The Firm: The Story of McKinsey and Its Secret Influence on American Business

by Duff McDonald

  Instead, Bower sold his shares back to the firm at book value. In doing so, he demonstrated precisely the kind of allegiance to the cause he expected of anyone wishing to be successful at McKinsey: He forsook considerable riches for the good of the institution, in the process giving young consultants the ability to buy their way into the partnership without mortgaging their houses to do so. His McKinsey would be self-perpetuating, and he gave up a fortune to make it so. But he also sent the message that working for McKinsey was like joining a special order of men willing to put the higher cause of the firm ahead of self-interest.

  Bower’s decision came as a surprise to many, including his own family. “Let me just say there was shock on people’s faces when he told us that he was selling his shares back to McKinsey at book value,” said his son Dick Bower. “It felt unbelievable, to tell you the truth. But that was Marvin for you.”4

  Before Bower came along, any huckster could call himself a consultant, and many did. So Bower came up with a version of the job that drew from other real twentieth-century professions: The consultant would comport himself as a lawyer, with discretion and integrity; he would bring scientific, fact-based rigor and precision to the task, like an engineer or accountant. Like a doctor, he would dispense advice to unhealthy companies on how to get better and to healthy companies on how to stay that way. And, like a priest, he would serve his clients.

  Because Bower had a background in law, his desire to be just like a law firm was perhaps the most explicit of all. Historian Christopher McKenna wrote of a 1940 brochure in which the firm explained: “We serve business concerns on management problems in much the same way that the larger law firms serve them on legal problems.”5 Another way of looking at it: It’s hard to get any business done in the United States without hiring a lawyer. If Bower could achieve a similar result for McKinsey, the firm could entrench itself in the economy.

  What’s more, Bower was already trying to move away from the idea of consultants as “business doctors” and to position the firm as a resource used by the best companies more than by the worst. “Those who use us the most, need us the least,” he told Fortune in 1954.6

  In his 1997 book The Will to Lead, Bower outlined the five primary responsibilities of the professional consultant; some of them overlap, but as we know, Bower was prone to repeating himself. First, the consultant must put his client’s interests ahead of the firm’s interests. If a McKinsey consultant thinks a study is not in the interests of a client—a waste of money, or a misguided investigation—he must tell the client so. Second, he must adhere to the highest standards of truthfulness, integrity, and trustworthiness. Third, he must keep to himself the client’s private and proprietary information. Fourth, he must maintain an independent position and tell the client the truth as he sees it. And fifth, he must provide only services that have real value.

  On the surface, there seems nothing controversial about this set of rules. Do your best for your clients, they say, and try not to screw them over in any way. But Bower’s idea of the professional was more nuanced than that. Part of the reason for his split in 1947 with Tom Kearney, he wrote, was that his partner was satisfied with “ethical” standards instead of “professional” ones.7 To act ethically means acting within the bounds of morality, which any honest person should be able to do. To act professionally means to take on a whole additional set of responsibilities. If that seems like an impossibly fine distinction, well, it was clear as day to Bower. To him, the purpose of the enterprise was to serve clients; profits were a byproduct.

  Gibberish

  Can an adviser to a business really claim he’s not engaging in a commercial act? It’s practically an absurd notion on its face—helping to increase profits as a selfless exercise—but that’s the line Bower chose to take, and thousands of McKinseyites have absorbed his view. “I still run to work—figuratively of course,” said Ron Daniel, the venerated former managing director of McKinsey, in 2010. “[It] may sound like motherhood, [but this] is a life of service. It’s not the same as being a doctor or part of the clergy, but in our own way, we are here because we serve our clients, and that idea of service just happens to be important to me.”8

  Bower carried out this service approach by mandating an all-for-one-and-one-for-all approach to moneymaking. He directed that all consultants share in one big pool of company earnings, not just the earnings of their office. This boosted the entrepreneurial spirit within the firm, spreading risks associated with opening a new office and encouraging talent to move freely throughout the company. The policy also sent a clear signal to potential clients—that when you enlist the services of McKinsey & Company, you have the full resources of the firm at your disposal.

  To go along with this philosophy, Bower came up with a new language. McKinsey had clients, not customers. Its consultants played a role rather than worked at a job. It had a practice and firm members, not a business and employees. It didn’t sell, nor did it have products or markets. The firm did not negotiate with clients, that being far too adversarial a term. It merely made arrangements. It didn’t have rules. It had values. And, perhaps most important, McKinsey was not a company; it was The Firm.

  There were occasions when Bower’s McKinsey didn’t behave like a secular priesthood. Though he stipulated that the firm never solicit work or advertise its services, McKinsey did produce 2,600 copies of a 42-page booklet titled Supplementing Successful Management, the majority of which ended up in the hands of current and prospective clients. In 1966 the company advertised in Time magazine under the guise of looking for recruits. “What does it take to succeed at McKinsey?” the headline asked in one ad. The answer: “Outstanding mental equipment finely honed by a first-rate education, coupled with the imagination to solve complex problems; the self-confidence, skill in expression, and sensitivity to other people that lead to high personal effectiveness; and, of course, good character and high standards.”

  The message was clearly aimed at potential clients as much as potential hires. But the firm denied any advertising motivation once again.9 McKinsey’s insistence that it did not engage in a PR strategy was simply false; in the 1960s, the firm contracted with PR pioneer Pendleton Dudley. It later used the services of Murden and Co., a consulting firm even more behind the scenes than McKinsey. Murden was an early force in the Bilderberg conferences, the secretive annual meeting of Western influencers.

  Bower’s insistence that the firm avoid traditional advertising for professional reasons also made a virtue of obvious necessity. For what could McKinsey advertise even if it wanted to? Certainly not its client list. “Management consulting is too complex an art to be explained effectively in the limited space of an advertisement,” wrote journalist Hal Higdon in The Business Healers. “About all a consulting firm can talk about effectively is the extremely high competence of its personnel. The effect might be somewhat similar to the Roman Catholic Church’s taking two pages of Life to advertise God.”10

  So what made a McKinsey consultant successful? Bower dedicated his life to defining him. First, said Bower, “the successful consultant has a personality that causes most people to like him.”11 And with that likable personality, the McKinsey consultant should make his way into his community’s establishment: He was expected to join local boards, get involved in charities, and even attend church. This was community relations as business strategy, another manifestation of Bower’s pragmatic idealism. (There was an ugly side to McKinsey’s caste system: Henry Golightly, a New York–based consultant, was run out of the firm when it was discovered that he was homosexual. Truman Capote, a friend who at times stayed over at Golightly’s Hamptons beach house, named his Breakfast at Tiffany’s heroine after the consultant, who was placed on “medical leave” when the details of his private life became known.)

  Second, the McKinsey consultant had to inspire confidence with his appearance. Bower’s writings are full of physical descriptions of people he hired in part because of how they looked. “I found that [
Harrison Roddick] had an attractive appearance and personality,” he wrote in one instance;12 “Walter Vieh . . . was a fine looking and likable man in his late forties”13 in another. As recently as the 1990s, said one former McKinsey consultant, the notion that one was “clubbable”—the type to be asked to join a high-end social club—remained an explicit characteristic of McKinsey hires.

  Bower’s obsession with appearances was of the time. When George MacDonald Fraser began writing his multititled chronicle of the cad Harry Plaget Flashman in 1969, he described his antihero in the precise terms one might think Bower looked for in recruits: “His eyes [were] blue and prominent and unwinking—they looked out on the world with that serenity which marks the nobleman whose uttermost ancestor was born a nobleman, too. It is the look that your parvenu would give half his fortune for, that unrufflable gaze of the spoiled child of fortune who knows with unshakeable certainty that he is right and that the world is exactly ordered for his satisfaction and pleasure.”14

  And the McKinsey consultant was usually tall too. One (not-so-tall) rival consultant suggests that McKinsey has long hired taller-than-average people for the sole reason that history has shown people pay more attention to them. And he’s right: In a recent excavation of the mausoleum of Chinese emperor Qin, the average height of an infantryman was five feet nine, the average height of an honor guard was six feet two, and an infantry general was six feet four.

  Bower enforced an unyielding dress code: dark suits, hats, and garters. Long socks were required because Bower abhorred the sight of “raw flesh.” Maurice Cunniffe, who worked at the firm from 1963 to 1969, could remember the protocol as if it were yesterday. “Definitely long socks,” he said. “And a feather on your hat only if it was barely peeking over your hat band.”15

  “You would wear garters and you would wear a hat,” recalled McKinsey consultant Jack Vance. “You didn’t wear bow ties and Lord knows you didn’t have a mustache.” Or argyle socks. In one heralded piece of McKinsey lore, Bower is said to have attended a client meeting in 1966 with a young associate who had the audacity to reveal a flash of argyle under his pants cuff during the meeting. Upon returning to the office, Bower whipped off one of his signature blue memos on appropriate sock wear, and he even held a Saturday clinic on the right way to dress.16 As recently as the 1990s, consultants were strongly encouraged never to leave their offices without their suit jackets on, although they were allowed to work in shirtsleeves. It wasn’t until 1995 that the firm conceded business casual days to its hardworking minions. Competitors and clients still make fun of McKinsey consultants and their cuff links.

  Bower once explained the rationale for his sartorial standards. “If your job is to help a client have the courage to follow the trail indicated by the facts, you need to do everything you can to minimize the distractions and deviations the client is likely to take,” he told his biographer Elizabeth Edersheim. “If you have revolutionary ideas, they are much more likely to be listened to if you do not have revolutionary dress. . . . If you were an airline passenger, and the pilot came aboard the plane and he wore shorts and a flaming scarf, would you have the same confidence as you did when he came on with his four stripes on the shoulder? Basically, the dress code all has to do with what you want to do, when you want to build confidence and an identity.”17 Whatever the argument, Bower was cooking the individuality of his consultants out of them as soon as possible. In 1962 McKinsey staffers gently mocked their workplace by publishing The Consultants’ Coloring Book, in which every color suggested was black or gray. Longtime partner Warren Cannon compared the dress code to that of “moderately well-to-do morticians.”

  (Bower wasn’t entirely blind to shifts in fashion. Three years after John F. Kennedy shocked the nation in 1961 by forgoing a hat at his inauguration, Bower turned up at the office without one. Bower’s consultants consulted with one another: Had the decree been lifted? “I’d wait six weeks,” one consultant told another. “It may be a trap.”18 It wasn’t: The hat requirement had gone by the wayside.)

  Conformity was enforced too in the way the offices looked and how the memos were written. All offices were made to look the same—and they still do, to this day. And the reports that the company produces for such extravagant fees all adhere to a precise formula—blue covers, the same typeface, sparse use of text, and a common language. Most McKinsey reports begin with a page titled “Today’s Discussion.” It’s a brief of what the consultants hope to get across to the client, presented in outline form, and it shows not just how McKinsey presents but how its consultants are taught to think: in logical, well-structured, and easy-to-follow steps. A McKinsey consultant, according to the Bower way, was never supposed to put his personal stamp on anything.

  So Bower substituted himself for the firm; he was its embodiment, and thus every detail deserved and received his attention. He took memo writing to an extreme, delivering his thoughts at excessive length on any subject that crossed his mind. It became a McKinsey tradition: To this day, firm leaders will write fifteen-page memos to the entire staff on a whim, discussing their view on the role of a consultant or how to succeed at McKinsey. Bower once concluded that too many ellipses and dashes had found their way into company reports. He issued a memo banning their use.19

  Bower wrote the firm’s first Basic Training Guide in 1937. It included everything from expense protocols to directions on how to write a proper letter to a client. That same year, McKinsey, Wellington inaugurated its reading program for associates, complete with required book reports. Every McKinsey consultant was forced to read what can only have been a page-turner, the two-volume Air Conditioning, as well as more compelling titles such as The Human Problems of an Industrial Civilization, Modern Economic Society, and Automotive Giants of America.

  The firm demanded that every consultant read at least fifteen books in the coming year, and submit book reports to partner Harrison Roddick in New York. If that seemed like a lot of reading for already busy consultants, the guide suggested that each man employ what could only be described as a sort of rudimentary speed-reading technique. “It has been well proven that one should practice reading as rapidly as possible, first for short and then for longer periods,” the consultants were told. “It will be found that gradually the general reading pace will be quickened. It is best not to read word for word, but to take in at a glance phrases and sentences.” And a threat: “The names of men who do not send in reviews will be brought to the attention of the partners.”

  Bower’s exhaustiveness in producing the guide was typical of the man. Did a consultant need a sample engagement letter? There were two samples included for his perusal. Did he need guidance on how to respond to a potential inquiry regarding the relationship between McKinsey, Wellington & Company and Scovell, Wellington & Company? There were several pages on the matter. There were copies of speeches by James McKinsey, rules for when the use of a Pullman car was allowed on a train trip to see a client (when it was more than 100 miles), and five pages on the creation of time sheets for internal use as well as submission to clients. McKinsey later dispensed with giving clients much more than a single sheet of paper that included its fee, but in 1937 the firm was as enamored as all of American industry with the meticulous gathering and analysis of data. They were management engineers, after all.

  Another example of an early philosophy that has since been jettisoned: The guide included an engagement letter that touted the “considerable experience” that all men working for McKinsey had before joining the firm. Later, McKinsey flip-flopped precisely on that point, having come to consider such experience an obstacle to broad-gauged problem solving, but in 1937 it was one of the firm’s most cherished assets.

  As with almost everything he wrote about McKinsey to McKinsey people, Bower insisted on an almost ridiculous level of secrecy about the Basic Training Guide, despite the fact that it contained hardly anything of a competitive or proprietary nature. “The Manual should be treated in the strictest confidence,” he
wrote. “It is recommended that it not be taken away from the office or from your hotel room when away on long engagements. This will avoid its loss.” Why did it matter? Because unlike other professions—law, medicine—consulting was obviously built on pretense, where dress, manners, and language were meant to present some notion of capability that wasn’t there to see on a diploma.

  One reason for his caution might have been that at the end of the guide, Bower let loose with a bit of unbridled ambition that he usually took great pains to keep out of public view. “It is not unreasonable to compare the outlook for the [firm] today with that of the Ford Motor Company at the beginning of the Century,” he wrote. “The [firm] has relatively as satisfactory conditions under which to operate as Ford did in the early days of the automobile industry, and our progress during the next thirty years depends entirely upon the extent to which we develop these possibilities.” Ambitious, perhaps, but also dead-on.

  Such expressions, though, were rare for Bower, who preferred to steer pretty much any conversation back to the topic of professionalism. Doug Ayer, a consultant at the firm from 1962 to 1968, recalled telling Bower of his plans for an upcoming ski trip. “He said he regarded skiing as unprofessional,” said Ayer. “I laughed. He didn’t. He said, ‘You’re running the risk of breaking your leg, and having that get in the way of client work.’ I told him I was going anyway, but that I appreciated his opinion.”20

  Upgrading the Clientele

  As World War II raged in the early 1940s, McKinsey improbably hit its stride. Conflict and corporate confusion proved good for business, as the firm helped American industry convert to war production. It advised ketchup-maker Heinz on making gliders and American Automotive on making tanks. While this wasn’t necessarily the kind of work Bower envisioned for his platonic McKinsey, business was nevertheless booming: By 1945, the firm had eighty-nine clients in New York (up from thirty-five five years earlier), twenty-five in Boston (up from nine), and four in San Francisco.