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What is tier 1? becuase it isnt work

 
#1 What is tier 1? becuase it isnt work
02/10/2006 11:59

john

Hi,

I know what the immediate responses are going to be: ' no deloitte strat is a tier 2, tier 1 is only Mck, Bain, BCG etc etc'

I want to probe further. I think what we define here as tier 1 / 2 etc oftentimes is a defenition of the BRAND - not of the type of work or client base.

Of course i agree that Mckinsey has outstanding people and delivers superb work. However - is it greatly superior to that of a Deloitte of a Roland Berger? Dont they deliver the same work for same clients just calling it differently?

Take BP for example: at any given point in time there are several of the top consultancies in thier london offices. Accenture is there, Booz is there, Deloitte and Mckinsey.

But if you look closely, McKinsey's 'growth strategy' is a very similar to Deloitte's 'fundamental business review' - which in turn is similar to Booz's revenue analysis etc etc.

So my question to you: are the tiers that we so often obsess about created by success and innovation of delivery or are they solely about prestige and brand. ( and thus higher fees)??

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#2 RE: What is tier 1? becuase it isnt work
02/10/2006 13:41

anon to john (#1)

Interesting question John.

It would be good to hear other responses to this question, but my first reaction to this is:

Do you mean vertically, horizontally or both?

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#3 RE: What is tier 1? becuase it isnt work
02/10/2006 15:47

gl to anon (#2)

diagonally?

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#4 RE: What is tier 1? becuase it isnt work
02/10/2006 16:08

anon to gl (#3)

booh, that wasnt funny..

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#5 RE: What is tier 1? becuase it isnt work
02/10/2006 17:36

Beng to deleted (#0)

Key differentiators between top strat houses and others:

1. The consultants themselves. Let's face it, McK and the 3Bs attract, hire, and compensate differently from the Big 4 and others.

2. There is a difference in the type of work. John, are you privvy to the work McK, Deloitte, and Booz at BP such that you know what they're doing is truly "similar"? Have you seen the "letters of engagement" or reports?

I've been on 2 projects where the client hired multiple consultancies seemingly on the same issue, but really different engagements. One involved 3 MC firms working on "profit improvement". Seems the same right? But McK was doing growth strategy, ATK was doing sourcing, and Deloitte was doing BPR.

Another involved a merger where 3 MC firms were working on "post-merger integration". Same thing right? Except that McK was managing the overall PMO, ATK was doing sourcing, and PwC was doing the due diligence.

Of course, it's entirely possible that BP truly hired 3 MC firms to do EXACTLY the same thing (possible, but unlikely). If they did, that would be a serious misuse of company funds and not representative of most "profit-constrained" companies.

3. Brand, prestige, and consulting fees are such that a client would be hard pressed to hire McK/3B's for any work other than the most strategic in nature.

Have any of you guys seen an unsatisfied and disgruntled ex-McK, Bain, or BCG consultant on this or any other Board? This, In spite of the fact that strat houses are known for working insane hours, live their life on the road, and all practice an "up-or-out" philosophy (i.e., the bottom 10-15% are culled annually)? Have you guys stopped to think why?

On the other hand, how many unhappy Deloitte, PwC, EY, CG, etc. consultants do you guys see on this Board?

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#6 RE: What is tier 1? becuase it isnt work
02/10/2006 17:42

Beng to Beng (#5)

"Tier 1" is not exclusive to McK and the 3Bs. Some smaller MC firms are considered tier 1. For example, Roland Berger is on par with McK in Germany in terms of the type/level or work and prestige. Monitor (a small boutique) is considered "tier 1" in the US. There are others.

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#7 RE: What is tier 1? becuase it isnt work
02/10/2006 19:12

Anon to Beng (#5)

It isn't that surprising that you get several firms contracted to the same client to do overlapping or very similar pieces of work. So many contracts are awarded on the basis of relationships so one director has a good relationship with Deloitte, another is chummy with Bain, a third is angling for a job with PA. Within each of their fiefdoms they will be inclined to get their favourite firms working, even when the issues that affect them are corporate and just departmental.

With regards to BP, there is also their ridiculous secrecy policy where departments never tell each other when they're employing consultants or what they have them working on (it's contrary to their culture to use consultants apparently).

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#8 RE: What is tier 1? becuase it isnt work
03/10/2006 07:48

londonkiddo to Anon (#7)

If you trust the market, then tier hierarchy should be determined by fee size. A fair market will, over the sum of all its consulting engagements, value "better" service more highly.

Granted, in the short term firms can bolster fees unfairly based on their brand mystique, or based on the scarcity of their services. But poor work will not be saved by brand for long, and a truly distinctive advantage is short-lived too. It is never long before market forces take effect, and the tier hierarchy is restored.

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#9 RE: What is tier 1? becuase it isnt work
03/10/2006 09:02

JJ to londonkiddo (#8)

There is a lot more money in SAP implementation than there is in strategy. But does that mean SAP implementation is on a higher tier?

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#10 Tier 1 - personal viewpoint
03/10/2006 10:42

Tony Restell (Top-Consultant.com) to londonkiddo (#8)

I would have 2 criteria for candidates looking to judge which firms are Tier 1:

o How high are the firm's average daily fee rates?

o How employable will you be with client firms once you have this consultancy on your CV?

My own view is that firms are Tier 1 in some geographies and not others, so it's important to make this assessment on a country-by-country basis. And firms must score highly on both counts to truly be Tier 1.

Take Roland Berger Strategy Consultants, where I spent a number of years in the 1990s. In terms of fee rates, they were winning work directly comparable to that being undertaken by the Ms and Bs of the strategy world - and charging fee rates that were just as high. However, in the UK their brand was not as strong - and certainly having them on my CV was nothing like as powerful as being an alumni of say McKinsey. So not Tier 1 in the UK in my view. By contrast, if I were based in Germany then I'd have recruiters biting my arm off to hire me - because RB is every bit as prestigious as McKinsey out there. So they are Tier 1 in Germany.

Tier 1 to me means that you are working on the most value-adding assignments with the most prestigious client base (ie. highest fee rates) and that when you decide to move on the "world is your oyster" because everyone is impressed by the consulting firm that's employed you - and so you can secure a career with any employer you choose. Without a tick in both boxes a firm isn't Tier 1 in my view.

Hope that helps - and interested to hear other viewpoints.

Tony Restell

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#11 RE: Tier 1 - personal viewpoint
03/10/2006 13:24

Rachel to Tony Restell (Top-Consultant.com) (#10)

Is there really a tier 1 in consultancy? Or is it just slang for 'I feel good about my firm'. There is a golden circle of law firms, a top 4 (ex 5) accountancy firms.... though consultancy was split into full service firms, strategy houses, implementaion houses, boutiques....

As if I wanted a new job I could go into pretty much any FTSE 100 firm, but not to work at board strategy level. Whereas if a McKinsey consultant wanted to work in outsourcing implementation he probably couldn't even get an interview....

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#12 RE: Tier 1 - personal viewpoint
30/04/2008 18:12

Chris to Rachel (#11)

Having worked at Accenture, Capgemini, with McKinsey, Bain and Monitor people and a niche strategy boutique full of ex-LEK partners, I have come to the conclusion that companies can easily be classified by the thickness of the double layer, ego and arrogance, of their consultants, McKinsey and Accenture coming top of the list almost all the time.

At the end of the day, it all comes down to the team you are in and the projet you are doing. All consulting firms are doing the projects their are being paid for, regardless of the real value they add (remember Enron), and yes there are some M+3B crappy projects and disgrunted ex-consultants out there.

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#13 RE: Tier 1 - personal viewpoint
30/04/2008 20:42

AJ to Chris (#12)

o How high are the firm's average daily fee rates?

This is irrelevant at any genuine Tier 1 firm - jobs will be fixed price based on value. Hours are irrelevant. Billable Hours are for temping bodyshops.

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#14 RE: Tier 1 - personal viewpoint
30/04/2008 20:57

enjoy to AJ (#13)

Contrary to the above, I've seen all the big names being punted off assignments for wasting everyone's time and money. Sure, the "Tier 1" do attract an intelligent lot, but that doesn't make you a good consultant straight off the bat. As seen by the many naive comments on here who seem to think consulting is just the same as their industry day job but with more travel, it is a profession and even the bright sparks can get it spectacularly wrong. When arrogance is added to the mix, it can be hilariously car-crash-tastic.

As for the compensation point, it is possible to make a shedload of money at firms that aren't Tier 1, indeed if you're really that good at your job you can make a bucket but at the same time not forsake all your important life relationships.

So yes, enjoy the brand, some of it is warranted, some it is just self-hype, but also take in to account many of the Warren Buffet principles - business is about making clear, simple decisions. Business fundamentals are business fundamentals, it's just that people at McKinsey seem better at dressing them up as rocket science better than those at your Big 4 and the likes.

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#15 RE: What is tier 1? becuase it isnt work
01/05/2008 09:33

anon to john (#1)

Remember these firms are foten competing for the same work and it isn't always the mckinseys of the world that win it, sometimes Acn etc. win it.

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