The Anatomy of a Consulting Firm

By David Maister 2004

This is chapter two of The Advice Business: Essential Tools and Models for Managing Consulting (Pearson Prentice Hall, 2004) edited by Charles J. Fombrun and Mark D. Nevis. It has been adapted (with permission) from material contained in David H. Maister’s Managing the Professional Service Firm (Free Press, 1997) and True Professionalism (The Free Press, 1993).

The structure and management of consulting firms is driven primarily by two key factors: the degree of customization in the firm’s work activities and the extent of face-to-face interaction with the client. Both of these characteristics (customization and client contact) imply that the value of the firm is often embedded less in the properties of the firm and more in the specific talents of highly skilled individuals. The consulting firm must therefore compete actively in two markets simultaneously: the “output” market for its services, and the “input” market for its productive resources, the professional workforce. It is the need to balance the often conflicting demands and constraints imposed by these two markets that creates the special challenge of structuring and managing the consulting firm.

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