When Elizabeth Spaulding became president of Stitch Fix in 2020, setting her up to be its next CEO, the company’s investors were initially impressed. Shares soared on the belief that Spaulding, a well-regarded management consultant with pedigree from the elite firm Bain & Company and unimpeachable tech cred, would be the leader to reignite the onetime e-commerce darling.
Investors’ hopes were ultimately dashed. Spaulding became CEO in April 2021, but stepped down from the top job less than two years later amid declining sales and mass layoffs. Analysts said that Spaulding, for all her digital savvy, needed more of the on-the-ground apparel industry experience that can only be gained by years of working in the industry.
“A lot of what she did seemed to be technical ideas that had been drafted up in a spreadsheet without a real understanding of the implications on the ground,” says Neil Saunders, managing director of GlobalData, a research firm. One particularly egregious move under Spaulding that Saunders called out: reducing the scheduling flexibility of Stitch Fix stylists. That angered the live humans who supplement the algorithms that choose which clothes to send to clients, and who are key to the company’s success. There was also Stitch Fix’s shaky handle on inventory during her term, which led to missed sales.
Spaulding did not return Fortune’s request for comment.
While it is not uncommon for an alum of an elite management consulting firm like Bain, McKinsey, Boston Consulting Group, Accenture, Deloitte, or EY (also known as Ernst & Young Global) to be CEO of a company, it is rare for someone, however brilliant an analyst or strategist, to do so coming directly from a consultancy without making a professional pit stop at a company to acquire the requisite hands-on operational chops. Experts say that a lack of industry experience outside of consulting is a hindrance. And the former consultants who do eventually climb to the top of a company only do so after some strategic job-hopping to gain hands-on business bona fides.
Very few CEOs leading Fortune 500 companies have followed the same path as Spaulding. (Stitch Fix does not meet the revenue threshold to be in the Fortune 500.) An examination of Fortune data found that of the 47 Fortune 500 CEOs with past stints at top-tier management consultancies, only three jumped to a C-suite job in industry right after leaving a consulting firm, and of those, not one went straight to the CEO role.
Joel Bines, a retired managing director at AlixPartners who built that top tier consultancy’s retail practice and now advises clients independently, is not surprised.
“There is nothing about management consulting that prepares anyone to be a CEO of anything,” says Bines. That’s not to say consultants don’t bring a lot of expertise to bear when hired to advise a company on a specific problem or guide it through a situation like a turnaround. But running a company is a whole ball of wax, he says.
Spaulding isn’t the only former consultant who struggled as CEO. Another such example was Art Peck, who joined Gap Inc. in 2011 after 23 years at BCG, armed with considerable e-commerce expertise. He was ultimately unable to stop the company’s long decline, and left in 2019.(Stitch Fix replaced Spaulding with Matt Baer, Macy’s chief digital officer and an executive with tons of merchandising and supply-chain expertise but no consulting background.)
Boards, particularly those of large public companies, seem to share Bines’s view that by and large, CEO candidates who have only worked at consultancies, even the elite ones, are not sufficiently equipped with the broad set of skills and breadth of experience needed to lead big, complex companies. And in the process, such boards seem to have saved themselves from a lot of wasted time.
Beware the PowerPoint Picassos
Consultants are often mocked as being little more than “PowerPoint Picassos” if they haven’t gotten their hands dirty by running a business unit or proven their ability to galvanize underlings. The word ”executive” is derived from the verb “to execute,” after all, so consultants eyeing a career in industry have to be good at doing and not just advising.
They are typically green when they first get an industry job, but they often land on C-suite search firms’ radars because of their potential and because they know how to work with urgency and simplify complex ideas. A board or investor often sees consulting experience as helpful because “firms are very selective and provide rigorous training,” says Jason Baumgarten, head of Spencer Stuart’s global CEO and boards practice.
The list of Fortune 500 CEOs with that coveted mix of consulting cred and operational chops reads like a who’s-who of corporate America: Alphabet’s Sundar Pichai (McKinsey), Lockheed Martin’s James Taiclet Jr. (McKinsey), Whirlpool’s Marc Bitzer (BGC), Stanley Black & Decker’s Donald Allen Jr. (EY) and CF Industries’ Anthony Will, who has worked at Accenture as well as BCG. Among the list’s CEOs, 17 are McKinsey alumni, followed by BCG with seven, EY with six, and Accenture with five.
Tractor Supply CEO Hal Lawton is one such CEO. His career has seen him in big jobs at Macy’s, eBay, and Home Depot before taking his current job in 2019. He says he still taps the skills he learned at McKinsey a quarter-century ago as he runs a company valued at $25 billion. That includes the analytical framework developed at McKinsey for distilling a problem and communicating to get buy-in from underlings. His experience there also helped him learn from close proximity to high-ups at clients like Procter & Gamble, Coca-Cola, and Clorox. “It was learning by osmosis,” he says.
Countless other examples show how consulting plus industry experience creates a potent professional combination. McDonald’s CEO Chris Kempczinski started his career at BCG in the late ’90s before going to Procter & Gamble and PepsiCo to learn brand building and marketing. He took the top job at the burger chain in 2019. Citigroup CEO Jane Fraser was a McKinsey partner focused on finance before jumping to Citi in 2004 and rising up the ladder. There’s also John Donohoe, who was CEO of Bain when, in 2005, he jumped to eBay to lead its marketplaces division on the way to the corner office three years later.
Even in the rare cases that a consultant lands immediately in the C-suite, the executive had to earn in-the-field experience for years before getting the CEO job. The three current Fortune 500 CEOs who went directly from consulting into a top leadership team are Tenet Healthcare’s Saum Sutaria, who after 20 years at McKinsey became operations chief at the company in 2019; grocer Albertsons’ Vivek Sankaran, a McKinsey alum who was named chief strategy officer at PepsiCo in 2008 (but went for a hands-on job running a regional division of the company’s Frito-Lay division within a year); and Starbucks’ CEO Laxman Narasimhan, who was named finance chief of a PepsiCo division after leaving McKinsey. (Narasimhan was also CEO of Reckitt for three years before joining Starbucks last year.)
The expertise these kinds of CEO candidates gather doesn’t have to only be in operations, of course. It can be in areas like marketing, brand building, or finance. Kristin Peck, chief of pet medicine maker Zoetis since 2020, spent five years at BCG as a finance expert before joining Pfizer in 2004 to learn the ins and outs of drugmaking. She then played a central role in Zoetis’ spin-out from Pfizer in 2013 and made her way to Zoetis’ top job.
Once a consultant does make the leap into industry, one key consideration for headhunters in assessing a CEO candidate is their experience overseeing profit and loss, or P&L responsibility in business parlance, says Matthew Bidwell, a professor of management at the Wharton School of Business.
“There is a sense of, okay, we know you can build Excel models, and we know you can do spreadsheets,” he says. “But can you actually run something?”
A “career accelerator”
PowerPoint Picassos or not, consultants are everywhere near the top of large corporations worldwide.
A McKinsey spokesperson tells Fortune that 1,000 of the firm’s alums globally are C-suite executives. That may be why so many students at business school are angling to start their careers with a stint in consulting. McKinsey says it gets about 1,000,000 applications for its 10,000 annual openings, a 1% acceptance rate. It doesn’t hurt that graduate students at top-tier institutions like Wharton and Harvard Business School command starting salaries of $175,000 as juniors at the three elite firms, McKinsey, Bain, and BCG—or MBB, as the trio is nicknamed.
Time spent at a management consulting firm can be like B-school on steroids. By seeing problems from the inside at top companies, over time consultants develop a broader perspective that makes them attractive to executive recruiters, says Spencer Stuart’s Baumgarten. “They develop pattern recognition from watching a lot of different companies and leaders do things,” he says. Bidwell calls a management consultant gig early on a “career accelerator.”
The leading consultancies offer rigorous training and a variety of stretch assignments at a time when much of corporate America has pulled back on intensive leadership development. There are some exceptions like Pepsi Co. and Procter & Gamble, but by and large, Bines says, “companies have ceded that management training program to consulting firms.” That’s a problem for potential C-suite execs, who need a variety of assignments within a company to be well-rounded.
One thing that ambitious consultants must consider before making the jump to industry is temporarily leaving behind high-end firms’ very high pay and impressive titles, including partner status. “Most have at a minimum moved laterally if not taken a step back financially with the idea that they’re investing in themselves for the future,” Lawton says.
But there is already an “up and out” culture at management consulting firms that ensures most stay only for a few years, so many consultants typically are eyeing a career in industry anyway. For the firms, the benefit is that alumni at companies all over feed them more consulting work.
Professionals who have effectively made the leap from consulting firms to a C-suite role have also typically been lucid about what skills they have and which ones they lack. “The key differentiator between those who succeed and those who don’t is self-awareness and knowing that 10, 15, 20 years at a top-tier firm doesn’t prepare them to be a CEO,” says Bines.
