We can often hear people using the term consulting, but let’s ask ourselves the question what it really means and where it comes from.
The first management consulting firm was created in 1886 by Arthur Dehon Little, and initially specialized in technical research. However, Arthur D. Little refused to follow the general trends when the field he had created started to grow — according to his opinion — on much too homogeneous standards.
The first management consultancy to serve both industry and government clients was Booz Allen Hamilton, founded in 1914, while the first modern, pure management and strategy consulting company was McKinsey & Company. Marvin Bower, the Mckinsey’s CEO from 1950–1967, later developed the ‘professional’ status of consultants, focused on top MBA graduates.
Arthur D. Little wanted to deal with the complex problems confronted by companies and was opposed to any kind of systematization when it came to sharing of ideas. He tried to come up, in each case, with a unique solution. Other consultants took far less risks, by dealing with well-known situations and transposing ideas from one organization to another. For some time, the profession grew on the ground of homogeneity rather than innovation.
Later on, with the DuPont Company, the departmental structure was born. They reshaped their organization according to the different products: explosives, stains, and paints — opposed to the former structure based on functions: sales, production, R&D.
While from the 1940s to the 1960s, consulting firms contributed to the rise of multi departmental structures, from the mid-1960s, they started to sell strategy, rather than structure. By the end of the 1980s, consultants played a whole new role in firms: they would legitimize their strategy. The growth of strategic consulting led to the unification of practices or, how Paul DiMaggio and William Powell, called it, to an institutional isomorphism.
It is interesting to notice that until the mid-1960s, a firm would never recognize that it hired consultants: that would mean it was going through hard times. European firms were the first to publicly announce that they had hired American consulting companies, with an aim to give clear warranties of their legitimacy.
It is important to remember that consultants covered two principal functions: bringing information and supporting legitimacy. Their role was to draw conclusions from observations and information they had and transpose these from one organization to another. This is where their advice to the companies which hired them came from.
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