We’ve pulled together a list of fancy consulting terms. Now, we don’t suggest that you go peppering your case interview as though you are a consultant for reals (no-one likes a pretender) but it may be helpful to be familiar with some of these terms. And who knows, hopefully, you’ll get to start using them when you’re a rockstar consultant!
80/20 RULE
Also known as the Pareto principle. This means that for many events, roughly 80 per cent of the effects come from 20 per cent of the causes. Even outside of consulting, you’ll hear this term bandied about such as ‘80 per cent of our sales come from 20 per cent of our clients.’
Actionable
This refers to the ability to execute a particular decision or recommendation. For example, ‘that recommendation is not actionable because we don’t have the team to implement it.’
B2B
Business-to-business. It describes transactions between businesses. For example, a consulting firm is a professional services company that services another business. You could, therefore, describe it as a B2B transaction. This is distinct from B2C, which focuses on the end customer.
B2C
Business-to-customer. As we said, B2C is about focusing on the end customer. Basically, it is about the transactions conducted directly between a company and its consumers. For example, McDonalds is a B2C organisation.
Bandwidth
This means the capacity of someone to take on extra work and can be used in a sentence such as, ‘I don’t have the bandwidth to take on any new clients.’
Balanced Scorecard
This is one of those nifty performance measurement systems that corporates like to use. What it does is looks at finances, customers, business processes and learning measures to allow an organisation to manage and measure the delivery of their strategy.
BCG Growth Share Matrix
This was a tool developed by the Boston Consulting Group back in the 1970s by a guy called Bruce Henderson. It basically says that a company is able to classify its business units based on a combination of market growth and share. Market growth serves as a proxy for industry attractiveness whereas market share is a proxy for competitive advantage. The Growth Share Matrix helps to map these business units accordingly.
Benchmarking
This means to compare something against other competitors or industry standards. This ‘something’ may refer to a value, business practice, performance or other quantity such as price or costs.
Best practice
This is a term used to describe benchmarks or practices that have shown to provide superior results compared to other practices or techniques.
Big Three
The top three consulting firms in the industry: BCG, McKinsey, Bain.
Bird’s eye view
A high-level view.
Blank slide
Slides (usually PowerPoint) showing what kind of analysis is required and what kind of message should be conveyed, but doesn’t contain the actual information – yet!
Boiling the ocean
‘Let’s not boil the ocean’ is another nifty consulting phrase you’ll hear. The thing is, analysis can be a bottomless pit and there may be no need to do the amount of analysis you could potentially do. Instead, pick a direction and see if there is a faster way to get to what you need to know.
Bottom-up
This is a way to estimate by starting with the lowest level assumption and then building all the way up to an estimate. For example, if you were trying to size a market, you might start with individual products and prices and add them up to a total industry size. This is compared to a top-down approach.
Brainteaser
A consulting interview question in which the job seeker is asked to solve a logic problem.
Business process reengineering (BPR)
The process of reviewing a client’s business processes, eliminating unneeded or ‘nonvalue-added’ tasks, and then implementing the leaner, more efficient process.
Buy-in
The agreement or consent of a stakeholder. For example, ‘we need to work on the buy-in of the CEO.’
CAGR
Stands for Compound Annual Growth Rate. For example, if a market grows from $100 billion to $230 billion over a period of nine years, the CAGR is 9.7 per cent. This is also known as the internal rate of return in finance.
Case
A consulting project.
Case team
A team working on a consulting project for a client; usually composed of one partner (or director), one consultant and two or more analysts.
Change management
A service where the consultancy helps a company cope with a period of significant change (common cases include mergers, acquisitions, restructuring, downsizing).
Circle back
To follow up at a later point in time, usually to review progress on the current topic of discussion.
Core competencies
Areas of a company that it does really well in, particularly compared to other competitors or similar companies.
Customer relationship management (CRM)
A widely implemented model for managing a company’s interactions with customers, clients, and sales prospects.
DCF
Discounted cash flow. The present value of a future cash flow.
Deck
The powerpoint ‘deck’ or ‘pack’ is how consultants communicate. Whether it’s to present research findings or offer final recommendations, it’s a vital document that as a consultant you will no doubt help to create.
Deep dive
A thorough, in-depth analysis of a particular topic.
Deliverables
The tasks that need to be completed. During a consulting engagement, the deliverables are agreed on upfront with the client.
Drilldown
Asking questions to gather more details. E.g. “Let’s look at the bird’s eye view and then drill down.”
Driver tree
Consultants love a good old driver tree. Whether this is a tree looking at revenue or costs drivers, the point of the tree is to provide a framework for logical deductions. It allows the consultant to break down a problem and review its components.
Due diligence
Extensive investigation of a business or person, typically prior to signing a contract.
Elevator test
A test of one’s ability to explain concepts in a short period of time.
Engagement
A consulting assignment received by a consultancy.
Enterprise resource planning (ERP)
Processes or software that manage/coordinate all the resources, information, and functions of a business.
Experience curve
The principle that a company’s cost declines as its production increases.
GMC
Global Management Consultancy, sometimes referring to just the Big Three, sometimes also referring to the Big Three consulting plus the Big Four accounting firms.
Granularity
Refers to the smallest, basic elements that make up a much larger business problem.
Greenfield
A new opportunity. For example, ‘entering the Chinese market is a true greenfield opportunity for the company.’
Guesstimate
We have been through a number of these in this book! As we explained, it’s a type of consulting interview question that requires candidates to make an educated estimate, for example, the number of wi-fi hotspots in Australia.
Hypothesis
Most, if not all, consultants will work off a hypothesis. This is critical to driving the analysis as it provides focus and direction (instead of ‘boiling the ocean’).
Implementation
Depending on the type of consultancy you work for and project you’re on, you may be focused on developing the strategy or instead, implementing the strategy. This is exactly what implementation refers to. In other words, it’s when a consultant’s recommendations are carried out either by the client or with the help of the consultancy.
Learning curve
The rate at which a consultant gathers company and industry information needed for a case. The steeper the curve the better.
Let’s think out of the box
Really means, “Can anyone please come up with something creative?”
Letter of engagement (LOE)/letter of intent (LOI)/letter of proposal (LOP)
A consultancy’s sales pitch to a potential client that describes the project, delivery and expectations etc.
Low-hanging fruit
The easiest things to do (also known as ‘quick wins’). For example, ‘this company should focus on the lowest hanging fruit, that is, converting highly engaged existing customers to product A instead of trying to gain new ones.’
MBB
McKinsey, Bain, BCG. The big three of the consulting world.
MECE
Mutually Exhaustive Collectively Exclusive. Consultants love when stuff is MECE. It’s a prominent concept used at McKinsey and basically means developing communications that cover all relevant issues effectively without redundancy or overlap.
Onboard
Being assigned to a case, engagement, or project.
On the beach/bench
Not literally, unfortunately. This is a term used to refer to times when consultants are not on a project or between projects. This is when a consultant’s workload declines significantly. It also referred to as downtime.
Opportunity cost
This is an economic principle that refers to the cost of an activity measured in terms of the value of the next best alternative that is not chosen. For example, if a company A decides to acquire company B, the opportunity cost may be using that money to invest in R&D instead.
Outsourcing
This means when a company decides to contract out a business process because it may be cheaper (lower cost) and result in better outcomes. For example, a company may decide to outsource its telemarketing team to Asia.
Paradigm
Overused lingo for “model” or “framework”.
Pigeonholing
When a consultant becomes overspecialised.
Ping me
A phrase that means to get in touch with another consultant. Based on the internet tool in which you send a single packet of data.
Pipeline
This is a term used to describe the current and upcoming projects for a consulting firm.
Pyramid Principle
A McKinsey principle developed by Barbara Minto. The pyramid principle is about how to tell a story effectively.
Rockstar
A fantastic bright employee... a high achiever.
Starwood Points
A hotel loyalty points/rewards system popular with consultants.
Six Sigma
A business management strategy
So what?
You’ll often hear senior consultants asking their team, what’s the ‘So what?’ Put simply, this is about understanding the implications of analysis. It’s not good enough to just crunch some numbers, you need to be clear about what those numbers actually mean. A McKinsey phrase often used is about being a ‘porpoise’, which means you go down into the detail but need to come back up to the surface in order to extract out the ‘so what?’ and articulate what this analysis really means for the client.
Supply chain
This is how goods are physically delivered to a customer.
Synthesise
As a consultant, you will often be asked to ‘synthesise’ your findings, so that you have one actionable recommendation or theme.
Top-down
A way of estimating by starting with the highest-level assumption, for example, the population of a country, and then using that to drill down to a smaller-level estimate, such as the size of a market. This is the opposite of Bottoms-Up.
Up or out
This is one of the harsher realities of the consultancies. Also known as ‘sink or swim’, this is a promotion policy that requires consultancies to move ‘up’ or otherwise, move ‘out’ of the firm. Not all consultancies have this policy, some of the boutiques are less inclined to use this but it is definitely often seen in action at MBB.
Value-based management
A consulting strategy, the end goal of which is to boost shareholder value for the client company.
Value creation
As we said in our consulting cheat sheet, this is the aim of all organisations. To deliver value to its shareholders. It is your job as a consultant to help organisations to do this.
Value-added
Defines a product or services add value to a preexisting product or way of doing things.
Whitepaper
An authoritative report or guide that helps readers understand an issue, solve a problem or make a decision.
Workplan
This is the schedule that is developed to help consultants deliver their projects on time.
Workstream
A consulting project may often have a number of different ‘workstreams’ or areas of focus. Each area may be managed by a different associate or senior analyst.
Writing a deck
Preparing slides for client presentations.