History of Consulting: 9 Defining Stages that Shaped an Industry

Consulting is often viewed as a modern business discipline—polished, professional, and packed with frameworks. But its roots stretch much deeper. In truth, consulting has always existed. Wherever leaders have faced difficult decisions, advisors have stood nearby—offering expertise, perspective, and a steady hand.

For a foundational look at how consulting works in today’s world, see our comprehensive guide to consulting.

We can trace the essence of consulting back to antiquity. From Homer’s Iliad to Marco Polo advising emperors, and from Colbert crafting France’s mercantile policy to Alexander Hamilton shaping early American finance, history is filled with figures who acted as the consultants of their time—guiding kings, statesmen, and captains of industry.

But the modern consulting profession, as we recognize it today, was born in the crucible of the Second Industrial Revolution. And it has never stopped evolving. From operations engineering to strategy, from IT to digital transformation, consulting has grown in both depth and reach—shaped by economic upheavals, global crises, and relentless innovation.

In this article, we’ll explore the eight defining stages that shaped the consulting industry, followed by a ninth—one that’s still unfolding.

Stage 1: The Birth of Consulting (Late 19th – Early 20th Century)

From Workshop Floor to Workflow Strategy: Efficiency Sparks a New Profession

The formal history of consulting begins not in the boardroom but on the factory floor.

In the closing years of the 19th century, the Second Industrial Revolution transformed how companies operated. The explosion of mass production created a new imperative: efficiency at scale. As machines and processes grew more complex, so did the challenges of managing them. And with that, a new breed of expert emerged—not to build machines, but to optimize how they were used.

This era saw the rise of scientific management, pioneered by thinkers like Frederick Winslow Taylor e Charles Babbage, who introduced the idea of analyzing and structuring work to maximize productivity. Their work laid the intellectual foundation for early consulting.

In 1886, Arthur D. Pequeno, a chemist by training, founded what is widely considered the first true management consulting firm. Originally focused on technical services, Little soon shifted toward management engineering, applying scientific principles to organizational processes. This was the birth of the consultant as a systematic problem-solver.

The methods were analytical, even mechanical—measuring output, timing tasks, identifying bottlenecks. But the value was unmistakable. Factory managers across the U.S. embraced these ideas with enthusiasm, eager to extract every ounce of productivity from their operations.

Consulting at this stage was deeply operational, technical, and execution-focused. But the seed was planted: a new professional class was emerging—external experts paid to improve internal performance.

🔍 Why It Mattered
For the first time, companies began to recognize that expertise could be bought. And that outsiders—armed with methodologies and fresh perspective—could unlock internal value faster than insiders steeped in the status quo.

Stage 2: The Rise of Management Consulting

From Efficiency to Advisory: Consulting Becomes a Discipline

As the 20th century progressed, industrial complexity intensified. Production processes became more advanced. Organizational structures grew larger. And companies began facing challenges that required more than just engineering solutions—they needed help navigating strategy, finance, and governance.

Enter the management consultant.

What began as technical advisory around processes soon evolved into decision-making support for executives. Early consulting firms started carving out a distinct space between operations and leadership—offering structured, project-based services that helped managers define direction, reallocate resources, and solve systemic problems.

This was also the period when management consulting became professionalized.

Consultants were no longer viewed as engineers with clipboards. They became strategic collaborators—an external brain to support internal decisions. Projects were organized as discrete engagements, often short-term, knowledge-intensive, and highly focused on business outcomes.

As noted by academic Marc Baaji, the growing complexity of capital requirements and corporate governance created a deep need for external expertise. New manufacturing models and market dynamics outpaced the capabilities of many business owners. Companies needed help navigating the unfamiliar.

Consulting firms responded by formalizing their value proposition. They brought frameworks. They offered benchmarks. And they cultivated a reputation for rigorous, methodical thinking that stood apart from day-to-day business politics.

The discipline matured rapidly during this stage. Clients began to see consultants not just as troubleshooters, but as partners in transformation—independent thinkers who could help define what success should look like, not just how to get there.

🧭 Key Shift:
Consulting moved from the plant floor to the C-suite. Efficiency was still important—but so was alignment, design, and strategy. The problem to solve had grown larger. And so had the role of the consultant.

Stage 3: Complexity & Capital — Consulting Grows with the Industrial Economy

From Ownership to Management: A New Kind of Decision-Maker Emerges

The early decades of the 20th century brought rapid industrial growth—and with it, new organizational complexities that consulting was uniquely positioned to address.

As companies scaled, the separation between ownership and management widened. The founder-owners of earlier industrial ventures gave way to professional managers. These executives were responsible for increasingly complex operations, capital allocation, and strategy—but often lacked the deep, specialized insight to navigate every challenge on their own.

Consulting stepped in to bridge that gap.

In many ways, this period marked the expansion of consulting’s scope. No longer focused solely on efficiency or workflow, consultants were now helping organizations grapple with systemic questions:

• How should we structure our organization?
• Where should we invest our capital?
• What markets should we enter—or exit?
• How do we manage growth responsibly?

The world was also becoming more interconnected. International expansion, government regulation, and infrastructure development added layers of risk and opportunity. Both public and private institutions began turning to consulting firms to help manage this complexity.

One pivotal example: the U.S. government enlisted Booz Allen Hamilton to support military and public-sector projects. At the same time, European governments (notably France) applied scientific management principles in nationalized industries. Consulting had become not just a corporate asset, but a strategic lever for the public sector as well.

💬 “Professional managers were neither owners nor entrepreneurs,” notes one historian of the era. “When faced with complex, high-stakes decisions, they needed trusted, independent advice. That’s where consultants came in.”

Consultants provided not just answers, but also confidence. Their external, data-backed recommendations helped executives justify difficult decisions to boards, shareholders, and employees.

📌 Consulting’s new identity: not just engineers or strategists—but enablers of good governance and stewards of rational decision-making in a fast-moving world.

Stage 4: Consulting’s Strategic Role Expands After the Great Depression

From Crisis to Credibility: Strategy and Structure Take Center Stage

O Great Depression of 1929 shook the global economy to its core. Businesses collapsed, trust in financial institutions evaporated, and the need for independent, professional advice became more urgent than ever.

A turning point came in 1933 with the Glass-Steagall Act in the United States. This legislation prohibited commercial banks from engaging in investment banking or advisory services—effectively removing them from corporate restructuring and strategic counsel. Into this vacuum stepped a new class of consulting firms, ready to offer objective expertise in management, finance, and organization.

Among them was McKinsey & Companhia, founded in 1926 by University of Chicago professor James O. McKinsey. While McKinsey initially focused on accounting and organizational efficiency, the firm quickly evolved to become a pioneer in consultoria em estratégia corporativa.

McKinsey developed a compelling business model:

• Use structured methodologies to assess organizational performance
• Leverage cross-industry insights and benchmark data
• Deliver clear, actionable recommendations to executives
• Do it all with a tone of authority and independence

Rather than simply optimizing tasks, consultants were now helping shape strategic direction. They were brought in to advise on:

• Organizational restructuring
• Business unit alignment
• Crisis recovery strategies
• Financial performance improvement

Meanwhile, the consulting industry was learning how to scale trust. Firms began using surveys, research, and codified knowledge to support broader advisory services. Credibility was no longer just personal—it became institutional.

🧠 From Tacticians to Strategists
The consultant’s role shifted from operational fixer to strategic navigator—an essential partner to executives charting the course through post-crisis recovery and reinvention.

This stage laid the foundation for modern consulting’s DNA: objectivity, analytical rigor, and problem-solving at the leadership level.

Stage 5: The Golden Age of Strategy (1950s–1970s)

From Experience to Frameworks: Consulting Codifies How Business Competes

By the mid-20th century, the world economy was entering a period of post-war reconstruction and explosive corporate growth. Companies were no longer just recovering—they were expanding. And with that expansion came a new question: How do we compete effectively in a changing world?

Consulting firms responded by developing something powerful: strategy frameworks.

This was the birth of the intellectual capital era in consulting—where ideas, models, and methodologies became the main product. Firms moved beyond offering experience-based advice and began delivering structured, repeatable approaches to solving strategic problems.

🧠 The Rise of the Strategic Toolkit

No firm exemplified this shift more than Grupo de Consultoria de Boston (BCG), founded in 1963 by Bruce Henderson. BCG revolutionized the industry with tools that could simplify and visualize complex strategic decisions. Two frameworks, in particular, became legendary:

• The Growth-Share Matrix (or BCG Matrix): Helped companies allocate capital across business units by classifying them as Stars, Question Marks, Cash Cows, or Dogs. It introduced the idea that portfolio management could be data-driven and visual.
• The Experience Curve: Showed that the more a company produced, the lower its per-unit costs would fall—capturing the benefits of learning and scale over time. It provided a rationale for aggressive growth and investment in market leadership.

Consultants were no longer just analysts—they were thought leaders, creating and deploying intellectual property that shaped global business thinking. Strategy consulting became prestigious, high-impact, and C-suite essential.

Other firms followed suit. McKinsey developed the GE/McKinsey Nine-Box Matrix, while Bain & Company, founded in 1973, brought an emphasis on long-term client relationships and implementation support.

🧾 As Raymond Chandler once said, “Structure follows strategy.” And in this era, strategy itself began to follow frameworks.

🔍 Consulting in Demand Across Sectors

As companies diversified and expanded globally, they turned to consultants for:

• Market entry strategies
• Diversification decisions
• Competitive positioning
• Corporate portfolio management
• Organizational redesign

Governments and public institutions also embraced strategic consulting to improve efficiency and economic planning.

🧭 Key Impact:
Consulting stopped being reactive. Firms like BCG, McKinsey, and Bain weren’t just answering questions—they were shaping the questions leaders asked. This was the moment consulting moved from a service to a strategic advantage.

Stage 6: The Technology Boom and the Rise of the Big Four (1980s–1990s)

From Strategy to Systems: Consulting Scales with Technology

As businesses entered the digital age, consulting once again evolved—this time to meet the rising demand for technology expertise. The late 1980s and 1990s ushered in a new era of enterprise computing, data systems, and global integration. Organizations needed help implementing massive software platforms, managing digital transformation, and aligning technology with business strategy.

Enter the age of Consultoria de TI.

Consulting firms that had built their reputation on strategic thinking now found themselves facing a new challenge: helping clients execute large-scale systems implementations—especially Enterprise Resource Planning (ERP) solutions like SAP, Oracle, and PeopleSoft. This work was complex, high-stakes, and incredibly lucrative.

And it wasn’t just the traditional consulting firms getting involved.

🧾 The Big Four (Then Six) Enter the Arena

O accounting giants—then known as the Big Six—quickly recognized the opportunity to extend their services into the booming consulting market:

• PricewaterhouseCoopers (PwC)
• Ernest & Young (EY)
• Deloitte
• KPMG
• Arthur Andersen
• Coopers & Lybrand

Already trusted for audit and compliance work, these firms leveraged their client relationships and financial expertise to expand into technology implementation and business advisory. They formed internal consulting arms, hired armies of IT specialists, and built global delivery models.

By the mid-1990s, these firms had overtaken many traditional strategy consultancies in terms of headcount, geographic reach, and revenue.

Meanwhile, pure-play technology consulting firms like EDS (Electronic Data Systems)—founded by former IBM salesman Ross Perot—helped pioneer outsourced IT services and systems integration at global scale.

⚖️ Regulatory Flashpoint0

The rapid convergence of audit and consulting under one roof raised conflict-of-interest concerns. The Escândalo Enron and the collapse of Arthur Andersen in 2001 forced many firms to divest or spin off their consulting arms. PwC sold to IBM. KPMG and EY restructured. Deloitte chose to retain and ring-fence its consulting business.

💼 Consulting Was Now Big Business

This era changed the perception of consulting from elite and bespoke to scalable and systemic. It also laid the groundwork for modern digital transformation consulting.

💡 Key Evolution:
Consultants were no longer just advising executives—they were leading end-to-end implementations, integrating systems across continents, and embedding technology deep into the fabric of organizations.

Consulting had officially become a global industry, driven as much by code and connectivity as by strategy and slides.

Stage 7: Operational Excellence and the Search for Competitive Advantage (1990s–2000s)

From Insight to Implementation: Consulting Becomes a Scalable Engine

By the late 1990s and early 2000s, companies were no longer asking, “What’s the right strategy?” They were asking, “How do we execute consistently—everywhere?”

The consulting industry responded by doubling down on operational excellence.

Firms like McKinsey & Companhia, Bain, e Deloitte began to industrialize their approach to consulting, offering programs that could be scaled across functions, geographies, and business units. Excellence was no longer an aspiration—it became a productized solution.

At the heart of this shift was a new wave of integrated frameworks—tools designed to help clients align strategy, organization, systems, and culture in a repeatable, measurable way.

🧱 The Rise of the 7-S and Beyond

McKinsey, building on the work of Peters and Waterman in In Search of Excellence, introduced the now-famous 7-S Framework. It connected seven key levers—strategy, structure, systems, shared values, skills, style, and staff—to create organizational alignment and agility.

Other frameworks, like Galbraith’s Star Model e Nadler & Tushman’s Congruence Model, helped consultants approach transformation as a structured, integrated effort—not just a top-down mandate.

Consulting firms began offering branded excellence programs across every business function:

• Operations excellence
• Manufacturing and supply chain optimization
• Marketing & sales productivity
• R&D acceleration
• Shared services integration

These were no longer just strategic insights—they were modular, documented methodologies supported by training materials, change management playbooks, and global implementation teams.

🏭 Commoditization and Differentiation

With scalability came risk: commoditization. As more firms began offering similar “excellence programs,” the differentiating power of premium consulting began to erode. What had once been bespoke, high-touch transformation work was increasingly templated and process-driven.

To remain relevant, firms needed to innovate on both depth and delivery. Some invested in digital capabilities, analytics, and proprietary tools. Others focused on embedding consultants in long-term roles to ensure execution.

🧭 Key Shift:
Consulting was no longer just about having the right answer. It was about driving results at scale, proving impact, and sustaining performance long after the engagement ended.

This stage redefined success in consulting—from strategy creation to strategy activation, measured not just in reports, but in real outcomes.

Stage 8: Specialization and Segmentation – Consulting’s Age of Niches (2000s–2020s)

From One-Size-Fits-All to Tailored Expertise: The Rise of the Specialist

By the 2000s, consulting had gone global. Major firms operated in over 100 countries, serving Fortune 500 clients with massive transformation programs. But with scale came complexity—and clients started looking for more tailored expertise, not just global muscle.

This shift gave rise to a new phase: segmentation and specialization.

🧬 Clients Evolve, So Do Consultants

Clients were becoming more sophisticated. They no longer relied solely on the “usual suspects.” Instead, they began to match consultants more precisely to their needs—seeking niche expertise, innovative approaches, and better ROI.

This led to an explosion of specialist firms, focusing on:

• Gestão Estratégica
• Digital and technology consulting
• Human capital and change management
• Sustainability and ESG
• Innovation and product development
• Procurement and sourcing optimization ← hello, Consulting Quest 👋

Even within specialties, firms began narrowing their focus by industry verticals, from life sciences to energy to public sector. The more targeted the value proposition, the more attractive it became.

📌 Need a firm to optimize your R&D tax credits in biotech across Europe? There’s a boutique for that.

🧩 New Types of Players

As specialization deepened, the consulting landscape fragmented. The once-clear boundaries between firm types gave way to a spectrum of models:

• Generalistas (e.g., McKinsey, BCG, Bain): Deep breadth, cross-industry scale
• Especialistas: Focused on one function or capability
• Niche Players: Expertise at the intersection of industry and function
• Consultores Híbridos: Combining consulting with tech, media, or outsourcing (e.g., Accenture, IBM)
• Freelance Platforms: Matching independent experts to short-term projects (e.g., Catalant, Talmix)

At the same time, consulting services became stratified by depth, cost, and delivery model. From Tier-1 boardroom advisors to agile freelance consultants, clients now had a menu of choices.

🧠 Consulting Becomes a Capability

Many companies also began building internal consulting teams—branded as business excellence, transformation offices, or capability centers. These in-house experts offered long-term continuity, deep organizational knowledge, and lower costs. As highlighted in Consulting Quest’s insights, this make-or-buy question became central to sourcing strategy.

And if you’re exploring whether to build in-house capabilities or hire outside experts, our guide to internal vs external consultants breaks down the pros and cons.

💡 Key Insight:
Consulting was no longer a monolithic service—it became a dynamic ecosystem. Clients chose partners based on need, not name.

Fantastic! Based on everything you’ve shared, here is the finalized Stage 9—our newly added “living stage” of the industry, fully integrated with insights from your article “The Future of Consulting: Why It’s No Longer Business As Usual” and built to close the historical arc with momentum.

Stage 9: A Future in Motion — Platforms, AI, and the New Consulting Ecosystem

From Relationship-Driven to Strategy-Engineered: Consulting Rewires Itself for the Digital Era

Think about how consulting used to work: a few trusted firms—chosen on brand and personal rapport—would land all the critical assignments. Procurement often sat on the sidelines. The process was personal, unstructured, and deeply relationship-driven.

But that world is gone—and what’s replacing it is far more dynamic, data-driven, and client-controlled.

In today’s environment, clients don’t just buy consulting—they design it. With the rise of AI, digital platforms, expert networks, and micro-consulting models, organizations now build modular ecosystems of advisors tailored to each problem, each moment, each outcome.

As outlined in our deep dive on future trends, this shift is reshaping the industry across four key dimensions:

1. AI and Automation Are Changing the Game

AI isn’t replacing consultants—but it is redefining how they work. Tools once billed by the hour—benchmarking, analysis, research—can now be automated. Clients are no longer paying for grunt work; they’re demanding insights, not slides.

Firms that embrace automation are empowering their consultants to focus on:

• Synthesizing complex data into actionable strategy
• Managing multi-stakeholder transformation programs
• Innovating custom solutions at speed and scale

But AI is only as valuable as the consultant using it. The future belongs to advisors who pair digital fluency with strategic depth.

2. Small Firms, Platforms, and Freelancers Gain Ground

The age of one-stop-shop consulting is fading. Clients now turn to:

• Boutique firms for deep domain expertise
• Expert networks for rapid insights
• Freelance platforms for tactical execution
• Global firms for scale and integration

This hybrid sourcing model offers flexibility and precision. But it also requires better coordination. Clients must become curators—selecting and orchestrating the right providers across phases and functions.

3. Blurred Lines Between Consulting and Everything Else

Today’s consulting value chain includes not just firms, but:

• Professional services companies offering advisory roles
• Software vendors embedding strategy into platforms
• Internal consulting teams scaling expertise from within

The result? Traditional firm boundaries are dissolving. Clients must now evaluate partners based not just on capabilities, but on fit, integration potential, and end-to-end value.

4. Procurement Becomes a Strategic Architect

Gone are the days when consulting spend was the exclusive domain of the C-suite. Now, strategic procurement teams are stepping in—with structured panels, value-driven RFPs, and smarter cost models that align consulting with outcomes, not just hours.

Leading organizations are balancing:

• Global panels and niche partners
• Competitive tenders and long-term relationships
• Value-for-money with value-for-impact

The companies thriving in this environment treat procurement not as a gatekeeper—but as a strategic lever.

🔮 What Comes Next?

Stage 9 isn’t the end of the story—it’s a live chapter still being written.

With generative AI, sustainability, geopolitical uncertainty, and talent disruptions on the rise, the consulting industry will continue to adapt. But the core trend is clear: clients are in control. The firms that succeed will be those that:

• Partner, not just advise
• Build trust through transparency
• Focus on measurable outcomes, not deliverables
• Embrace both digital tools e human ingenuity

In short, the future of consulting isn’t about doing less—it’s about doing it smarter, faster, and with more purpose than ever before.

Conclusion: From Ancient Advisors to AI Architects—The Consulting Journey Continues

The story of consulting is the story of business itself.

From ancient orators guiding kings to modern experts engineering digital transformation, consultants have always helped organizations navigate uncertainty, scale opportunity, and shape change. What began with time-motion studies in dusty factories has evolved into global ecosystems of advisors—each bringing specialized insight to help companies compete, adapt, and grow.

Across these nine defining stages, we’ve seen consulting stretch, specialize, and redefine itself:

• From efficiency to strategy
• From handcrafted advice to industrialized excellence
• From monolithic firms to modular ecosystems
• From relationships to results

And now, as we stand at the edge of a new consulting era—powered by AI, platforms, and smarter procurement—one truth remains constant:

Trusted expertise, paired with bold execution, will always be essential to building the future.

But unlocking that value takes more than a firm handshake or a flashy pitch deck. It takes clarity, discipline, and a sourcing strategy aligned to your business goals. That’s where we come in.

💬 Ready to Navigate the Next Chapter of Consulting?

No Consulting Quest, we help organizations like yours take control of their consulting strategy—from supplier selection to performance management. Whether you’re rethinking your consulting panel, optimizing your procurement process, or exploring new ways to deliver transformation, we’re here to guide the journey.

👉 Agende uma consulta gratuita and discover how you can source, manage, and scale consulting like a pro.