The McKinsey Engagement

by Paul N. Friga

  The consulting team. As you sort through your data to understand each "so what," the first constituent group to consider is your fellow consultants. In addition to helping to check the validity and thoroughness of your tentative understandings, your coworkers may be affected by the implications of these understandings for their particular areas of analysis. No matter how hard the team strives to maintain independent and MECE streams of analysis, there will undoubtedly be overlaps. So, the team members continually check in with one another to share implications.

  The client project team. The most obvious implications for the client project team (which includes the high-level sponsor, the key point of contact, and anyone assigned to work on the project with the consulting team) are the answers to the key question. Less obvious implications for consideration include political issues (promotion plans, informal rules of communication, and unspoken influence tactics), answers to different but related questions (possible future consulting projects), and private agendas (remember, the people you are working with have been attempting change efforts well before you arrived).

  The client implementation team: One of the biggest criticisms of consulting firms (especially McKinsey at one time) is their inability or unwillingness to consider implementation in their recommendations. The truth of the matter is that providing great ideas that cannot realistically be implemented is as ineffective as not even doing the work (and more costly!). During a project, it is important to think through how the recommendations will be carried out, who will be doing the implementation, and what needs to be addressed to ensure that the implementation will actually happen.

  RULE 3: DOCUMENT THE KEY INSIGHT ON ALL CHARTS

  The final Rule of Engagement involves the explicit documentation of the insight on each and every slide. I would like to first discuss the reasons why this is so important and then cover some tips for doing it well.

  The Collecting and Understanding processes are designed to work hand in hand during the team's problem-solving journey. The team sketches out the story line, drafts ghost slides, gathers the data to fill in the charts, and then finalizes the insight statement on each chart. This is the most important part of the process. McKinsey typically inserts the insight at the top of each slide in the form of a sentence. Other firms place the key insight somewhere else on the page and use the top of the slide as the tracker or section divider (our approach will be covered more thoroughly in the next chapter). This statement is extremely important to the process, as it makes explicit the reason why the chart exists and shares that reason with the rest of the team, and eventually with the client.

  A few tips for identifying and documenting the insight on each slide are (1) start early, (2) seek input, and (3) think in terms of impact for the client. In terms of timing, the first draft of the insight statement is actually prepared before any data are gathered. As described in the previous chapter, the ghost slide has a tentative insight into what the data may ultimately support (kind of a mini-hypothesis). The insight statement may evolve a bit as the data are collected—it is always important to ensure that the statement is supported by the data and does not make claims beyond what the data support. The insight-generation process is so important that it should not be left to one person. Research shows that diversity of opinion leads to better answers, so you should seek input from other team members as you develop your insights and test them with supporting data. The processes of seeking others' input and describing your assumptions lead to better charts and insights.

  Finally, all insights should eventually be tied to some impact for the client. Remember, that is why we are here! One way to do this is to identify the specific impact that the insight has on the eventual recommendation, and how that recommendation, in turn, affects the client's operations. Every McKinsey engagement includes quantification of the potential impact for the client (especially because this is part of the firm's core mission statement). Typically, this will be in the form of additional revenue or decreased costs and will include an explicit statement of assumptions as well as a range estimate for the quantified impact.

  OPERATING TACTICS

  The Operating Tactics for the Understand element of the TEAM FOCUS model are:

  Tactic 35: Ask "so what?" to sort through the analysis to find out what is ultimately important.

  Tactic 36: Estimate the impact of the recommendations on the client's operations.

  STORIES FROM THE FIELD

  STORY FROM THE FIELD—1

  Topic: A client's failure to communicate changes in expectations effectively leads to an abrupt change of direction for the consultant team. D. A. Gros saw many successful projects during his tenure at McKinsey and recalls how important understanding and adapting to the client perspective was during one project that he supervised.

  On a pharmaceutical project, as a senior engagement manager, I was in charge of a team that was to help the company develop a pure growth strategy for its Asia-Pacific market. This included brainstorming on strategy for 10 different countries and checking in with the head of the Asia-Pacific region, who was based in the United States.

  On a Friday two weeks into the project, when we were delivering the draft book for review, the senior client executive flipped through the book and suddenly threw it back across the table at me, stating that it was all wrong. Four weeks before the start of the project, I had discussed the project's direction with both the McKinsey partners and the client—it was to be a pure growth-strategy engagement. However, in the six weeks that had passed since that meeting, developments in the market and within the company had created significant financial pressures that required a cost-reduction strategy rather than a growth strategy.

  Because of this new direction, we had to reevaluate the company's position, go back to the drawing board, and start over with the Frame process. One of the first things I did was to reach out to the partner on the project and discuss this change in direction. By the day after the disastrous meeting, I had spoken with several McKinsey experts on cost reduction and read relevant white papers—by leveraging the subject-matter experts, I became very proficient in the cost-reduction matters we would be addressing. By Saturday evening, my team was plowing through this problem from the new angle.

  After burning the midnight oil for several days, we had a new deck prepared for a Tuesday meeting. This time, the senior executive was very satisfied with the result, and the project was extended for Asia and eventually led to further work in Latin America.

  STORY FROM THE FIELD—2

  Topic: Understanding the "so whats" is at the heart of a consul-tant's advice for project success. Mike Yang offers the following bits of advice from his McKinsey days:

  "So what." A story is not a story without the "so what"; it proves the importance of the insight and translates it into impact for clients.

  Implications for constituents. In addition to considering the constituents, you need to make sure that you validate the insights through private syndication. If you have a gut feeling that someone will not like the result, that person probably won't. It's better to prepare the various constituents for discussions and ask them for input ahead of time than to have unpleasant surprises in subsequent meetings.

  Document the key insight. Each chart should have a clear and meaningful point. If you can't find that point, then this probably is not a good chart—remove it from the deck.

  STORY FROM THE FIELD—BUSINESS SCHOOL EXAMPLE:

  Topic: Understanding other team members' roles and assignments helps a team to conduct a successful engagement efficiently. While working as an associate at McKinsey, one MBA interviewee experienced the worst-to-best team project in which he has ever participated.

  My project started out terribly wrong. The engagement manager was not able to meet until two weeks into the study. As a result, I was the lone wolf. Accordingly, I gathered as much data as I could find from past McKinsey studies, industry reports, and recent articles.

  My pride in the 200-page s
lide deck was destroyed at my first progress meeting with the engagement manager. She must have said "so what" 180 times as she literally tore each irrelevant slide out of the deck and threw it to the floor. It was a long and painful meeting.

  The study took a positive turn when the partner met with us the next day and together we clarified the story line and role each of us would play, and expanded our team size. With increased focus on the right issues and better-directed resources, the project got completely turned around.

  CASE STUDY

  I will never forget the importance of "so whats" in team problem solving.

  WHAT WE DID

  One of our most important guiding principles was to focus on the "so whats" of our analysis. Dr. Friga had drilled so-what thinking into our heads before the project ever started, so we didn't have much trouble remembering to focus on the relevance of the information we had gathered. The tricky part of this project lay in determining the effects of the conclusions each member reached on other members' project elements. For instance, there was a tension between the "finances" and "autonomy" buckets: by incorporating as a stand-alone community, Center Grove would have a great deal of autonomy, but it would be strapped financially for at least two years. On the other hand, incorporation into another community by way of annexation would solve a lot of the financial and logistical problems, but it would sacrifice much of the community's freedom to pursue its own objectives in taxing and spending.

  Another of our success factors was applying this so-what thinking on a broader level. We didn't just think about how the data were relevant to us or to our project; we also considered the implications of our findings for the constituents—we basically tried to put ourselves in their shoes, and then ask, "So what?" While we understood (more or less) where the constituents were coming from, it was still difficult for us to construct our presentation, since we knew that the audience probably wouldn't be overly receptive to any type of change. Because the constituents were all so personally invested in the decision regarding incorporation, annexation, or doing nothing, certain members of the audience proved to be very hostile. For example, even though we anticipated that people would not be excited about a tax increase and we tried to mitigate its negative connotations by emphasizing other positive effects, most people were still adamantly opposed to any sort of tax increase. Several in attendance were ultimately convinced of a new perspective by our presentation; especially poignant was the example of an older woman who mentioned that she had a change of heart after seeing our data and considering the impact on her grandchildren and great-grandchildren.

  WHAT I LEARNED

  Data are necessary to form conclusions, and it is certainly necessary to back them up; however, just presenting a lot of information is useless. Furthermore, it's generally not a good idea to just present a lot of information and let the audience draw its own conclusions. This project really enforced how important it is to come up with a single viable solution and present a clear point of view, so that the audience isn't left confused. This is something that I think applies to any project, as you will always want to make sure that your audience gets the most it can out of your presentation. The best way to ensure that you don't leave your audience members hanging short of a solid conclusion and asking itself, "So what?" is to present clear solutions and relevant so-whats to them.

  DELIVERABLES

  Figure 8-2 Understand: Implications Summary

  Figure 8-3 Understand: Insight-Titled Chart

  9

  SYNTHESIZE

  Figure 9-1 TEAM FOCUS Model—Synthesize

  CONCEPT

  This final chapter is dedicated to the three people within McKinsey who influenced me the most in terms of developing the material for this book: Harry Langstaff, Gene Zelazny, and Barbara Minto.

  Harry was the heart and soul of the introductory training program at McKinsey, during which all new associates would travel to rural England to learn and practice many of the McKinsey principles of teamwork and analysis. He passed away in 2006, but I will never forget his command of core McKinsey ideas, his uncanny knowledge of methodologies, and his personal touch. Gene Zelazny is the mastermind behind McKinsey's ability to transfer outstanding ideas into compelling charts and graphics.

  Last but certainly not least is Barbara Minto, who completely changed the way thousands of consultants and executives (at McKinsey and elsewhere) do analysis and deliver recommendations. Her work within McKinsey, and now with her own consulting firm, is world renowned, and her books are required reading for every student I teach. Her ideas are the backbone of efficient and effective team problem solving, and they are described in more detail within this chapter.

  RULES OF ENGAGEMENT

  The Rules of Engagement for this chapter all relate to developing and delivering a good argument—well structured and well delivered. It is important to remember that the best way to accomplish this feat is through team coordination, which always trumps individual efforts (and comes with its own set of challenges, of course).

  RULE 1: OBTAIN INPUT AND ENSURE "BUY-IN" FROM THE CLIENT

  One of the most important operating assumptions for successful consulting engagements is to engage the client actively. Popular press stories of McKinsey being a firm that comes in with a fantastic strategy slide deck that cannot be implemented are unfounded. In fact, in every project at McKinsey, the team is charged with actively involving the client throughout the entire process and never completing a project without a detailed implementation plan and a specific understanding of the impact that the changes will have on the organization.

  The motivation for client involvement is quite clear and is related to the twofold mission statement that is documented in every one of McKinsey's 90+ offices around the world: (1) help leaders make distinctive, lasting, and substantial improvements to the performance of their organizations and (2) provide our people with an outstanding place to work, with opportunities for growth that they can find nowhere else. The leaders of McKinsey's client companies must take an active role during any McKinsey study. They provide perspectives and knowledge that are available nowhere else, they know the culture of the company, and they will ultimately be in charge of implementing the ideas and making positive changes in their respective organizations.

  There are several opportunities for client engagement that need to be strategically managed to ensure that effective problem solving takes place. In addition to the eventual impact the recommendations may have in terms of organizational performance, the short-term performance indicator is whether or not there is client "buy-in" to the recommendations. Without such acceptance, there is no chance of successful implementation.

  Before the engagement. McKinsey does not undertake an engagement without substantial discussions with the client sponsor to ensure that the business problem is well defined, that there is a chance for substantial performance improvement, and that the client will be adequately involved during the project. This understanding is also documented in the letter of agreement (see Chapter 5).

  During the engagement. Interviews are a significant opportunity for client involvement and buy-in. The interview list is critical; the team must make sure that the key knowledge holders, political constituents, and ultimate implementers are included. Note that the interviews are not just about gathering data, but also about testing hypotheses and building relationships. Progress meetings are also held, where draft recommendations, findings, and data are shared to ensure that the project is headed in the right direction in an efficient manner. There should be no surprises in the final meeting with the client—just positive energy and discussions of implementation plans and their impact.

  After the engagement. The best consulting firms all realize that consulting projects are more often sold on a relationship basis than as one-off RFPs (requests for proposal). The key is maintaining a long-term relationship. At McKinsey, this is a high priority, and every client has a relationship partner who gets to know the top management te
am and follows up after projects to ensure that the projects had impact and to discuss other ways to continue to help the clients achieve their business objectives.

  RULE 2: OFFER SPECIFIC RECOMMENDATIONS FOR IMPROVEMENT

  This Rule of Engagement is a reminder to keep in mind why consultants are here in the first place: to help clients. While it may be obvious that the hypotheses that drive our analysis become recommendations after they are proven, the high level of specificity required is not obvious. This is an area in which junior consultants often struggle as they craft recommendations for the final slide deck.

  As will be described later in this chapter, every final set of recommendations should have a governing point. This could be anchored in the general kind of change that the organization is pursuing (a change in strategic positioning, operational improvements, increased knowledge sharing, cost reductions, or some other area), the financial impact of the changes suggested, or some other organizing construct.

  The next level down should capture a more specific set of recommendations (generally no more than three). The engagement's findings will provide the rationale for these recommendations, and the proposed tactics will supply an execution plan. Each project may have its own particular set of recommendations, but the action steps will generally be supported by information about why and how. We will cover the topic of how to craft and deliver the story in the next section.