Speaker 1: Welcome to Essentials Explained. My name is Luke, and today we'll be talking about the structure of consulting firms. What people often believe about consulting firms is they are just comprised solely of key teams that go out there and are sold to clients and generate revenue for the firm. That is one aspect of it, and that is what may be considered a front office perspective, which is the pure revenue generating component of the firm. But there's also what could be considered a back office component, which are specific practice areas that are focused on enabling client-facing teams to achieve the best quality output possible. So what does this actually include? It is often developing intellectual property to codify perspectives on certain practice areas. So let me give you a couple examples because I know that is a lot of mumbo jumbo that may not really mean anything to a lot of people. You're a consulting firm that does a lot of pricing work, and you go help companies optimize their pricing to maximize the amount of profit they can derive from specific products. So you'll likely have partners or managers that have done this work before and that have institutional knowledge on how do you complete this type of case. But oftentimes the core executional team, so consultants, associates, won't have done this specific type of work before, and they don't know all the specifications and how you should go about completing this process in the most efficient way. So the best way to codify this knowledge is to build out back office functions, which may be called practice areas. These practice areas will develop a playbook on completing this process in an effective and repeatable way. So for pricing, it could be collect all the data, aggregate the data into a consolidated data set, benchmark outlier prices compared to the average price, and then quantify potential revenue uplift if you take the outliers and bring them to the average. Really simple four-step process for developing a pricing case and for quantifying what the potential profit maximization could be. Helpful to have that knowledge codified and institutionalized in a way that it's repeatable across different cases and is able to be utilized by those without that existing tribal knowledge. When I was at Bain, I actually worked in Bain's private equity practice area for six months. I did an internal rotation focused on increasing Bain's analytical capabilities to access alternative resources to support their due diligence process. For a tangible example, I turned disparate data sets, so think web activity, think credit card spend, think geo-targeting location into an interactive dashboard that anyone could access through Tableau, increasing the efficiency of teams to utilize data and to more effectively understand trends throughout COVID-19. This is something that when you're working on a live deal or you're working on an individual project, you don't have time to think about how this process could be done the most efficiently. So this is why consulting firms have practice areas to increase the efficiency and increase the capability of their teams that are serving individual clients. If you already are working at a consulting firm, I would advise you to leverage these resources more. There are some incredible people that work in practice areas and some incredibly smart individuals that can really help you on your case. I would assume most people watching this video are more focused on recruiting for the client-facing roles. If you do get the opportunity to look at back office roles, they are less like consulting. You will not be on an individual project that is built out to a client. You will instead be working in a fashion that is more similar to a job in industry where you will work on a specific team trying to enable a function or a practice area to achieve better results within your company. While not a perfect analogy, it is similar to an analytics expert within a large company optimizing their Salesforce effectiveness. Hopefully this video has given you a good idea of the two different sides of consulting firms and honestly something that I find a lot of people don't fully appreciate until you've actually gone through the process and actually honestly worked in a practice area. Thank you for watching this video. If you are interested in more consulting content, please check out the other videos on our channel.