Boutique Consulting Firms

Boutique firms support their clients with highly-specialized expertise. Boutique firms choose to focus on a smaller number of industries (energy, life sciences, retail), functions (M&A, economics and litigation, turnaround), or methodologies (real options, EVA).

There are a couple of common misconceptions about boutique firms. One is that being a "boutique consulting firm" necessarily implies being a small firm. This is not the case. A boutique is determined not by size, but by focus. L.E.K. Consulting (which was founded by a handful of former Bain partners) has roughly 500 employees, but we would consider the company a boutique because of its specific focus on three types of strategy consulting problems-M&A, shareholder value, and business strategy. Another misconception is that boutiques are less prestigious than the multi-functional firms. This highly depends on the area of focus. For example, BCG is extremely well-regarded across many industries for most types of strategy problems, but for a decision analysis or real options strategy problem, clients might turn to Strategic Decisions Group, which focuses on those areas.

All this said, we should note that many boutiques are indeed small, ranging from upwards of 200 employees down to a single consultant. Often, boutique consulting firms grow from the expertise and client relationships of one to five founding partners, and unless it sells a consistently large flow of work, the firm has no compelling reason to grow quickly. Also, smaller boutiques can deliver services at lower costs than the larger consultancies because a smaller firm requires less overhead and less extra "capacity" (i.e., consultants), so their services might seem more attractive to prospective clients than those of the more expensive firms.

If you are especially interested in a particular industry or type of consulting problem, definitely do your homework on the outstanding boutiques in that field. If you find the right company to match your interests, you will spend all of your time doing the work you dreamt of, and that is a much harder goal to achieve within a more diverse consulting firm.

Examples of boutique consulting projects:

• A consulting firm with a well-known shareholder value methodology helps a beverage company establish value metrics in its business units
  
• An economics consulting firm helps a foreign government decide how to structure the privatization (sale) of its utilities through an auction
  
• A niche R&D strategy consulting firm deploys two consultants to a high-growth semiconductor company in Silicon Valley for a 3 month project to improve R&D processes
  
• A process reengineering boutique snares a 6-month project to assist implementation of new supplier standards for an automotive consortium
  
• A turnaround consulting firm helps a telecommunications hardware firm restructure its organization until Chapter 11 bankruptcy
  

Leading boutique and internal consulting firms include:

• Charles River Associates (economics and litigation consulting)
  
• L.E.K. Consulting (shareholder value, M&A, and business strategy)
  
• Marakon Associates (shareholder value methodology)