Mind Without Fear

by Rajat Gupta

  Fred just repeated his warning.

  “Okay,” I conceded, “but he’s a very competent consultant and he built that office with Christian and me. But it’s not up to me, so you do what you think is right. I’ve said my piece.”

  At the next board meeting, Jan was on the agenda again. He had been fired, and not surprisingly, from my perspective, he had sued the firm for wrongful dismissal. He had a very strong case. His performance had been outstanding, he’d been given no warning, and the worker-friendly Scandinavian labor laws were clearly in his favor. The firm was going to lose, and it would be costly. I refrained from saying “I told you so,” since it would not have served any purpose, but I hoped Fred was at least a little aware of the irony when he turned to me and said, “Rajat, I need you to get us out of this. You’re the only one he trusts and the only one he’ll talk to.” I invited Jan and his lawyers to immediately fly to New York, and even while the three-day board meeting was in process, I was able to negotiate an acceptable settlement for both parties.

  “I Won’t Step Aside”

  McKinsey’s managing director does not have much power to make unilateral decisions; most important matters in the running of the firm are handled by various committees. However, there is one area in which the managing director can call the shots: appointments. It was Fred’s prerogative, as the newly elected leader, to appoint people to all leadership roles in the firm. He decided that it was time the Chicago office had a new manager. Mike Murray was initially resistant to the change, but eventually acquiesced, telling Fred that he should make me office manager, based on my success in Scandinavia and client record in Chicago.

  Fred, however, had someone else in mind. He could have just gone ahead and made the appointment, but clearly he was uncomfortable about it and felt he owed me an explanation. Perhaps he was also hoping I’d make it easy for him by telling him I wasn’t that interested in the role anyway. “You’ve already managed an office,” he told me, “so you really don’t need any more management experience. I’d like to give someone else this opportunity.”

  I was disappointed. I’d enjoyed running the Scandinavia office and would have relished the challenge of taking on Chicago. I felt I’d earned it and had trusted that McKinsey’s meritocratic system would recognize and reward my hard work. But I tried not to let Fred see how I felt. “Okay, do whatever you want; it’s up to you,” I told him.

  Over the next couple of days, however, my response didn’t sit well with me. I felt I was not being honest—I wanted the job and I felt I was the best candidate. Some instinct told me that if I didn’t fight for this, my career would stall. Plus, my sense of fairness had been offended. It wasn’t right that I simply step aside. Perhaps it was too late and Fred’s mind was already made up, but if I’d learned anything from my early experiences with ITC and McKinsey, it was that asking for a second chance can pay off.

  I called Fred back. “To be honest, I would like to be head of the office. Ultimately, it’s your choice, but I want you to know that I will not step aside and take myself out of contention.”

  This put Fred in a tough position. Although the appointment was his prerogative, it was important to him to be seen to be making the right choice with the support of the partners. He sent one of his colleagues to Chicago to talk to the rest of the partners and find out their preferences. This process went on for several days.

  In the end, the majority of partners expressed a clear preference for me. To his credit, against his own wishes, Fred gave me the job. I was glad I’d told him what I wanted—I think I would always have regretted it had I not stood up for myself at that crucial juncture.

  Managing Chicago

  The Chicago office was a challenge. It hadn’t really grown in ten years. I decided to try some of the strategies that had worked so well in Scandinavia, starting with changing the culture to encourage more collaboration. My own experience upon arrival had revealed just how territorial most partners were. They protected their existing clients, and staked out “their” prospective clients, even when they were being quite ineffective about developing them. Many would insist they were “in talks” with a particular CEO, but nothing ever seemed to come of it, so that no one else could step in. So I instituted weekly partner meetings, held on Saturdays so everyone would be able to attend, at which we would discuss every client and potential client.

  At the first of these meetings, we gathered in Mike Murray’s living room. “Openness and honesty are critical,” I told everyone. “This will only work if we’re straight with each other about what’s actually going on in these client relationships—the good, the bad, and the ugly—and what we can each realistically commit to achieving.”

  The partners were initially very reluctant, but as the process began, they soon found it cathartic. It was like a form of group therapy, as people began to admit that they were stuck in developing particular clients, or were trying but failing to close a deal with new ones. It was a relief to many to be able to say they weren’t sure how to achieve the desired results, and to ask others for help and suggestions. A spirit of camaraderie began to emerge in the office.

  We were still struggling to be a well-performing office, however. Well, we were the master consultants, I thought, so we should be able to figure out what the issue was. I decided to ask the firm to do an analysis of the office and see if it could pinpoint the problem. It came back with a clear conclusion: our underlying problem was that we had too many partners—three too many directors, to be exact.

  I presented the report at our partner meeting. There was a silence as I finished, and as I looked around the room, I could tell that most people were immediately worrying about whether they were among the “too many” and wondering who would be asked to leave. Those were not the questions I was asking, however.

  “I don’t believe a word of this report,” I told the surprised partners, recalling how Ron Daniel had once said the same words to me in response to my youthful, inaccurate assessment of McKinsey’s future. “It makes no sense. There’s a huge client potential here. Why would we ask three directors to leave, rather than increasing our client base and growing into the number of directors we have—or more?”

  Over the coming years, that was the strategy we adopted, and it worked. In fact, three years later we’d gone from sixty professionals to 160 and become one of the best-performing offices in the US. I brought in some new blood from other McKinsey offices and developed a lot of the younger associates and partners. The team-oriented culture continued to thrive, and we developed many new clients. We also forged friendly relationships with the neighboring offices in Toronto and Cleveland, forming a kind of Great Lakes collaboration.

  As office manager, I could have cut back on my own client work—many office managers did. But I decided to do the opposite. Serving clients was the heart and soul of what we did, so why should the leader be exempt from that work? Besides, I loved the client work. I began to work the Chicago business networks as I had in Scandinavia, to similar effect. One memorable engagement was with Nutrasweet, then a tiny division of the giant Monsanto. Nutrasweet’s CEO was a razor-sharp lawyer and I worked hard to help him develop strategies to combat competition as his patent came to expiration. A few years later, he would be handpicked as the next CEO of Monsanto, and the firm landed a very big client.

  As a family, we enjoyed our time in Chicago. Anita was happy to be back in a country where she could simply pick up the phone and call a plumber, and didn’t have to go to the train station every day to get a single English-language newspaper. Despite an invitation to join a prestigious country club, of which I would have been the first non-white member, I remained firm in my decision not to play golf but to dedicate my weekends to my family. No doubt the fairway would have been a great place to meet clients, but I was doing quite well in other settings, and I cherished my time with my wife and girls. Our youngest daughter, Deepali, was born in 1990, completing our family. Her chubby body and exuberant hair reminde
d us of a “koosh ball” toy, and she soon gained the pet name “Kushy,” which has stuck to this day. Anita stayed a full-time mom to the four girls, and a full-time job it certainly was, especially as my job increasingly demanded me to travel.

  When I was home, I tried to spend as much quality time with them as I could, including helping my daughters with their schoolwork. Sonu had always had an unusual gift for pattern recognition, solving puzzles since she was a year old. She was extremely good at math, and I always proudly thought she took after me, since I had scored the highest in an all-India math exam. In middle school, she was given the opportunity to attend an advanced math class at the local high school, and I loved helping her with the problems she brought home, until one day I had the uncomfortable experience of staring perplexed at her homework, unable to solve the problems. “Baba,” she said, catching my look of dismay, “what’s wrong?” As she figured out the answer on her own, I had to admit that my teenage daughter had surpassed me. I could no longer help her with her homework, but I was even more proud of her prowess.

  McKinsey Looks East

  In the early 1990s, the firm served its first Indian client: a software company called HCL that wanted to expand into the American market. I was overseeing the team, and soon became friends with the CEO, Shiv Nadar. It was on this engagement that I made the acquaintance of a young engagement manager from our San Francisco office named Anil Kumar.

  Around the same time, the firm’s leadership was talking seriously about starting an office in India. My New York mentor and colleague Tino Puri decided to make the move and head up the office, along with a few other Indian partners who were happy to go home. When Anil reached out to me saying that he was considering asking for a transfer to the new office, I encouraged him, and put in a good word with the relevant people. For myself, the India office never beckoned. I was too busy in Chicago, and saw my opportunities as firmly rooted in US soil.

  The establishment of the India office was just one example of McKinsey’s increasingly global outlook. The firm was becoming truly international. Of the thirty-three new offices that had been opened in the 1980s and early 1990s, only six were in the US. Seventy-eight of our 148 senior partners lived outside the US. As Fred Gluck’s second and last term as managing director approached its close, there was a lot of speculation about who would replace him, and whether the firm might finally look beyond the US for its next leader. In late 1993, I came to work one day to find the office abuzz with gossip about an article in BusinessWeek entitled “The McKinsey Mystique.”

  “Many insiders believe McKinsey may well elect the first non-American to lead the firm,” the article declared, and went on to identify four potential candidates: my old friend Christian Caspar in Scandinavia; Lukas Muhlemann, who had made quite a name for himself in Switzerland; Norman Sanson in the London office; and the formidable Herb Henzler from Germany.1 Despite my previous appearance on the ballot six years earlier, I did not seem to be on their radar, but this time I privately thought that I had a good shot. My success in both Scandinavia and Chicago—two very different offices—had made an impression, and I knew that many people supported me. I now felt ready, but I didn’t know if the firm was ready for a leader so far outside the McKinsey mold. When the ballots came back, however, the choice was between me and Don Waite, head of the New York office. No one else, including all of BusinessWeek’s projected favorites, even made it to the nomination.

  Don Waite was a blue-blooded American in the classic McKinsey mold and part of the older generation. His election would have represented a continuation of the firm’s history, rather than a changing of the guard. I, on the other hand, was only forty-five and considered by many to be the new face of the firm, an appropriate choice to lead McKinsey in the globalizing world. In March 1994, the second round of voting took place while I was vacationing with my family at our ranch in a remote part of Colorado.

  The day the votes were counted, I was alone in the house, having injured my back the previous day while teaching four-year-old Kushy to ski. The rest of the family had gone to the slopes without me, so there was no one around when the phone call came from my long-time mentor Ron Daniel, who was head of the election committee.

  “Congratulations, Rajat,” he said. “I’m calling to tell you that the partnership has chosen you to lead the firm. I’m very happy for you and for the firm. I assume you will accept the role?” I told him I would be honored. Who would have imagined, back when Ron had given me a second chance to interview at McKinsey, that twenty-one years later he would be making this call?

  Not wanting to call anyone before I’d told my family, I had several solitary hours to reflect upon this remarkable turn of events. I was the first non-American-born managing director of the firm, and the first Indian to ever lead a global company of McKinsey’s stature. I was also the youngest leader the firm had elected in the modern era.

  As I sat on the deck, looking out over the grandeur of the mountains, I thought of my parents and how proud they would have been. My path had led me in such a different direction to the one my father had taken, but I hoped he would have appreciated that in my own way I was attempting to serve my family and my country, just as he had done. My mother, too, would have been gratified to see that the resourcefulness and dedication she taught me had brought me so far.

  I felt a deep gratitude for the genuine meritocracy that the firm had proven itself to be. My peers had done me this honor on the strength of my leadership record, my problem-solving abilities, the relationships I’d built, the clients I’d introduced and served, and, most importantly, the trust I’d earned. The color of my skin and the country of my birth had not mattered, in the end. I could hardly believe this had happened. Even after I told my family later that afternoon, it still felt surreal. The reality only began to sink in when several journalists and photographers showed up on our doorstep the next day, having heard the news and tracked me down at our remote little mountain retreat.

  As soon as we left Colorado, I booked a ticket to Boca Raton, Florida. I felt strangely nervous as I sat on that flight, less like the soon-to-be-leader of an international firm and more like a humble student making a pilgrimage to meet a great teacher. When I stepped out into the Florida sunshine, I was taken aback to see that the teacher had come to greet me. McKinsey’s patron saint, Marvin Bower, then in his nineties, was standing on the sun-baked sidewalk waiting for me.

  When he saw me, he came forward and clasped my hand, congratulating me on my election. We spent several hours together that day, discussing the future of the firm. He told me he was concerned that the firm could be growing too fast, and that partners might get too focused on increasing revenues at a cost to the quality of client service. I shared with him the plans I was formulating, and we talked about the importance of keeping the McKinsey partnership intact and its values solid, even as it became more diversified and global. By the time I left that evening, with Marvin’s blessing, I felt the mantle of leadership beginning to settle a little more comfortably on my shoulders.

  10

  Unity in Diversity

  Let us unite, not in spite of our differences, but through them.

  For differences can never be wiped away, and life would be

  so much the poorer without them.

  —Rabindranath Tagore, Talks in China

  I was late for my first day as McKinsey’s new leader—two weeks late, to be precise. I’d gotten sick earlier that month, a gall bladder infection that I didn’t seek treatment for quickly enough. Right as I was getting ready to take up my new role, my gall bladder burst and I contracted a staph infection that almost killed me. On the day I should have officially taken on the role of managing director, I was in a hospital bed. Thankfully, I made a full recovery and was eventually able to return to work.

  During the previous few months, I’d taken a fascinating and important journey, visiting every one of the firm’s sixty-two offices in thirty-one countries and talking with almost all my
partners. I was in the unusual position of knowing almost every senior partner in the firm directly, having worked in Scandinavia, Europe, Asia, and the US, as well as served on several committees related to personnel and compensation issues. I made sure to spend time with the young directors, principals, and associates as well. This was a practice I’d adopted as a consultant—you can learn a lot more about a company by speaking to those on the lower rungs of the ladder than by speaking only to the leadership. This journey confirmed my sense that the firm was truly evolving into something far removed from its traditional, pedigreed American reputation. I was becoming leader of a truly global partnership; in fact, more of our senior partners lived and worked outside America than inside, and 60 percent of our revenues came from overseas. My election reflected this reality. I felt like a global citizen more than I felt Indian or American. When I told the press that I took all the congratulations as a great compliment to the firm, I wasn’t just affecting modesty. I was genuinely proud of the firm for having proven itself to be the meritocracy I’d always believed it to be, rather than affirming its reputation as an old boys’ club.

  At the end of my travels, I felt I’d taken the pulse of the firm and was ready to meet with the directors and formulate my priorities as the firm’s new leader. I summed these up in a memo to the partnership that I sent out in July 1994. I intended to enhance collaboration, beginning with building genuinely global client service teams; institutionalizing client impact reviews so we could measure the actual effects of our work; improving our functional knowledge development efforts to become a firm of innovative ideas; reaffirming our commitment to geographic entrepreneurship and being present in every major economy in the world; rendering governance flatter and more transparent and building on our partnership values; and reducing unnecessary costs, since we were the custodians of our clients’ money.