So sorry to read about the travails of the McKinsey crowd. Our thoughts are with them and their families this holiday season, of course. The irony is that we are entering a period of decision-making in business when strategy consultants will be badly needed, and could make valuable contributions.
That’s in contrast to the prior 40 years. It shouldn’t come as a surprise that decades of global neo-liberalism (~1980-~2020) was a golden age for pricey MBAs handing out cookie-cutter advice. Why wouldn’t it have been? The answers were often simple and the same: outsource to China, downsize in the US, privatize any and all assets, goose EPS through buybacks, take advantage of loose regulatory regimes, move those opioids…. Four decades of declining risk rates lowered the hurdle rate for success. The consultants looked good.
That’s now over. With the return of non-zero risk rates, and the political economy of the 2020s more or less the opposite of the earlier paradigm, lots of decisions have to be made without the confidence engendered by the prior regime of declining rates, open borders, unorganized labor, deflation, and friendly regulators.
Genuine strategy choices now must be made, about human capital when it is in short supply, about capital when it costs something, about borders when they are no longer wide open, about marketing, about resources, about distribution, etc. Now is the time for a (re)consideration of strategy, especially for those companies that have come up the last few decades, and have only known the prior paradigm.
Let’s check back in a decade or so and see how the branded strategy consultancies have held up. If they can help businesses navigate the 2020s, then those fees won’t seem so outrageous afterall.