“Is Public Sector Management Consulting Work Boring?”
When I was asked this question today, I had a flashback that took me all the way to the early days of my career. When I first joined management consulting I wanted to only do strategy work for the greatest blue-chip stocks on the planet; GE, GM, P&G, Pepsi, Exxon-Mobil, Verizon and AT&T where the kinds of the companies I dreamed about advising. After all, they were the leaders of corporate America. Why would I want to do anything else?
Unfortunately life and circumstances take us on a different path. I eventually ended up doing a tremendous amount of work in the emerging markets. Even then, emerging markets were dominated by state-owned businesses. In hindsight, working in emerging markets and the public sector served me well and in many ways equipped me with better skills. Thankfully, many consultants today see things that I only learnt after much time in emerging markets. If you speak to many consultants today, they are attracted to major markets like Brazil, China, Dubai, Russia, India, Indonesia and the Philippines.
You would have noticed I have not mentioned the public sectors in Germany, France, the USA, UK, Canada and other emerging markets. While important work is still being done in the public sectors of developed countries, especially in healthcare, defence and education, most of these governments suffer from overly bureaucratic layers, depleted coffers and somewhat limited ambitions. Public sector clients with quick decision-making, lots of funding, really complex problems, lots of these problems and major ambition mostly exist in the developing markets. Of course, within these generalizations, exceptions exist:
- Healthcare and defence will likely be most challenging in the US, France and UK. All will require innovative solutions.
- No one will ever confuse India for fast decision-making.
- Vietnam may be one of the fastest growing economies in the world, but its size is just so small that it will take some time to justify a management consulting venture.
- Dubai probably had major ambitions and significant coffers.
However, by and large, public sector work in the emerging economies rivals the thrill off doing private sector work for the world’s leading companies. Here’s why:
- The size of public sector clients in emerging economies is gargantuan. Gazprom, CNOOC, Sinopec, Petrobras, Sasol and all the telecoms, electricity, banking and insurance companies in emerging markets have market capitalizations over $50bn. These are monster companies with massive problems.
- Stature of the clients. If you advise Gazprom you will need to ultimately engage the Russian Ministry of Minerals and secure the blessing of the Russian President and Prime Minister to implement the recommendations. The same applies to other companies like Codelco in Chile or even Transnet in South Africa. The access to the most senior levels of influence is staggering.
- Critical projects can transform the destiny of a country. Chile pretty much rode out the recession due to a well endowed state coffer primarily driven by copper revenue. Imagine if the Boston Consulting Group had screwed up their recommendations and Codelco was never able to spit out cash. What would have happened to Chile without the cash cushion? You do not have to imagine this, just look at Dubai. Without sufficient cash, major projects have been cancelled and Abu Dhabi needed to provide a bailout. Not all countries have friendly neighbours. Think about Iceland and the impact of its failed banking strategy.
- Projects are just as challenging. Petrobras wants to transform itself into a global oil and gas company. Sasol wants to do the same thing. China Telecom wants to use its cash-flush position to enter new markets. Vimpelcom (technically not state-owned but heavily influenced by the Kremlin) has already started expanding. Eskom wants to build a new fleet of power stations. The Indian government wants to roll out a new social security model. Russia wants to diversify its economy. The Middle-East wants to become a medical, finance and tourism centre. These are amongst the toughest challenges in the world and all the top management consulting firms are involved.
- Important skill worth learning for the future. Learning to operate in an emerging market will be a useful skill. You need to know the language, culture and lifestyle. As more of the world business shifts there, you need to have the skills to work there.
- Huge capital programmes which are shovel-ready. Whether it is planning new power-stations, designing new urbanization strategies, road networks, dams, schools, hospitals, trade-corridors and more, emerging markets are spending trillions of dollars. Planning the thinking behind this requires significant management consulting help.
- Similar to reshaping Europe with the Marshall Plan. If you ever spoke to McKinsey partners who were involved in European projects around 1950, they will tell you about the personal gratitude and the significance of helping an entire continent heal itself and grow into prosperity. We are in a similar wave today and it’s a nation building opportunity which will not last forever.
- How do you build the perfect society? If that is a question that intrigues you, then you can get involved in Shanghai, Mumbai, Rio de Janeiro and Moscow as all these governments are using major sporting events as a catalyst to rethink their city planning. Some developed countries like Singapore are also thinking in the same way.
- They are more experimental and willing to try things. Although the mob aided the development of Las Vegas out of the Nevada desert, when was the last time the US embarked on such a transformative project. The development of experimental new farms, feeding stations, financial centres, medial centres and social security systems can only take place in emerging markets since they have very little or no existing apple cart to upset.
- Even small projects can have a big impact. For a minute forget about all the grandiose schemes described above. In some countries like Bangladesh, simply helping the national bank roll out a micro-finance programme could have a profound impact on millions of lives. In how many countries in the world, could a few million dollars have such a profound impact?
To answer the question; yes public sector projects can be both extremely boring or extraordinarily exciting and challenging. It really depends on where you want to work. Personally, I would avoid public sector work in developed economies. The opportunity to drive major change is fleeting, there are too many committees and the ambition to change the world has disappeared. Today, it is more about protecting the status quo.
Although operating in emerging markets is tough, there is scope to make a bigger impact.