I am a total novice to strategy consulting, but I had a question:Why do boards of companies get strategy consultants in? Surely one of the skill requirements of a board member is to be able to create the strategy of the business going forward - If you have to get people in to do this, what are you doing at the helm of the business...Comments appreciated

Strategy consultants seem to produce insanely rigorous research and use extremely complicated, and presumably more accurate, models to make predictions.I don't think many execs could produce work like this... time and skill wise. I don't really know though! Just speculating.

Come on you strat guys - whats the reason?

In my past experience, the real value that strat consultant bring to the table (and I will steer clear of too much sales consultant-talk):- Often the management teams are very caught up in internal politics and conflicts, an external third party, fact based opinion often cuts through all of that-Strat consultants often have information about market trends and competitors that is not freely available otherwise- Often management dont have the time/human resources/skills to do in-depth analysisThat said, I firmly believe that strat consultants play a facilitative role and the overall resp. for the direction of the corp strategy always stays with the management team. No matter how smart a strat consultant you are, there is no substitute for having the real in-depth knowledge and history of the business in order to set an implementable strategy.thats my 2c anyway.....

This is a huge topic - and I suspect most strategy consultants are way too busy to take the time to respond! But let me just bullet point a few of the reasons why a Board of Directors might feel the need to bring in a team of strategy consultants (as an ex-strategy consultant myself):* The client company urgently needs to take decisions about its future strategic direction and engaging an external team will allow the necessary analysis work to be undertaken and decisions to be made in a far shorter timeframe than if the Board had to do this themselves just with their in-house resources. (Think of the example of companies trying to determine the value of counter-bid that they should make for Yahoo to prevent it falling into the hands of Microsoft; Board members are capable of taking this decision themselves but bringing in an external team could allow decisions to be reached in a matter of days - and shortening the timeframe for decisions could prove to be business critical in the circumstances)* Learning from experiences in other industries. As sectors evolve, it is quite common that they face challenges that have already been overcome in other industries. So a business that needs to develop a strategy for eg. turning around customer retention issues might very well want to understand the lessons that have been learnt by mobile phone operators, gym operators, etc. There's no reason that Board Directors would have this knowledge themselves but bringing in a strategy consultancy could give the company overnight access to this expertise. This expertise could come from tapping into other sectors / markets or from tapping into the experiences of the same sector in other parts of the world. A strategy consultancy will bring expertise on both fronts.* Reasons of politics or credibility. If Board members know that unpopular strategic decisions are going to have to be taken, having external consultants reach the conclusion that these actions are needed can be less damaging to relationships within the company than the Board of Directors reaching these conclusions in isolation. Equally, if stock market analysts have lost faith in the management team of a business, the fact that a firm like McKinsey has been brought in and is endorsing the decisions being taken by management can rebuild stock market belief in the decisions being taken.There are of course many more reasons besides these, but I hope this gives a flavour for some of the reasons a Board might be quite justified in bringing in an external strategy consulting team to bolster the resources and intellect already at their disposal.Tony RestellTop-Consultant.com

Tony,for what concerns determining the value of a firm for whatever reason (acquistion, merger etc), shouldnt be that a job for bankers?

Anon - consulting firms will often be involved in this type of work (M&A is a massive area for consultancies) and may well be involved working alongside bankers. Consultancies will often have better insights into the synergies that can be achieved - and the timeframes for achieving them - than bankers who are more removed from the day to day workings of the client business.Either way though - in the context of the original question the Board of Directors need the guidance and input of external experts...Tony RestellTop-Consultant.com