History of Consulting

The history shows that there was always need of advice for wealthy and powerful people to have the effective decisions. Kings had prophets, Persian sultans had viziers yet the person or group of people who specialized in advising effective management or decisions did not appear as a formal organization. Until industrial age. According McKenna (1995) before Second World War consulting as it is known now, was named as “managerial engineering” because initially it was specializing in technical research. The growth of industrial organization in United States created a market for professional firms of accountants, engineers and lawyers who offered an independent corporate counsel. Back in 1890, manufacturing companies needed engineer’s advice but they did not want them to include in staff. This brought chemical engineer Arthur D. Little to idea of creating such “managerial engineering” firm to deliver their technical knowledge. Similarly, Price Waterhouse started providing external audits for growing companies. By the 1890’s, the American based accounting and law firms started expanding throughout the country. This led to demand of professions of engineers, lawyers and accountants so that larger partnership could offer their services to growing corporate clients. It enabled younger partners to experience and learn “management engineering” so that later to use their knowledge within the older firm or to form new firms. Younger professionals intentionally learned skills from different fields because they were struggling to attract clients. As it was assumed by Thomas Cody the main factor to influence the modern management consulting was the development of the concept of “scientific management” by Frederick Taylor-even if as a consultant he was not successful. Taylor’s concept was combining practice of engineering with the principles of economics. It was combination of these two practices that today’s profession was born.

McKinsey

Later, In 1926 one of the early innovators James McKinesey an accounting professor at Northwestern University, founds “McKinsey & Co,A.” in Chicago. He brings together “engineers and accountants” to his firm. At the same time, there are emerging another firms combining legal training and management accounting. James McKinsey saw the budgeting as new form of control on growth and diversification of enterprises. James wrote a book on this topic in 1922.

During Great Depression, it was noticed rapid growth of independent management consulting firms in both size and numbers. During 1930, management-consulting firms started establishing branches in new cities. McKinsey founded in 1926 and by 1936 it had staff of 25 employees and their branch in New York. Between 1930-1940, according McKenna (1995), there was growth estimation of firms to 100 but by 1940 there were 400 management consulting firms in United States. Services of management consulting firms become important for the industries after 1930’s. James McKinsey in 1930 was working on soliciting new clients and conducting management-engineering survey. He cultivated new contacts through financial communities. McKinsey, was claiming that he invited important banker in Chicago and New York to a lunch and by that he was getting work and new project for the firm. James McKinsey greatest contribution to institutionalization of his firm was “general survey outline” which drafted to give young inexperienced consultants a model to follow.

Thus the origins of modern consulting are rooting back to 1930s, because since then the management consulting have recognized the largest and important organization to help the global and local industries and governments operate efficiently avoiding mistakes.

Date: 2015-12-18; view: 688