The History of Management Consulting

By Victor Hoang · Updated Oct 24, 2026

The consultants who built the trade started as technicians. They became "efficiency experts", then professionals, then strategists. Finally, in the 1990s, they became part of the audit giants. Each shift solved a trust problem and created the next one.

Management consulting as a business began in Boston in 1886. Chemist Arthur D. Little and Roger Griffin opened a laboratory that sold industrial research to companies. The label "management consulting" came a generation later. The modern firm, with its professional code and its strategy frameworks, took shape between the 1920s and the 1970s. The through-line is a single product: outside judgment that a company's own leaders can trust.

For the wider story of how management ideas developed, start with our history of management.

Timeline at a Glance

The Adviser's Craft (antiquity to the 1880s)

Counsel to rulers, long before anyone sold it by the hour

Start in northern India, in the age of Chandragupta Maurya, who ruled from about 321 to 298 BCE. According to the research summary on Kautilya, later tradition says he advised Chandragupta and helped establish the Mauryan Empire, and he is generally regarded as the author of the Arthashastra, a Sanskrit treatise on practical statecraft. Scholars cannot settle the text's date; the same summary places it between the third century BCE and the third century CE, and it appears to be the work of several hands rather than one.

The Arthashastra matters here because it is a manual for the person who advises power: how a state should be run, by someone who is not the ruler. That is a precursor, and it is not management consulting. The adviser lived inside one ruler's court. The consultant of the 20th century would sell comparable counsel to many clients, from outside, under an engagement. Nobody called Kautilya a consultant. What the two eras share is the underlying market: leaders who cannot see everything and want a trusted second view.

In our reading, business advice between the ancient court and the modern firm came in professional slices: lawyers on disputes, accountants on books, engineers on machines. Advice on how a whole organization should run was the gap the next era filled.

What this means for teams today: The oldest consulting question is still the first one to ask. Who is advising you, who are they loyal to, and what do they gain from the advice?

Little and the Efficiency Men (1886-1919)

A chemistry lab sells research, then stopwatches sell efficiency

In 1886, two chemists set up shop in Boston. Arthur D. Little's own history says the firm was founded that year by MIT chemist Arthur Dehon Little and his partner Roger B. Griffin, and that it first did chemical analysis and industrial research, with notable work in papermaking. Griffin died in 1893, and the firm was formally incorporated in 1909. Those are two different dates and both matter: 1886 is when the work began, and 1909 is when the company took its enduring form. The firm says it is widely recognized as the world's original management consulting firm. That is its own claim, made years after the fact: the phrase "management consulting" did not exist in 1886.

The label came from a different tradition. The Progressive Era was obsessed with efficiency, and Frederick W. Taylor's monograph, The Principles of Scientific Management, was published in 1911. Taylor had a rival in selling efficiency. A 2022 article in the Pennsylvania Magazine of History and Biography by James P. Quigel describes Harrington Emerson's Emerson Efficiency Engineers as an early management consultancy that helped establish the business and the profession. Emerson and Taylor competed for leadership in industrial consulting, and Emerson spread the idea through publications, lecture tours and efficiency clubs. For the full Taylor story, see our history of scientific management.

In 1914, a young Northwestern graduate in Chicago started a firm of his own. Booz Allen Hamilton's biography of Edwin Booz says he founded it that year, originally as The Business Research Service. The Army drafted him in 1917, and he returned to the business in 1919. The same biography lists the clients he later served, among them Goodyear Tire, General Mills, U.S. Gypsum and Montgomery Ward. A company history compiled in the International Directory of Company Histories adds that in 1924 he renamed the firm Business Surveys, and that unlike the efficiency-engineering firms, he used a personnel-oriented, applied-psychology approach that included interviewing employees.

The new problem was credibility. A stopwatch expert could be waved off as a factory-floor intruder, and a lab chemist was not obviously qualified to reorganize a sales department. The market had demand and no standards.

What this means for teams today: Ask a consultant for the method and for the evidence it worked somewhere like you. Efficiency advice that ignores the people doing the work has a long record of backlash.

Bower's Profession (1920-1959)

A lawyer turns a trade into a profession with rules

By 1920, the trade had a name. Booz Allen's company timeline credits James Allen with coining "management consulting" that year. The same timeline says Montgomery Ward went from near-bankruptcy to $13.5 million in annual profits by 1936, with the firm's help. That is the firm's own account of its own work.

The profession's shape came from a firm founded in Chicago. Amar Bhidé's Harvard Business School history of the firm records that James O. McKinsey founded his firm in 1926. McKinsey was a certified public accountant and a University of Chicago professor, and the firm specialized in accounting and what was then called "management engineering". In 1933 he asked a young Harvard-trained lawyer, Marvin Bower, to join the New York office. Bower had spent the Depression at the Cleveland law firm Jones Day, where he watched bondholders' committees take control of defaulted companies, and he saw the need for a firm that would handle business problems with the discipline lawyers brought to legal ones.

McKinsey died unexpectedly in November 1937. In 1939, Bower, Guy Crockett and Dick Fletcher formed a new partnership that took over the eastern practice, and the same study records that Crockett and Bower then set out to make the "professional concept" a hallmark of the firm. That meant putting clients' interests ahead of firm revenue, preserving confidences, giving truthful and independent advice even when it risked ending a study, and not advertising or soliciting clients. The firm held its first seminars and published its first papers in 1940. In 1946, the firm's Chicago partners under Tom Kearney went their own way, and Bower persuaded Kearney to call his firm A.T. Kearney & Company so that the McKinsey partners could buy the McKinsey name. In 1954, the firm adopted an up-or-out policy for associates, and it entered Europe in 1959. Bower served as managing partner from 1950 to 1967.

Other firms grew on the same ground. Arthur D. Little's timeline notes that in 1949 it applied operations research, developed during World War II, to industrial and management problems, and that in 1942 it designed Puerto Rico's Operation Bootstrap for the government there. Consulting was no longer a lone adviser. It was a firm with standards, a recruiting pipeline and a reputation to protect.

The problem the new model created was sameness. If every firm sold independence and professionalism, what made one worth more than another?

What this means for teams today: Set a written standard for any outside adviser: who owns the answer, what stays confidential, and what happens if the findings are unwelcome. The professional firm was built on exactly those rules. For how engagements are structured, see consulting engagement models.

The Henderson Years (1963-1980s)

A grid and a rival firm turn strategy into a product

The new firms of the 1960s sold strategy on paper, in short essays sent to prospective clients. BCG's history page lists Bruce Henderson as founder and CEO from 1963 to 1980, says he introduced the Perspectives essay series in 1964 as a way to market the firm, and dates the growth-share matrix to 1968. Henderson's article "The Product Portfolio" is listed on BCG's site as published in 1970. It argues that a company needs a mix of products with different growth rates and market shares, so cash from mature products funds growth in others. It names stars, cash cows and question marks, and it calls the low-share, low-growth quadrant "pets". Most people today call that last box "dogs".

The grid's appeal is easy to see. It turns a portfolio of businesses into a picture a board can argue over in an hour. Its flaw is equally clear: a business's place in the grid depends on how the market is drawn, and two analysts can draw it differently. For the mechanics and the common mistakes, read our BCG matrix guide.

The business model also changed. In 1973 Bill Bain left BCG. A company history says he had grown frustrated with a project-oriented approach that emphasized issuing reports over achieving results, and that he and colleague Patrick Graham started Bain & Company. For most of its history, the same source notes, Bain took on only one client in a given industry, to align itself with the client's goals. It opened a London office in 1979, and Bain Capital was formed in 1984. The new problem: if advice is judged by results, the adviser starts to share the client's risk, and that complicates independence.

What this means for teams today: A framework is a conversation starter, not a verdict. Ask what data sits behind each axis, and who decided where the line falls. If you hire a firm to set strategy, read the strategy consulting process so you know the phases to expect.

The Accountants' Detour (1970s-2002)

Audit firms grow big consulting arms, then are forced to shed them

In the 1980s, the biggest consulting practice in the world sat inside an accounting firm. According to a company history of Andersen, Arthur Andersen & Co. became increasingly involved in consulting in the 1970s, and in 1988 it became the largest consulting firm in the world, with 40 percent of its revenue from consulting. After years of internal discord it split in 1989 into Arthur Andersen & Company (accounting) and Andersen Consulting. In 2000 the International Court of Arbitration in Paris ruled that Andersen Consulting could separate completely, and in 2001 it changed its name to Accenture.

The rest of the profession was under a different kind of pressure. The SEC Historical Society records that in 1998, SEC Chairman Arthur Levitt asked the Public Oversight Board to appoint the O'Malley Panel to examine the audit model. The panel could not agree on a ban on non-audit services, but the issue of independence took its toll anyway: most major firms split off or sold consulting divisions. Then Enron collapsed, and in 2002 Arthur Andersen was convicted of obstructing justice in connection with the SEC's Enron investigation, which barred it from auditing public companies. The same year, Section 201 of the Sarbanes-Oxley Act prohibited nine specific non-audit services for audit clients and required audit committee approval for others.

This period overlaps with the Henderson years and shows a trade-off that every consulting model carries. Bundling audit and advice creates revenue and a conflict of interest at once. The law resolved it by separating the two for the same client. It did not stop the demand for advice.

What this means for teams today: When the same firm audits you and advises you, ask who checks the checker. The rule that came out of this era, independence for the auditor, is a useful test for any adviser whose fee depends on what they recommend. Our guide to implementation consulting shows how to separate design advice from delivery.

The Advisory Return (2002-present)

Advice comes back to the big networks, and AI joins the team

The separation did not last as a permanent exile. The SEC Historical Society notes that by 2012 some firms had begun rebuilding consulting practices for advisory services offered to non-audit clients. A clear sign came on 3 April 2014, when PwC announced the completion of its combination with Booz & Company. The firm took the name Strategy&, because after a short grace period the Booz name could no longer be used following the change in ownership. The strategy firm that traced its roots to Edwin Booz's Chicago practice ended up inside an audit network.

The newest chapter is artificial intelligence. In September 2023, researchers from Harvard Business School, the Wharton School, MIT Sloan, Warwick Business School and BCG published a field experiment with 758 BCG consultants, about 7% of the firm's individual-contributor consultants. On 18 realistic consulting tasks inside what the authors call the "jagged technological frontier", consultants using GPT-4 completed 12.2% more tasks on average, finished 25.1% faster and produced results rated more than 40% higher in quality. On one task chosen to sit outside that frontier, consultants using AI were 19 percentage points less likely to produce a correct solution than those without it. Several authors work for BCG and another advises it, so read it as well documented but not independent of the firm.

The point for the history is that consultants' basic product, a trusted judgment, is now partly produced with software. The new trust question is knowing which tasks the tool can do and which it cannot. That is the same job the profession has always had: telling a client where the method is reliable.

What this means for teams today: Ask any adviser, human or AI, where its work stops being reliable. Write that boundary into the engagement. The frontier moves, so revisit it.

Key People

Key Facts

Key Facts: Management Consulting History

• Arthur D. Little says its firm was founded in 1886 in Boston by Arthur Dehon Little and Roger B. Griffin and incorporated in 1909.
• Harvard Business School's history of McKinsey records that James O. McKinsey founded his firm in 1926 and that Marvin Bower joined the New York office in 1933.
• BCG lists Bruce Henderson as founder and CEO from 1963 to 1980, and his "Product Portfolio" article is dated 1970.
• By 1988, Arthur Andersen was the world's largest consulting firm, with 40 percent of its revenue from consulting.
• Section 201 of Sarbanes-Oxley (2002) prohibited nine specific non-audit services for audit clients.
• In a 2023 experiment with 758 BCG consultants, GPT-4 users completed 12.2% more tasks and finished 25.1% faster on tasks inside the AI frontier.

The Pattern Behind the History

This is our synthesis of the timeline, not a research finding. We call it the Method-to-Trust Pattern.

1. A method opens the door. A lab test, a stopwatch or a two-by-two grid gets the first engagement.
2. The method gets copied. Rivals teach the same technique, so it stops differentiating the firm.
3. Standards replace the method. McKinsey's independence rules and up-or-out policy show firms selling their conduct once their techniques are common.
4. Mixed incentives trigger a correction. Bundling audit with advice, or fees with outcomes, invites a break, as Andersen showed.
5. New technology moves the work, not the need. Operations research, computers and AI change what consultants do. The client still pays for judgment it can rely on.

What It Teaches Teams Today

• Buy judgment, not slides. The consulting method you are shown today will be common tomorrow. The conduct standards behind it are what last.
• Name the conflict up front. If an adviser can profit from what you decide, say so in the engagement terms.
• Define the end state. Strategy advice that stops at a report is the weakness Bill Bain left BCG to fix. Agree who carries the work after the findings.
• Match the model to the problem. A frameworks-and-analysis project, an embedded team and a delivery partner are different engagements. Read consulting engagement models first.
• Treat AI as a junior colleague with a jagged skill set. Check its work where the stakes are high, and expect it to be reliable on some tasks and wrong on similar-looking ones.

If you want the wider map of ideas that consultants carried into boardrooms, see the schools of management thought, the question of who counts as the father of modern management, and the 1990s wave in our history of business process reengineering.