Playing To Win

The Business of Strategy Consulting

Cheeseburger & Pepsi

Roger Martin
8 min readMay 20, 2024


Source: Saturday Night Live

I have been asked repeatedly to write about the business of strategy consulting. I don’t love the idea because I don’t much like the business of strategy consulting. But I realized that shouldn’t stop me from writing a piece on a subject about which readers have intense interest. Hence, this Playing to Win/Practitioner Insights (PTW/PI) on The Business of Strategy Consulting: Cheeseburger & Pepsi.

A Brief History

The industry was created in 1963 with the foundation of Boston Consulting Group (BCG) by Bruce Henderson. Others might argue that there were firms that practiced ‘strategy consulting’ before that, but I think it was all a rounding error before BCG, which grew spectacularly and defined a category. In 1973, Bill Bain and six other BCG partners left to create Bain & Company. In 1983, Monitor Company opened its doors. McKinsey & Company, a firm that was created as a cost accounting firm in 1926, realized in the 1970s that it would be left in the dust if it didn’t enter the strategy consulting field and did so aggressively.

There were lots of spinoffs and smaller start-ups, such as Strategic Planning Associates, Corporate Decisions, LEK, Parthenon, etc. The giant benefits firm, William Mercer rolled up a bunch of the smaller firms into Mercer Management Consulting, later renamed Oliver Wyman (one of the acquired companies). But none of these firms achieved meaningful contribution to the strategy consulting industry. Happy to have someone convince me otherwise, but I can’t name anything.

The glory days of the industry were in the 1970s and 1980s when BCG and Monitor did strategy almost exclusively. It was never more than a line of business for McKinsey but in those days, it was a consequential line. From the start, Bain positioned itself as a tough-minded implementation-first firm, distinct from what it thought of as the effete strategists it had left behind at BCG. It did strategy but primarily as a front end of what it apparently really wanted to do, which was to operate the client, which it did by seconding partners to fill client positions full time (with sometimes disastrous consequence as at Guinness).

The Critical 1990s

Strategy consulting firms made two very consequential strategic choices in the 1990s.

First, they figured out that strategy was a small market compared to a number of far larger proximate markets — e.g., overhead cost reduction, sales force reorganization, post-merger integration, and, in due course, digital transformation — and expanded dramatically into these (and other) giant adjacencies.

Second, they chose to organize around industry specializations. During the 1990s, McKinsey, BCG, Bain (the three of whom came to be referred to as MBB) and Monitor all adopted industry practices as their primary organizing approach. Monitor was the last to go because of me. I fought organizing by industry practice like a devil, as a member of our four-person Global Executive Committee, because I believed then and still believe today that it is impossible to become a first-class strategist working in one industry. When I left to become Dean of the Rotman School in August 1998, Monitor had, within months, industry practices — parroting everybody else in the industry.

Consequences of the 1990s Choices

The choices were super-successful for the leading firms. MBB grew to immense size — McKinsey to $16B by 2023, BCG to $12.3B, and Bain to $6B (those are McKinsey and BCG-reported numbers and an outside estimate for Bain, which might well be low). Monitor lost momentum and was acquired by Deloitte in 2013, so I will focus on the three independent giants — MBB. (Monitor was hardly alone. Virtually all of the medium-sized firms in the industry have been acquired by broad-based professional service firms.)

But strategy atrophied at MBB. It just isn’t a big line of business anymore. In recent years, my estimate for strategy at McKinsey has been 10–15% of revenues, which I suggested to a recent McKinsey partner with whom I do some work and he scoffed at it. According to him, it is a mere 3%. That may be wrong — I have no way of knowing for sure — but he had no reason to lie. It would have been easier for him to just agree with me. Whatever it is at McKinsey, it is likely to be less at Bain, and BCG is probably modestly more. So, strategy is now a tiny line of business for MBB.

And that creates a tricky situation. Calling themselves ‘strategy consulting firms’ makes MBB very sexy for recruiting at leading MBA campuses (and elsewhere). But the recruits figure out the truth when they get to their new jobs. I saw the results firsthand as Dean of Rotman when sad graduates came back to tell me that they were leaving the highly-sought-after job they had gotten at one of the ‘strategy consulting firms’ because they had been there for two-three years and hadn’t done a lick of strategy work.

The Nature of the Business

The business of the strategy consulting industry is the deployment of case teams. The firms all have a pyramid structure with lots of juniors and as few partners supporting the pyramid as possible. The means of making profits is to mark up the juniors (other than a new line of business that I will discuss below). I am dated on this front (readers in the industry can update me if they wish), but during my time at Monitor, the MBB/Monitor mark-up had risen to around 6X total compensation of the consultant in question. The implication is that freshly-minted MBAs — who make about $230K in total compensation in their first year (not including signing bonus which isn’t in the calculation) — get billed to the client at $60K/month for a 50% allocation (which is a common allocation). That is why MBB case teams are so expensive — often $1M/month or more. If a firm can deploy its consultants on case teams at these rates, the partners make plenty of money!

That is why the answer to all client problems is a case team. It’s the business model. If a client wants something else — e.g., to talk to a senior partner — good luck. It reminds me of the long-running Saturday Night Live Olympia Restaurant skit (example here with screen shot above featuring an all-star line-up of SNL favorites — John Belushi, Dan Aykroyd, Bill Murray, Jane Curtain, Garrett Morris, Gilda Radner and more) during which customers try to order myriad menu items only to be told that the only thing on offer is cheeseburger & Pepsi. Regardless of what you ask for, you are going to get a case team with the team members charged out at 6X (or more).

Two Things I Despise about the Modern Business of ‘Strategy Consulting’

The first is the new line of business alluded to above, which is gain-sharing cost reduction studies. I have written about this before in this series, so I won’t repeat the whole argument.

In brief, as the article points out, any competent person can cut costs — and lots of them — from any organization if they have zero responsibility for maintaining revenues. In contrast, cutting costs while maintaining revenues is hard — a hard task for which one should be willing to pay MBB-level rates. But that is not what is on offer — it is cheeseburger & Pepsi time again. On offer is cost cutting with no responsibility for revenues — which is just plain stupid for clients.

The second is selling industry expertise. Given my role with CEOs, I frequently see ‘strategy consulting firm’ proposals and workplans. In almost every case (actually, I can’t think of one where it isn’t the case), a key selling point is that they have worked for many (if not most) of the direct competitors of the potential client. That is front and center in their pitches. They are explicitly (not elliptically) telling the potential client that they are going to bring to bear the things they have learned from working for its direct competitors.

Of course, it is done in an untraceable way. They won’t say to Citibank, “this is exactly how JP Morgan Chase does x.” They will say, “from our vast and impressive knowledge of your industry, we believe that the best practice is y” — but the only reason they know that is because they worked inside JP Morgan Chase and learned about how it does y.

This is where the fateful shift to industry practices in the 1990s has ended up. It didn’t happen right away. But in due course, all insights from companies in other industries disappeared and the only knowledge that ‘strategy consultants’ have is how the industry in which they spend all of their time works — and that is all that they can deliver.

Strategy is choice and that is the consequence of the choice that my whole industry made. And that is one reason why strategy is a lost art.

Practitioner Insights

If you think you need help from a ‘strategy consulting firm,’ you will be at Olympia Restaurant and what will be on offer is cheeseburger & Pepsi, regardless of what you want or need. Cheeseburger is a case team and Pepsi is insights from your direct competitors. If you ask for anything else, you will get cheeseburger & Pepsi masquerading as what you asked for. I suggest that you think about whether you want cheeseburger & Pepsi before you make the call. If you do, make the call. If not, do something else.

One thing you must take into consideration is where you stand in your industry. Let’s imagine that you are in the bottom half of your industry. Then the bloody-minded thing to do — even though I think of it as sleazy — is to hire a ‘strategy consulting firm’ that can prove it has worked for as many of your competitors as possible. It might be capable of getting you up to the 50th percentile — and many fortunes have been made by taking a dreadful company and elevating it to mediocrity.

I will digress on this point for a minute. I was once invited to a conference at Harvard Business School (HBS) on transformational change and it was centered around a ‘remarkable transformation story’ of two executives who had ‘completely turned around a company’ — I won’t give details to protect the guilty. During the discussion of the case, which I had studied carefully as I am inclined to do, I asked if I was interpreting the exhibits correctly as showing the company started as #5 of 5 players and seven years later after ‘the transformation,’ it was 3rd. They confirmed that I was right. Then I asked the question, why do we call this a spectacular transformation success and not reversion to the mean? They didn’t like that — and it was probably not nice. It was in my younger days, so I didn’t mind playing the skunk at the picnic. But it was true!

The logic holds here — if you suck and you can get help from a ‘strategy consulting firm’ to copy the industry, you can possibly elevate to the mean — and maybe HBS will hold a conference praising you.

But if you are in (say) the top quintile of the industry, you are an idiot if you hire a ‘strategy consulting firm’ that sells you based on its industry experience. All you are doing is facilitating your competitors to catch up to you and will gain very little useful from the small number of players above you — most of whom (though clearly not all) are probably smart enough to not hire a ‘strategy consulting firm.’

If you are thinking this is hypocritical because I am a strategy consultant, no and yes. Yes, I am a strategy advisor, but I am not driven to sell case teams because I am a solo operator — I don’t have case teams to sell (i.e. no cheeseburger). And I only work for one company per industry — hence I don’t kite insights around industries (i.e. no Pepsi). Strategy is choice and those are mine!



Roger Martin

Professor Roger Martin is a writer, strategy advisor and in 2017 was named the #1 management thinker in world. He is also former Dean of the Rotman School.