the strategy work for a start: it may be a service which is struggling but it undoubtedly still looks attractive to firms which are slugging it out in the dog-eat-dog world of other services, like IT consulting. It's probably the rates, too. At a time when clients are turning the screw ever tighter on rates in most areas, the idea of being able to command the fees that McKinsey does must look like the land of milk and honey. And you can't blame consulting firms for wondering how they get a piece of that action.

But more than anything else, of course, it's the brand. I recently spent time in India, where I had the genuinely fascinating task of talking with a large number of private sector clients about their use of management consulting. It'll surprise nobody to hear that Indian clients are extremely price sensitive. But from the biggest multinational to small construction companies operating out of dilapidated office blocks in the back streets of Mumbai, all (or at least virtually all) have one thing in common: they use McKinsey. At a time when all is not rosy in the land of strategy and when, by many of the measures we look at, there's evidence that the firm may be slipping behind at least one of its major rivals, the degree to which the McKinsey brand had penetrated Indian clients and opened up their notoriously-padlocked wallets was extraordinary. That's some brand. And some competitor.

On which note I leave you so I can get back to fighting this blog's titanic battle for supremacy with The Huffington Post. They're in our sights. It's only a matter of time.