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

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The Firm: The Story of McKinsey and Its Secret Influence on American Business Page 38

by Duff McDonald


  turnover of, 83–84, 223, 235, 264–65, 269–70, 330

  women as, 106, 169–70. See also “up-or-out” system; specific person or type of employee

  engagement managers, McKinsey, 121–22, 201

  engineering, 24, 27, 38, 51, 170, 186–87

  Engwall, Lars, 252

  Enron: accountability at, 244

  accounting fraud at, 246–47

  collapse of, 244, 246–47, 261, 290

  compensation at, 245

  criticisms of, 244

  as culmination of capitalism, 261

  culture at, 241, 242, 243, 244

  Gladwell story about, 262–63

  and Gupta as managing director, 239–52

  impact on McKinsey of collapse of, 247, 249–52, 270

  lobbyists for, 241

  McKinsey confidentiality about, 58

  as McKinsey failure, 2, 86

  McKinsey as favored advisor to Skilling at, 7

  McKinsey fees from, 246

  McKinsey liability for collapse of, 247

  McKinsey relationship with, 239–40, 242–44, 247, 248–51

  mission of, 242

  off-balance-sheet financing at, 243, 244, 245, 247, 249, 288

  popularity of, 241

  rank and yank system at, 244–45

  reputation of, 243–44

  revenues of, 241

  risk management at, 245

  as Skilling client, 239–40

  Skilling named president of, 240–41

  as trading firm, 246

  turnover at, 244–45. See also Skilling, Jeff

  Equal Employment Opportunity Commission, 207

  Ernst & Young, 199, 200, 201, 328

  Europe: American investment in, 78

  McKinsey expansion into, 55, 56, 73–80, 95. See also specific nation or city

  evaluations, McKinsey, 83, 86, 133, 159, 169, 204–5, 209, 325, 331, 332

  The Evolution of Strategic Management (Gluck), 141–42

  “Excellence” folio, 147–48

  executive committee, McKinsey: of Bower, 66, 94, 100, 138, 277

  of Daniel, 277

  McKinsey power structure and, 121

  executive compensation, 65–66, 82, 105, 121, 248, 302, 334

  experience curve, BCG, 109, 110

  Export-Import Bank, 80

  Facebook, 327, 334

  Falvey, Mary, 106

  Farr, Chuck, 182

  Farrell, Diana, 218, 284, 290–91

  Fastow, Andy, 241, 246, 249

  Federal Bureau of Investigation (FBI), 283, 318

  Federal Incomes and Excess Profits Tax Laws (McKinsey), 21

  Federal Reserve, 166

  Federal Trade Commission Act (1914), 18

  Federated Department Stores, 204

  fees, McKinsey. See revenue/fees

  Feiger, George, 166, 208, 227, 232

  Ferguson, Roger, 216, 223, 284

  Fidelity Investments, 175, 305

  financial institutions group (FIG), McKinsey, 277

  Financial Management (McKinsey), 21

  Financial Market Meltdown (Mellyn), 289

  Financial Services Authority, 285

  financial services industry: and capitalism concerns, 261

  criticisms of, 260

  culture/values of, 320

  McKinsey activities with, 230–33

  McKinsey alumni and, 231–32, 286

  McKinsey role in bubble in, 286–94

  profits in, 291. See also banking industry; Wall Street; specific organization or person

  Fiorina, Carly, 254

  Firm Strategy Initiative (FSI) (1995, 1997), 226, 233–34

  First Boston, 253, 327

  First Chicago, 287

  First Interstate Bancorp, 189

  Fisher, Jim, 226–67

  Five Forces theory, 90

  Fletcher, Dick, 38

  Flynn, Tim, 281, 322

  Foote, Nathaniel, 216, 223

  Forbes magazine, 165, 168, 185, 310

  Forbis, John, 118

  Ford, Henry, 11, 19, 26, 109, 190

  Ford Motor Company, 19, 51

  Fortune magazine: best companies to work for survey of, 328

  Bower interview for, 43

  boxing ring cartoon in, 167

  Enron stories in, 241, 246

  executive compensation article in, 65

  and expansion in consulting services, 93

  GM story in, 184

  Godrej comments about Gupta for, 314

  and Gupta resignation from Goldman Sachs board, 313

  Guzzardi article in, 92

  and hiring McKinsey just to prove a point, 188

  Huibregtsen comment about fees for, 204

  Katzenbach comments about McKinsey recruiting for, 171

  Lafley’s comments about Gupta for, 314

  leadership production story in, 295

  McKinsey consultant profiles in, 156

  and McKinsey as leadership creator, 233

  McKinsey profile in, 206–7

  research at McKinsey story in, 215

  strategic planning survey by, 140. See also Huey, John

  Foster, Dick, 217, 247, 249, 250, 263

  four-box matrix (BCG), 88, 109, 113, 140, 143, 144

  Four Roses Whiskey, 54

  Foy, Peter, 139–40, 162, 165, 176

  frameworks, McKinsey, 143–45

  Fraser, George MacDonald, 47

  Fraser, Jane, 248

  Frazer, George, 14

  Frazer and Torbet, 14

  Frito-Lay, 211

  From Higher Aims to Hired Hands (Khurana), 65, 124–25

  Fuld, Dick, 230

  Fuller, Joe, 198

  The Functions of the Executive (Barnard), 55

  The Future of Management (Hamel), 333

  Gaither Commission, 70

  Galleon fund, 308, 310, 313, 314, 315, 316

  Gandhi, Mahatma, 314

  Gay, Edwin, 26

  GB Voyager Multi-Strategy Fund, 313

  Geigy, 79

  General Electric (GE): in American Century, 17

  and BCG-McKinsey competition, 113–15

  Bedaux as consultants for, 27

  decentralization of, 76

  diversification at, 63

  government contracts for, 69

  and hiring McKinsey to prove a point, 189–90

  McKinsey alumni and, 282

  McKinsey lending advice to, 291

  mergers and, 17

  multidivisional structure of, 18

  NBC purchase by, 189–90

  specialization at, 215

  strategic business units at, 114–15

  strategic planning at, 113–15

  General Foods, 64

  General Mills, 295

  General Motors (GM): in American Century, 17

  bankruptcy of, 184

  Drucker book about, 90

  growth and control dilemma at, 17

  Japanese as competitors of, 183

  McKinsey as consultant to, 2, 86, 174, 181–84

  as McKinsey failure, 191

  McKinsey impact on, 86, 174, 181–84, 327, 332

  organization/reorganization of, 54, 55, 183–84

  Patton Work for, 65

  Sloan impact on, 19, 54

  Smith as CEO of, 177

  General Post Office, British, 76, 77, 78

  General Survey Outline (GSO), McKinsey’s, 22–23, 25, 28, 141

  generalists, 94, 120–23, 133, 139, 142–46, 197, 201, 215

  George, Bill, 313

  George Fry & Associates, 42

  Germany: cost cutting/layoffs in, 212–14

  criticisms of McKinsey in, 212–14

  McKinsey activities in, 87–88, 107–8, 157–61, 165, 212–14, 279

  McKinsey European expansion and, 79, 228

  McKinsey office managers in, 162

  Peters and Waterman’s work and, 150

  power of McKinsey office in, 108

  “the McKi
nsey society” in, 212–14

  Gerstner, Lou, 7, 41–42, 81–82, 217, 233, 303–4

  Ghemawat, Pankaj, 56

  Gillette, 314

  Gingrich, Newt, 232

  Gladwell, Malcolm, 262–63

  Glass-Steagall Act (1933), 18

  Glassdoor surveys, 295

  Glennan, Keith, 68

  “global profit pools,” 302–3

  globalization. See growth/expansion, McKinsey; specific nation or city Globe and Mail (Canada): Barton comments to, 300

  Gluck, Fred: appearance of, 196, 219

  Barton compared to, 299

  and BCG as competitor, 116, 140, 264

  Carnegie and, 194–95

  clients and, 194–96, 197, 198, 245

  compensation for, 207–8

  Daniel and, 135–36, 142, 146, 196–97

  Davis recommitment to era of, 278

  early years at McKinsey of, 194–95

  elections as managing director of, 153, 168, 197, 198

  “Excellence” folio and, 147

  focus of McKinsey and, 139

  and Fortune-Huey profile of McKinsey, 206

  generalist-specialist debate and, 142

  and greed at McKinsey, 219

  and growth/expansion of McKinsey, 193, 198, 221

  Gupta and, 224, 225

  Henzler and, 158

  and intellectualization of McKinsey, 164

  and IT consulting, 200–203

  knowledge focus of, 145, 197, 214–18, 223, 278

  legacy of, 215, 219, 271

  McKinsey bureaucracy and, 277

  McKinsey hiring of, 194

  McKinsey image and, 194

  and McKinsey as Jesuits of Capitalism, 215–20

  McKinsey revenues/fees and, 197, 203, 205, 219

  McKinsey structure/organization and, 142

  personal life of, 219–20

  personal and professional background of, 170, 193–94

  Peters-Waterman work and, 147, 148

  post-McKinsey activities of, 220

  practice bulletins of, 141, 278

  promotions of, 197

  reengineering and, 211

  and self-image of McKinsey, 166

  sharing culture and, 143

  and strategy initiative, 146, 153, 197

  Superteam of, 140–42

  technology interests of, 193, 196

  writings by, 141–42

  Godrej, Adi, 314

  Gogel, Don, 232

  Golden West Financial, 254–55

  Goldman Sachs: Buffett investment in, 313, 315

  Bush administration and, 284

  competitors of, 328

  Enron compared with, 246

  in the future, 328

  Gupta as board member at, 311–12, 313, 315–16, 321, 322

  and Gupta insider-trading case, 315–16, 317

  Japanese clients of, 165

  and long-term/short-term strategy, 292

  McKinsey alumni at, 232

  McKinsey compared with, 9

  Golightly, Henry, 46–47

  Good Bank/Bad Bank exercise, 175

  Google, 4, 182, 264, 295, 327, 329

  Gorman, James, 7, 42, 197

  Gourmet magazine, 280

  government: British, 107

  bureaucratization of consulting process for, 72

  Dutch, 175

  local, 283

  as McKinsey clients, 67–69, 70, 282–86

  McKinsey impact on, 326

  public/private partnerships and, 176

  and U.S. government as McKinsey client, 67–69, 70, 282–86

  and “whole government transformation” advice of consultants, 293. See also deregulation; regulation, federal

  Grauer, Peter, 323

  Great Britain: government-McKinsey consulting in, 107

  McKinsey expansion into, 95. See also London, England, McKinsey office in

  Great Depression, 25, 27, 28, 30, 33, 53, 54, 64

  Great Talent Hunt, 90

  Green, Steven, 232

  Greenspan, Alan, 223

  grocery business, 115

  Grohe, 279

  Grossman, Larry, 189

  “grow-or-go” approach, 83

  growth/expansion, McKinsey: in Africa, 79, 169, 228

  in Asia, 80, 115, 160, 300, 301, 335

  Bower and, 73, 75–76, 94, 95, 171

  and compensation of employees, 120

  and complexity, 331

  and culture/values of McKinsey, 325

  Daniel and, 229, 238

  Davis and, 277, 297

  decentralization and, 77, 78

  in Europe, 61, 80, 77, 78, 79, 160, 162, 165

  globalization and, 4, 5, 9, 74, 77, 78, 79, 80, 102-3, 115, 136, 138, 160, 162, 165, 169, 193, 226, 325, 326

  and Gluck, 193, 198, 221

  and Gupta, 260, 268, 277

  and Harvard partnership, 61

  and McKinsey in the future, 325, 331

  in 1940s and 1950s, 52–53, 74

  in 1960s and 1970s, 64, 94, 102–3, 107

  in 1980s and 1990s, 164, 222

  scaling back of, 277

  in South America, 160

  between 2001 and 2005, 222. See also revenue/fees, McKinsey; specific nation, state, or city

  growth-share matrix (BCG), 89, 109, 110

  Gulf War, First, 217–18

  Gupta, Rajat: accomplishments of, 222–23, 237, 260

  Barton compared to, 299, 301

  board memberships of, 311–12, 314, 321, 322

  Bower compared with, 225

  Bower eulogy of, 270

  clients and, 238, 268, 275

  compensation/wealth of, 267, 311

  as creating office of managing director, 277

  cubic consulting and, 226

  culture/values at McKinsey and, 233–36, 237, 260, 265–66, 271, 275, 321, 322

  Daniel compared with, 224–25

  Davis views about, 275, 278

  EAGLE and, 233

  economy during tenure of, 136

  elections as managing director of, 221, 223–24, 268, 273, 274

  and Enron, 239, 249, 250

  evaluation of, 263–70

  financial industry and, 232

  Firm Strategy Initiative and, 226

  and Fortune-Huey story about McKinsey, 206

  Gluck and, 224, 225

  as Goldman Sachs board member, 311–12, 313, 315–16, 321, 322

  greed/growth-at-all-costs attitude of, 159, 209, 215, 222, 234–35

  growth/expansion of McKinsey and, 221–22, 237, 238, 268, 277

  impact on McKinsey of, 237–38, 271, 321–22, 324

  insider-trading case of, 271, 310, 311–20

  internal challenges facing, 263–70

  internal concerns about leadership of, 237–38

  knowledge building and, 222–23, 237, 268, 278

  as Kumar mentor, 309

  Kumar testimony against, 310

  as McKinsey alum, 7, 8, 10

  McKinsey bureaucracy and, 277

  and McKinsey equity with clients, 265–66

  McKinsey partners’ views about, 266, 278

  McKinsey revenue/fees and, 222, 234–35, 266, 267–70

  and missteps/failures at McKinsey, 252, 259

  personal life of, 267

  personal and professional background of, 221, 224

  personality/style of, 224–25, 266–67

  post-McKinsey activities of, 311–20

  Rajaratnam/Galleon and, 312–13, 314, 315, 322

  and recruiting and training, 260

  reputation of, 225, 312, 313

  retirement of, 311

  self-image of, 224–25

  Skilling considered as successor to, 242

  support for, 313–14, 315

  and Swedish banking industry collapse, 252

  tenure of, 238

  Guttman, Daniel, 68, 70

  Guzzardi, Walter, Jr., 92

  Hagemann, Helmut, 158


  Hague, William, 42, 286

  Hall, Ted, 166, 219

  Hamel, Gary, 333

  Hammer, Michael, 210

  Handfield-Jones, Helen, 248

  Hanna, Ali, 314

  Harper & Row, 148

  Harvard Business Review, 65, 155–56, 157, 301

  Harvard Business School: Baker Scholars at, 80, 94, 327

  BCG recruitment at, 110

  Bower as student at, 33, 34

  Carnegie at, 94

  case study method at, 104, 235, 288

  competition for recruitment at, 111

  criticism of In Search of Excellence by, 151

  Daniel recruitment at, 134

  founding of, 20, 26

  Gupta as graduate of, 224

  McKinsey case studies at, 104, 235

  McKinsey compared with, 7–8

  McKinsey recruiting at, 111, 134, 327, 328

  McKinsey relationship with, 61, 80–84, 170, 192, 205, 288

  McKinsey research activities compared with, 215

  Monitor founding and, 198

  hedge funds, 291

  Heinz, 5, 17, 52, 53, 74, 76, 115

  Hemphill, William, 24

  Henderson, Bruce, 88–89, 109, 110, 113, 115–16, 119, 164, 199

  Henzler, Herb, 148, 157–61, 162, 164, 209, 212, 214, 223, 224, 266

  Herrhausen, Alfred, 214

  Hewlett-Packard, 147–48, 254

  Higdon, Hal, 24, 46, 76, 121, 178, 189–90, 202

  hiring. See recruiting/training

  Hochhuth, Rolf, 213–14

  Hodges, A. C., 21

  Holland, Bob, 106

  homosexuality, 46–47

  Hong Kong: McKinsey expansion into, 80

  Hoogovens, 175

  Hoover Corporation, 5, 75, 76

  House of Lies (Kihn), 178

  Houston Natural Gas, 239

  Hoyos, Juan, 275

  HSBC Capital, 232

  Huey, John, 42, 85, 184, 188, 206, 215

  Hughes, Howard, 58–59

  Huibregtsen, Mickey, 204–5, 206

  Hulme, Ron, 242, 250

  Hunter, Robert, 259

  Iacocca, Lee, 190

  IBM: as brand, 187

  as competition for McKinsey, 199

  conformity within, 64

  European expansion of, 5

  “Excellence” of, 154

  and Gerstner as McKinsey alum, 7, 41, 81, 233, 303–4

  leadership product at, 295

  McKinsey alumni at, 233, 282

  McKinsey compared with, 187

  McKinsey as consultant to, 303–4

  as McKinsey European client, 74

  McKinsey testing of computers from, 200. See also Gerstner, Lou

  ICG (Information Consulting Group), 200–201

  ICI, 76

  Imperial Chemical Industries, 78

  In Search of Excellence (Peters and Waterman), 148–55, 156, 173, 180, 210, 243, 308

  India, 170, 221, 228, 309

  Indian American Council, 309

  Indian Institute of Technology, 224

  Indian School of Business, 309, 312

  Industrial Prussianism, 186

  Information Consulting Group (ICG), 200–201

 

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