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

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by Duff McDonald

27. Ian Davis, interview by author, June 6, 2011.

  28. Walter Kiechel III, The Lords of Strategy (Boston: Harvard Business Press, 2010), 11.

  29. Andrew Hill, “Inside McKinsey,” FT Magazine, November 25, 2011.

  30. Peter Grauer, interview by author, July 26, 2011.

  EPILOGUE: THE FUTURE OF McKINSEY

  1. Walter Kiechel III, The Lords of Strategy (Boston: Harvard Business Press, 2010), 2.

  2. Nicholas Lemann, “The Kids in the Conference Room,” New Yorker, October 18, 1999.

  3. Bill MacCormack, interview by author, May 7, 2010.

  4. Stefan Stern, “Strategy Consultants Need Some New Ideas,” Financial Times, April 5, 2010.

  5. Clay Deutsch, interview by author, March 5, 2011.

  6. Gary Hamel, The Future of Management (Cambridge: Harvard Business School Press, 2007), 6.

  7. George David Smith, John T. Seaman Jr., and Morgan Witzel, A History of The Firm (New York: McKinsey & Company, 2010), 444.

  INDEX

  Abernathy, William J., 124

  Accenture, 199, 328

  accountability, 124, 186, 244

  accounting/accountants, 12, 13–14, 15, 21–22, 23, 38–39, 199, 202–3, 246–47. See also auditing/auditors; specific firm

  Achieving Excellence in Retail Banking (McKinsey), 156

  activity value analysis (AVA), 207

  A.D. Little, 205

  advice-on-retainer system, 31

  Advised and Sold: McKinsey & Co—The Big Bluff of the Management Consultant (Leif), 214

  AIG, 258, 293–94, 307, 317

  Air Canada, 117

  Air Force, U.S., 93

  Air France, 79

  Air Liberté, 256

  Air Littoral, 256

  airline industry, 255–57

  Alitalia, 102–3

  AlixPartners, 294

  Allen, Mike, 76, 115

  Allen, Robert, 177

  Allstate, 257–59, 293

  alumni, McKinsey: board memberships of, 305

  as CEOs, 192, 231–32, 281–82

  as clients, 84, 303–7

  cronyism and, 307

  and culture of greed at McKinsey, 208–9

  as double-edged diaspora, 303–7

  in England, 285–86

  financial services industry and, 231–32, 286

  Gupta insider-trading case and, 319

  as Harvard alumni, 192

  influence of, 231–32, 305

  institutionalization of, 84

  Kumar inside-trading case and, 308

  as McKinsey competitors, 205–6

  and McKinsey in the future, 327, 329, 332

  McKinsey reputation and, 238

  and McKinsey as success, 190–92

  number of, 84, 192, 222, 303

  questionable behavior by, 296

  as Rotten Corps, 84

  scrutiny of, 307

  specialness of, 7–8

  who were forced to leave, 304–5. See also specific person

  Amazon.com, 11, 182, 264

  Ambani, Mukesh, 314

  AMD, 309, 310

  America West Airlines, 233

  American Airlines, 53, 311

  American Association of University Instructors in Accounting, 14

  American Automotive, 52

  American Business, 1920–2000: How It Worked (McCraw), 17

  American Business magazine, 35

  American Century, 15–18

  The American Challenge (Servan-Schreiber), 78

  American Cotton, 17

  American Express (Amex), 7, 182, 207, 233, 303, 304, 327

  American Management Association, 29

  American management technique: McKinsey contribution to, 3

  American Red Cross, 64

  American Tobacco, 17

  Ames, Chuck, 232

  Amgen, 220

  analysis, 15, 113, 143–44, 226–27, 232. See also knowledge-building

  “Anchorage perspective,” 163

  Andersen Consulting, 199, 200, 203, 227, 249

  Antonini, Joseph, 254

  AOL, 253

  AOM, 256

  Aoshima, Yukio, 164

  Apax Partners, 232, 305

  Apple Computer, 111, 168, 182, 327, 328

  Applied Digital Solutions, 265

  Armour & Company, 18, 24

  Arrow Electric, 303

  Arthur Andersen, 100, 138, 199–200, 239, 250, 309, 327

  Arthur, Brian, 217

  Arthur D. Little, 26, 74, 88, 138, 201

  Ashland Oil, 303

  Ashley, Richard, 225

  Asia, 300, 301, 335. See also specific nation

  associates, McKinsey, 121, 208, 235, 269–70, 273, 275

  Association of Consulting Management Engineers, 71

  AT&T, 6, 17, 174, 177, 178–79, 182, 183, 191, 197, 198, 327

  Atari, 154

  Athos, Anthony, 149

  Atomic Energy Commission, U.S., 68, 78

  auditing/auditors, 31, 202–3. See also accounting/accountants

  Auguste, Byron, 169

  Austrian Airlines, 255–56

  automobile industry: in Japan, 104, 163. See also specific person or corporation

  Axelrod, Beth, 248

  Ayer, Doug, 51–52, 62, 77

  Bacon & Davis, 26

  Bain & Company: BCG relationship to, 110

  best place to work surveys and, 295, 324

  conflict of interest concerns and, 90

  founding of, 90

  Iacocca/Chrysler hiring of, 190

  knowledge-building at, 217

  as McKinsey competitor, 111, 115, 138, 140, 142, 167, 197, 226, 264, 295

  Time Inc. as client of, 281

  Bain, Bill, 111, 199

  Bain Capital, 111–12

  Baker, James, 241

  Bales, Carter, 70–72, 73, 200–201, 276, 305

  Balloun, Jim, 205

  Bank of America, 177, 189

  Bank of England, 76, 78

  Bank of Ireland, 78

  Bank One, 185–86, 287

  banking industry: consolidation in, 166, 253

  credit demands on, 289

  as early clients of McKinsey, 28–29

  “global profit pools” of, 302–3

  influence of McKinsey on, 166, 232, 286, 288–94, 332

  in Korea, 301

  McKinsey failures/missteps with, 292–94

  McKinsey fees for, 204, 286, 292, 293

  signs of impending failures of, 231

  and specialization-generalization debate, 121, 145

  Swedish, 252. See also investment banking; specific person or bank

  Bantam Books, 153

  bar codes, 115

  Barnard, Chester, 55

  Barrington Associates, 42

  Barron’s magazine, 281

  Barton, Dominic: Asian interests of, 300, 301, 335

  capitalism views of, 301–2

  clients of, 301

  Davis and, 299, 300

  earlier managing directors compared to, 299–300, 301

  elections as managing director of, 297, 299–300, 301, 324

  Gupta case and, 317

  Gupta compared with, 301

  knowledge building and, 302, 303

  and Kumar as inside-trader, 307–8

  Mer meeting with, 323–24

  and partnership morale, 321

  personal and professional background of, 300, 301

  writings of, 297, 301–2

  BASF, 79

  Basic Training Guide (McKinsey & Co.), 49–51

  BBC, 180–81

  Beame, Abe, 71

  Bear Stearns, 287

  Bechtel Group, 220

  Bedaux Company, 26–27

  Bell Labs, 170, 193–94, 195, 197, 215–16

  Ben & Jerry’s, 106

  Benmosche, Robert, 258, 294

  Bennett, David, 286

  Bennett, Jim, 117, 146, 147, 153

  Berardinelli, David, 258, 259

&
nbsp; Bergen, Harold, 53

  Bertelsmann, 161

  Bessemer Securities, 134

  best place to work surveys, 295, 324

  “best practices,” 5, 283

  Bezos, Jeff, 11

  Bharara, Preet, 318

  Bhatia, Sabeer, 314

  Biglari, Hamid, 232

  Birt, John, 181

  Black & Decker, 110

  Blackwell, Lord, 285

  Blankfein, Lloyd, 312, 315

  Bleeke, Joel, 225

  Bloomberg LP, 323

  Bloomberg, Michael, 283

  Bok, Derek, 82–83

  Bolshoi Theater, 228

  Bookkeeping and Accounting (McKinsey), 21

  books: McKinsey-published, 156. See also specific book or author

  Booz & Company, 171

  Booz Allen Hamilton: in China, 230

  European expansion of, 74

  founding of, 26

  government consulting of, 72

  as McKinsey competitor, 55, 171, 182, 203, 204, 205

  as private company, 118

  as public company, 118

  revenue/fees for, 138, 203

  top clients of, 182

  Booz, Edwin, 26

  Borch, Fred, 113, 114

  Borden Chemical, 305

  The Borderless World (Ohmae), 162

  Bose, Partha, 123, 137, 143, 157, 163, 216, 217, 218, 223, 229

  Boston Consulting Group (BCG): best companies to work for survey and, 328

  clients of, 110

  founding of, 88–89

  four-box matrix of, 88, 109, 113, 140, 143, 144

  Harvard recruiting by, 110

  influence on consulting business of, 112–13

  knowledge-building at, 217

  and knowledge focus in consulting, 139

  McKinsey alumni at, 304

  McKinsey compared with, 114

  as McKinsey competitor, 88–89, 109–11, 112, 115, 116, 138, 140, 142, 156, 167, 197, 226, 264

  offshoots of, 110–11

  and Ohmae’s influence on McKinsey, 164

  Peters and Waterman’s work and, 149

  products of, 109–10

  size of, 142

  “strategy consulting” at, 88–89, 140

  Boston, Massachusetts: McKinsey office in, 37, 52, 53, 165

  Bower, Helen McLaughlin (wife), 33, 34, 42, 62, 73, 87, 270

  Bower, Marvin: accomplishments of, 326

  ambitions of, 33–34, 35, 39, 51, 62

  Bales-NYC controversy and, 71–72

  clients of, 39, 44–45, 108

  colleague relationships with, 37–38

  compensation/financial affairs of, 38, 42–43, 87

  Crockett and, 56–57

  culture/values at McKinsey and, 44, 61, 74, 116, 125, 208, 219, 265, 270, 271, 275, 319, 320, 321, 322, 325, 335

  Daniel and, 126, 134–35

  and “dark years” for McKinsey, 104

  death of, 270–71

  decline in relevance of, 130–31

  early years with McKinsey of, 34–35

  economy as advantageous to tenure of, 136

  Eisenhower comment to, 68

  and election of managing directors, 101

  elitism of, 93–94

  as embodiment of McKinsey & Company, 49

  and equity stakes with clients, 234, 265

  executive committee of, 66, 94, 100, 138, 277

  frugality of, 87–88, 118, 128

  gains control of McKinsey, 56–57

  generalist model and, 120

  goal of, 4

  and growth/expansion of McKinsey, 73, 75–76, 95, 171

  Gupta compared with, 225

  and Harvard case study approach, 83

  and incorporation of McKinsey, 86

  influence on McKinsey of, 35, 61, 62, 116

  and joint venture proposal, 117–18

  legacy of, 101, 219, 270–71

  McDonald relationship with, 128, 129, 130

  McKinsey alumni and, 84

  McKinsey bureaucracy and, 277

  McKinsey compensation system and, 145, 165, 208

  and McKinsey competition, 167, 203

  and McKinsey dealings with management level, 63–64

  and McKinsey exceptionalism, 94

  McKinsey (James O.) and, 24–25, 32, 34, 35, 36, 95

  as McKinsey (James O.) successor, 4, 56–57, 61–62

  and McKinsey leadership structure, 138

  McKinsey mission and, 169

  McKinsey revenue/fees and, 266, 323

  and nonfinancial rewards for professionals, 119

  “one firm” philosophy of, 31–32

  on Parker in London office, 75

  as partner in McKinsey, Wellington, 31

  partners’ views about leadership of, 129

  and Patton work on executive compensation, 65–66

  personal and early professional background of, 32–34

  personality/style of, 4, 41, 49, 62, 63–64, 87, 134–35

  Peters and Waterman’s work and, 149, 154–55

  power of, 158

  and products for clients, 109

  professionalism focus of, 105, 124, 260

  Reilly payments and, 130

  as repeater, 41–42, 44

  reputation of, 118

  retirement of, 95, 100

  role in McKinsey & Company of, 31, 36, 37, 39, 41

  and secret of success, 191

  as selling back shares in McKinsey, 42–43

  successors to, 100–102

  technology views of, 171

  tenure of, 101, 135, 136

  training and consistency focus of, 85

  up-or-out approach and, 83

  views about clients of, 39, 44–45, 58–59, 108, 109, 123, 225, 234, 266, 275

  views about consultants/consulting, 15, 31, 41, 43–45, 46, 124, 208

  as visionary, 32, 96, 97

  Walton relationship with, 105

  and Wellington-McKinsey merger, 31–32, 37

  writings of, 36, 44, 48, 52, 69

  and youth as prized over experience, 80. See also specific person, client, or topic

  Bower, Richard “Dick” (son), 43, 62, 270

  boxing ring cartoon, 167

  Braxton Associates, 110

  Brebach, Gresham, 200, 201

  British Broadcasting Corporation (BBC), 77, 78, 180, 181

  British Management Consultants Association, 78

  British Petroleum, 305

  British Rail, 78

  British Steel, 175

  Broken Markets (Mellyn), 263, 289

  Bruggisser, Philippe, 255–57

  Bryan, Lowell, 121, 232, 243, 248, 253, 277, 278, 289, 293, 305

  BSHG, 201

  Budgetary Control (McKinsey), 21, 24

  budgeting, 2, 21–22, 114

  Buffett, Warren, 313, 315, 334

  Bulkin, Mike, 151

  Bush, George W., 284

  business: as machines, 150

  social role of, 261–63. See also corporations; specific business

  Business Administration (McKinsey), 22

  The Business Healers (Higdon), 24, 46, 189–90

  Business Objects, 309

  Business Review Weekly: McKinsey cover story in, 168

  business schools, 2, 20, 80–84, 89–90. See also specific school

  Business Technology Office, McKinsey, 202, 203

  BusinessWeek magazine, editorials/stories in: and arrogance at McKinsey, 165

  and AT&T-Gluck-Monitor, 198

  BCG-McKinsey competition and, 110

  Byrne comments for, 242–43

  Carlson comments for, 170

  Chellgren comments for, 303

  and client development at McKinsey, 268

  criticism of McKinsey European expansion, 74

  Daniel comments for, 135

  election of non-Americans for managing director, 223

  and Enron-McKinsey relationship, 242–44, 247, 249, 251

&n
bsp; “Excellence” research feature, 148, 154

  expansion of consulting work, 93

  Gluck cover story in, 198

  and Gulf War publications, 218

  Gupta comments for, 249, 259, 268, 269

  and Gupta leadership of McKinsey, 238

  McKinsey consultant profiles, 156

  McKinsey expansion story, 64

  and McKinsey generalist model of consulting, 120

  and number of clients served by McKinsey, 136–37

  and overstaffing at McKinsey, 269

  Skilling comments for, 239, 242

  Byrne, John, 223, 238, 242, 249, 251, 260–61

  Cadbury Schweppes, 78

  Cahouet, Frank, 174–75

  Campbell Soup, 17

  Cannon, Warren, 49, 54, 117–18, 158, 277

  Cap Gemini, 199, 210–11

  capitalism, 103–4, 215–20, 261, 301–2

  Capote, Truman, 46–47

  Cardwell, Jack, 126, 134

  Carlson, Don, 170

  Carlyle Group, 81, 303

  Carnegie, Rod, 94–95, 108–9, 194–95

  Carnegie Corporation, 90

  Caro, Robert, 58

  CarsDirect.com, 265

  Carter, Graydon, 279

  Carter, Jimmy, 136

  Caspar, Christian, 162, 223

  Casserley, Dominic, 280

  Catholic Church: McKinsey compared with, 3, 41, 46, 165

  CBS, 72

  Cecil, John, 232

  Celanese Corporation, 80

  Celler-Kefauver Act (1950), 63

  Center for Managing Uncertainty, 293

  Central Intelligence Agency (CIA), 327

  CEOs: as exercising internal control, 114

  job of, 177

  McKinsey alumni as, 192, 231–32, 281–82

  McKinsey consultants as confidants of, 234, 330, 333

  McKinsey impact on, 326, 333

  McKinsey as producer of, 192, 233, 304. See also executive compensation; leadership, business; management; specific person

  Champy, James, 210

  Chandler, Alfred, 16, 18, 19, 77, 99

  Chanos, Jim, 246

  Chase Manhattan, 72, 91, 145, 176, 179, 253, 287

  Chatterjee, Anjan, 314

  Cheek, Logan, 79, 108–9, 158

  Chellgren, Paul, 303

  Chemical Bank, 287

  Chenault, Ken, 207

  Cheng, Josh, 228

  Cherington, Paul, 53

  Chicago, Illinois: Gupta as head of office in, 221, 224, 226

  McKinsey office in, 25, 31, 35–36, 37, 38, 56, 117, 221. See also University of Chicago

  Chicago Tribune: Gupta comments to, 225

  McKinsey (James O.) obituary in, 35

  China: Barton base in, 301

  McKinsey activities in, 222, 227–30, 283, 296, 329

  McKinsey fees for clients in, 283

  and McKinsey in the future, 329, 335

  China Leadership Institute, McKinsey (Beijing), 230

  Chopra, Deepak, 314

  Chrysler Corporation, 58, 64, 80, 190, 333

  Chrysler Group LLC, 305

  cigarette industry, 92–93

 

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