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McKinsey’s success

Over the decades, McKinsey’s success and its reputation have been determined by the quality of its clients — not just the institutions, but the individuals. The firm was founded in 1926, when the Universiry of Chicago professor James Mc Kinsey began recruiting experienced executives and trained them to be “accounting and engineering advisors”. When James O. McKinsey died in the late 1930’s Marvin Bower, graduate of Harvard Law as well as Harvard Business School became the leader of his small consulting firm.

He believed that management consultants should be professionals and initiated the upgrade of the firm’s image and broaden associates’ expertise. He placed client interests first, accepted only those assignments that we are fully qualified to perform and maintained independence and objectivity, even if it means declining or withdrawing from an assignment. The next decade the global economic environment changed drastically but the firm did not respond to those changes accordingly. That lead to a stall in the firm’s growth.

The newly assigned Commission on firm aims and goals researched the problem thoroughly and concluded that the focus on expansion has diluted the professionalism. The recommendations included an increased number of MGM and utilization of narrow-specialized consultants. When Ron Daniel took over the company the Commission’s recommendations still were not met. Even worse, the company was feeling pressure from strong and innovative competition. Their local office based model was inadequate to the rising need of information and knowledge sharing.

The first important step Daniel did was to emphasize on the training and developing process, creating the first Director of training position. Second step was to initiate structural changes creating cross-geographic Clientele Sectors and encouraging the development of functional expertise in the general areas. The concern was that the fine line between the new direction and product driven approach shouldn’t be crossed because of the established business relationships in the local offices. Also he attracted well known experts to form a group that will develop and share the existing knowledge of the company.

The open minded Fred Gluck contributed much to the innovation starting with the brainstorm strategizing during the “Super Group” session. He also brought his ideas about the knowledge as a core firm’s activity and asset. The creation of the 15 virtual Centers of Competence was a revolutionary step towards the functional expertise. That was a very costly project with unspecified budget but he was aiming high. It was actually a long-term blue skying for the practice leaders with one single purpose – to collect as much new ideas as possible.

Gluck supported the practice development and defended it with Judging by the evidence of the three mini cases, we see that the firm has been somewhat effective iin it’s two decade long change process. However, it’s not as simple to decipher whther or not it has been successful since each of the three case pointed out some strengths and weaknesses that have resulted from the over two decades of change. The Sydney office case for example, actually proves that the last two decades of management change have had varying differences..

The client on the project was very impressed with the value added in their acces to knowledge, which was one of management’s objectives. Also the amount of resources that Stuckey had available was quite large. He was able to organize a team with such diverse members. However, it was a very complex and difficult process finding associates that to complete the team. Stuckey also felt that even though the customer was satisfied, that the company had become very introverted in it’sway of looking at and handling of client challenges.

He felt that even though the knowledge systems were helpful, it is also important for the company to focus on new fresh ideas that were not part of the knowledge base. A similar theme was seen in the European Telecom case where the consultants working for McKinsey wanted to implement a new innovative way of sharing information in the telecom industry, which was outside of the traditional inter company knowledge base. Telecom was growing so rapidly that it was difficult for Soderstrom working as the sole intelligent switch, to maintain all of the info coming in about telecom.

But their proposals for an intranet, (system where all ideas could be shared regarding telecom, without the intelligent switch acting as the keeper) were met with fears that this would be a another step towards compartmentalizing , and the increasing difficulty in sharing this knowledge with other aspects of the company. It’s also obvious that management has neglected to provide efficient channels in which knowledge for rapidly expanding industries. And now that the telecom associates want to start their own more advanced method of sharing there is fear that they are alienating the rest of the company.

The third mini case shows that management was also partially successful in it’s attempt to give the strategy specialists a certain and prominent career path. Normally such associates like Steve Dull would not have chosen a career as a specialist because they tended to be treated like second class citizens, and normally their career path was not as bright as regular consultants who served clients. This is a testament to the strides management made to change the feeling within the company about specialists.

They committed to increase the percentage of partners who were specialists from the previous mark of 5 % to 15 to 20% . However, as seen in the latter part of the case, this may be too little too late. Mr. Dull was considering writing his own book , and further trying to give his career a boost , as he did not feel the prospects were good for internal specialists. The question still remains that why should only 15 or 20% of the partners be specialists? It still begs the question, are they not just as important if not more than regular associates?

After all they are at the core of creating innovative solutions to business problems. It appears that management didn’t go far enough in it’s reshaping of the partner makeup. The two decade long change process had many positive effects on the company, but as noted in the 3 mini cases, there are some important areas that the plan did not succeed. Namely , in information system development for emerging industries, personal growth and development issues among specialists, and the lack of willingness to try new ideas rather than rely on the company driven internal knowledge database.

It seems that it would have been more beneficial had the company loosened the reigns in Sydney and London , regardless of the potential risks. And regarding the career path, there is no doubt it should provided better opportunities for personal growth and development for specialists. Rajat Gupata’s approach regarding knowledge development and application within McKinsey revolve around the following key elements. He believes in investing in the future even if it means 5-10% less client work today.

He wants to capitalize on the firms historical knowledge and expertise , while continuing to use the present knowledge infrastructure of Pdnet and FPIS to continue to support CIS , and FCG groups. He also wants to use new channels and mechanisms for knowledge development and organizational learning. He also believes in the building the team atmosphere , along with continuing to strive for new and innovative ways of thinking. As evidenced by his support of the Practice Olympics.

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