History of Management Consulting

Management consulting grew with the rise of management as a unique field of study. The first management consulting firm was Arthur D. Little, founded in 1886 by the MIT professor of the same name and was incorporated in 1909.^[1] Though Arthur D. Little later became a general management consultancy, it originally specialized in technical research. Booz Allen Hamilton was founded by Edwin G. Booz, a graduate of the Kellogg School of Management at Northwestern University, in 1914 as a management consultancy and the first to serve both industry and government clients.

After World War II, a number of new management consulting firms formed, most notably Boston Consulting Group, founded in 1963, which brought a rigorous analytical approach to the study of management and strategy. Work done at Boston Consulting Group, McKinsey, Booz Allen Hamilton, and the Harvard Business School during the 1960s and 70s developed the tools and approaches that would define the new field of strategic management, setting the groundwork for many consulting firms to follow. In 1983, Harvard Business School's influence on the industry continued with the founding of Monitor Group by six professors.

One of the reasons why management consulting grew first in the USA is because of deep cultural factors: it was accepted there, (contrary to say, Europe), that management and boards alike might not be competent in all circumstances; therefore, buying external competency was seen as a normal way to solve a business problem. This is referred to as a "contractual" relation to management^{[citation needed]}. By contrast, in Europe, management is connected with emotional and cultural dimensions, where the manager is bound to be competent at all times. This is referred to as the "pater familias" pattern^{[citation needed]}. Therefore seeking (and paying for) external advice was seen as inappropriate^{[citation needed]}. However, it is sometimes argued that in those days the type of education of the executives was often different in the USA than in Europe, where managers often came from technical or other specialist backgounds - e.g. graduates from technical Grandes Ecoles in France, or "Doktor" in Germany (similar to PhD) - but often had limited specific management education. It must be said though that this is very difficult to quantify given the vastly differing management structures in American and European businesses^{[citation needed]}.

It was only after World War II, in the wake of the development of the international trade led by the USA, that management consulting emerged in Europe. The current trend in the market is a clear segmentation of management consulting firms.^{[citation needed]}