Consulting Parlour

History
Management consulting grew with the rise of management as a unique field of study. The first management consulting firm was Arthur D. Little, founded in the late 1890s by the MIT professor of the same name. Though Arthur D. Little later became a general management consultancy, originally specialized in technical research. The first pure management and strategy consulting company was McKinsey & Company, still considered a leader in the field. McKinsey was founded in Chicago during 1926 by James O. McKinsey, but the modern McKinsey was shaped by Marvin Bower, who believed that management consultancies should adhere to the same high professional standards as lawyers and doctors. Andrew T. Kearney, an original McKinsey partner broke off and started A.T. Kearney in 1937.
After World War II, a number of new management consulting firms formed, most notably Boston Consulting Group, founded in 1963, which brought a vigorous analytical approach to the study of management and strategy. Work done at McKinsey, BCG, and Harvard Business School during the 1960s and 70s developed the tools and approaches that would define the new field of strategic management, setting the groundwork for many consulting firms to follow. Also significant was the development of consulting arms by both accounting firms (such as Arthur Andersen) and global IT services companies (such as IBM).
Current State of the Industry
Management consulting has grown rapidly, with growth rates of the industry exceeding 20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and linked to overall economic conditions. The consulting industry shrank during the 2001-2003 period, but had been experiencing slowly increasing growth since. In 2004, revenues were up 3% over the previous year, yielding a market size of just under $125 billion
Currently, there are three main types of consulting firms. First, there are large, diversified organizations, such as IBM's Global Services and Deloitte Consulting offer a range of services, including IT consulting, in addition to a management consulting practice. Second are the large management and strategic consulting specialists, like the venerable McKinsey, that offer purely management consulting, but are not specialized in any one industry. Finally, there are boutique firms, often quite small, that have extremely focused areas of consulting expertise, such as Canback Dangel in corporate analytics or First Manhattan in banking.
Approaches
Management consulting has become the primary source for innovation in the practice of management, forming a bridge between academia, firms, and thought leaders in other fields. As a result, management consulting firms use a variety of tools and techniques to approach business problems. See strategic management for more information.

Criticism
Management consultants are often criticized for overuse of buzzwords, reliance on management fads and a failure to develop executable plans that can be followed through. A number of highly critical books about management consulting argue that the mismatch between management consulting advice and the ability of business executives to actually create the change suggested results in substantial damages to existing businesses, see, for example Dangerous Company by James O'Shea.
Not surprisingly, management consulting is also the butt of many business-related jokes, such as: "Question: What’s the difference between a management consultant and a used-car salesman. Answer: A used car salesman knows when he is lying."
Leading Firms
The Vault Guide to Top Consulting Firms lists the following as the top five management consulting companies:
McKinsey and Company
Boston Consulting Group
LAWADM Consulting Group
Bain and Company
Booz Allen Hamilton
Monitor Group

Books about Management Consulting
Managing the Professional Services Firm, by David Maister
Guerrilla Marketing for Consulting, Jay Conrad Levinson and Michael W. McLaughlin
Flawless Consulting, by Peter Block
The Professional Services Firm Bible, by John Baschab
Managing Transitions, By William Bridges