PowerPoint Two

McKinsey & CompanyThe Firm : 

McKinsey & CompanyThe Firm Dangerous Company The Gold Boys’ Network Crystal Diane Byrd IST 325 Spring 2003

McKinsey & Company : 

McKinsey & Company Agenda Introduction and Company Overview McKinsey’s Mission Aspirations and Values Business Focus Clients Founders Forging Professional Values Tapping Harvard McKinsey’s Golden Connection A World Class Leader A Tough Employer One Woman’s Claim Casting a Wider Net Lessons Learned

McKinsey & Company : 

McKinsey & Company Introduction and Company Overview “ ‘One firm’ simply means that we're all in this together and that all our incentives, evaluation processes, and the like apply firm wide” Rajat Gupta CEO, McKinsey & Company Founded – Private company – 1926 Founder – James “Mac” McKinsey managed by Marvin Bower Size – Over 100 offices in 40 countries, employs 13,000 Revenues – $3.4 billion (2001) Source: The Gale Group

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McKinsey & Company McKinsey’s Mission “Win access to the ear and whisper the right message, and your influence will find its true measure” O’Shea and Madigan Dual Mission – To their clients and themselves to improve performance and attract exceptional staff Mission is supported by four aspirations and enduring values that guide all of the business efforts

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McKinsey & Company Aspirations and Values Serve clients as Primary Counselors on overall performance. Give each client the best of the firm. Superior Talent to initiate the best of consulting. Govern Ourselves through a values-driven partnership.

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McKinsey & Company Business Focus Focus of business – advising top management of leading companies and institutions of strategy, organization, technology and operation Business interests – automotive and assembly, banking and securities, business building and business technology offices, electric power and natural gas, insurance, media and entertainment, telecommunications Success – strict policy of privacy, founded on application of values, discipline, reputation and access over time, Art of networking – Gold Boys Network, Strict performance standards and training, 5- step process and 7- S Model

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McKinsey & Company 7-S Model Source: www.mckinsey.com

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McKinsey & Company Clients Successful – Hewlett Packard, Johnson and Johnson, General Motors and Siemens Unsuccessful – Enron, Swiss-Air, Kmart, Global Crossing Source: Business week

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McKinsey & Company James O. McKinsey Former accounting professor at the University of Chicago Source: www.mckinsey.com McKinsey's Goal – To help senior management in various companies solve their major business problems Mc Kinsey new theory – That so-called management engineers could go beyond rescuing sick companies.

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McKinsey & Company Marvin Bower Founders of modern management consulting Source: www.mckinsey.com Assumed Responsibility of the company after the death of James O McKinsey Bower was a member of McKinsey from 1933 until his retirement in 1992

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McKinsey & Company Marvin Bower Philosophy –  Management consulting should be held to the same high standards for professional conduct and performance as law and medicine. He insisted that client interests be placed before the firm's Engagements be undertaken only when our value to the client was expected to exceed our fees Bower restricted the firm's ownership to active partners He instilled professionalism through training

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McKinsey & Company Forging Professional Values McKinsey’s 5 Step Process Take top management perspective Establish a solid fact base Work with clients, not for them Preserve confidentiality Bring the best of the firm to each client

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McKinsey & Company Forging Professional Values (con’t) “This is about how we manage ourselves and what kind of organization we want to be ” Rajat Gupta, Managing Director on McKinsey’s Four Core Value Source: www.mckinsey.com Impact Driven Professional Support – “We want to make a difference in the institutions we serve individually, while collectively serving enough leading institutions so as to have broader impact on the business community and society”

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McKinsey & Company Forging Professional Values (con’t) Rajat Gupta, Managing Director on McKinsey’s Four Core Value Caring Meritocracy – “Without a true meritocracy, we won't be able to maintain our quality standards or attract the kind of people we want to attract” Self- Governing, Unified Firm Partnership – “This is not a firm of leaders and followers; it is a firm of leaders who want to have the freedom to do what they think is right for the institution” Delivering the Best – “if knowledge and being the best aren't part of our core values, then we're missing something”

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McKinsey & Company Tapping Harvard “The secret of success is constancy to purpose” Marvin Bower, quoting British Prime Minister Benjamin Disraeli. The Trend – Recruiting staff from the Harvard Business School began with Marvin Bower one of the founders of McKinsey and Company. The Program – Students were presented with case studies and problems and had one day within which to come up with a solution. The Product – A graduate capable of thinking on his/her feet.

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McKinsey & Company Tapping Harvard (con’t) The Question of Ethics “In a business that lives on impressions, dazzling the client is important” O’Shea and Madigan The Influence – Bower influenced the way business was run and classes were taught at the Harvard Business School and who was in charge. The Patronage – The Matsushita Chair of Leadership, established in 1981

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McKinsey & Company Tapping Harvard (con’t) The Competition – With the growth of consulting, even Bower’s persuasive patronage could not keep competitors for Bakers Scholars at bay The Problem Solver – True to his character as success as a management consultant and as a result a problem solver, Bower was able to go back to the top of his game

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McKinsey & Company McKinsey’s Golden Connection “ United Nations of business consulting, with one crucial difference: It works”. O’Shea and Madigan The Name – McKinsey’s name and reputation apparently opened the doors of many major corporations in corporate America to many of its veterans who transitioned out of McKinsey The People – Mckinsey’s people are valued for the type of experience that they bring to the table

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McKinsey & Company McKinsey’s Golden Connection (con’t) Louis V. Gerstner, Jr. IBM. Source:www.ibm.com Harvey Golub, former Chairman and CEO of American Express Company Source: www.americanexpress.com Michael H. Jordan, former chairman of international food and beverage at PepsiCo Inc www.eoriginal.com

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McKinsey & Company McKinsey’s Golden Connection (con’t) The Tie That Binds – These men are united not only in their connection to McKinsey & Company, but also in the personal qualities that they have in common as a result of their common business heritage. Aggressive Visionary Possessed intellectual vigor Bold Zealous Loyal

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McKinsey & Company McKinsey’s Golden Connection (con’t) The Assumption – Herein lies the true power of McKinsey The Measure of Success – For a consulting company the weight given to their advice and the implementation of their recommendations are critical to their success, therefore by exercising intellectual vigor at the top of companies is the key to their success.

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McKinsey & Company A World Class Leader Mckinsey’s business is influence versus special expertise Traditionally and deliberately, it deals first with the top level of business leadership Rule of Confidentiality –The one rule most Mckinsey consultants and former consultants seem to value above all others

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McKinsey & Company A World Class Leader (con’t) “Our point of view is simply that some people will continue here, some will go on to be leaders elsewhere...” Rajat Gupta McKinsey is high-caliber partnership where consensus of the partners dictates the course of events The Firm recognizes that it is frequently involved in growing the executives who will run corporations all over the world Outstanding people are hired in their own right, whether they are continuing at Mckinsey and are very successful at Mckinsey or not

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McKinsey & Company A Tough Employer (con’t) Mckinsey & Co. is one the most selective employer when it comes to the level of scrutiny its employees must face According to The Firm, the same standards are applied to everyone base on their Mission and Guiding Principles Statement

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McKinsey & Company A Tough Employer (con”t) Mckinsey consultant start out as associates. After two or three years at The Firm, the consultant who does well comes an engagement manager. Two or three more years after that, the title “senior engagement manager” is conferred. At any time during the course of this experiential leap, The Firm can decide the character just isn’t going to make it.

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McKinsey & Company A Tough Employer (con’t) Corporate culture 1st circle gets the best cases, the best mentoring, and the best avenues to partnership 2nd circle receives challenging cases and a good chance at advancement. 3rd circle some cases but not much attention and not much prospect at partnership 4th circle received difficult clients, minimal chance for advancement and little attention from partners.

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McKinsey & Company A Tough Employer Only one in five make it to principal Anyone who makes it through that gateway is then at step three: an elect/non-elect decision by a subcommittee of The Firm's board of director This brings us to the case of Suzanne Porter

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McKinsey & Company One Woman’s Claim Suzanne Porter Suzanne Porter joined McKinsey in 1986 after graduating from University of Texas Suzanne Porter planned to work for a consulting company before she went on leave from her job to attend business school at the University of Texas. Porter was interested in Mckinsey Company, and she submitted her resume at the Mckinsey’s public forums at University of Texas.

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McKinsey & Company One Woman’s Claim Suzanne Porter Porter worked with EDS, Republic Financial Services, Enron, American General, Tenneco, Zale, and Children’s Hospital accounts at the Mckinsey Advanced to senior management in the beginning of 1991 By August 1991, Porter was told that her performance on her most recent engagement was not satisfactory

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McKinsey & Company One Woman’s Claim Suzanne Porter Later, her partners also told Porter that she was years behind in her development. In June 1992, the Mckinsey Texas partners decided not to recommend her for election to principal. Suzanne Porter stayed at Mckinsey until April 30, 1993.

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McKinsey & Company One Woman’s Claim Suzanne Porter Porter’s Claim – she was victim of discrimination because she was a woman. Claimed that she was the target of inappropriate comments from men in the firm over time Claimed that she was hindered in her attempts to get a job at Bain & Co. Porter and her witnesses alleged that women at Mckinsey were not as well brought along as men.

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One Woman’s Claim Suzanne Porter McKinsey’s Defense – disagrees on all points, and won summary judgments dismissing a number of the claims The firm says she was fired because she had difficulty working with others, required a high degree of supervision, lacked analytical rigor, and reached conclusions with insufficient data. The Outcome –The Texas office got some sensitivity training it didn’t anticipate, and a woman was finally elected to the principal level at McKinsey. McKinsey & Company

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McKinsey & Company Casting a Wider Net Looking beyond Harvard Since 1986 McKinsey has been increasingly recruiting graduates with broader educations and experiences. 1995 – 43% of its 756 new consultants were not business school grads. Why? Pool of business school standouts was not large enough The company has evolved and grown and has become dependent upon a different set of skills Mckinsey's modern agenda has changed into analysis of the global economy

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McKinsey & Company Casting a Wider Net (con’t) Predicting Change (Practice what you preach) Before McKinsey went global, many of its clients were confused as to why they would take such a risk when they were already so successful. “Why do anything different? That is always the challenge for successful organizations. Of course, what we tell our clients is that that is just the time when you invest and do something different to maintain that success. In a narrow sense we were taking some of our own medicine.” Bill Lewis The Global Institute

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McKinsey & Company Casting a Wider Net (con’t) Going Global In the 1980s, questions arose about the world economy from CEOs in the US and in Europe Held international conferences for 3 years Opened global offices in Washington D.C. Consultants analyze the world economy Produce reports available to anyone

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McKinsey & Company Casting a Wider Net Organizational Values “Leave The Firm stronger for the next generation” Rajat Gupta Mckinsey spends a great deal of time checking on it’s own health Maintaining a first class image even in the light of the down fall of Enron, a company in which McKinsey had a major involvement Establish multi-level relationships with clients, not just with CEOs Establish tight partnerships. “Meritocracy”.

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McKinsey & Company Casting A Wider Net (con’t) “They remain the high priest of consulting, with the most formidable intellectual firepower, the classiest client portfolio, and the greatest global reach of any adviser to management in the world” Source: Business Week The Goal – McKinsey’s goal is stability, not to be wedded to any one business area in particular hence the wide variety of business services that they offer. The Future – Although not the biggest consulting company in the world, McKinsey continues to shine based on their reputation and golden connection

McKinsey & Company : 

McKinsey & Company Lessons Learned The most important body part of a person in power is the ear Maintain a first class image and reputation Invest in a wide range of business services Take top management perspective Establish a solid fact base Work with clients, not for them Preserve confidentiality Bring the best of the firm to each client Establish and maintain a golden connection