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 39

by Duff McDonald


  information technology (IT), 199–203, 297, 332

  Innovation: The Attacker’s Advantage (Foster), 250

  “The Inside of Ohmae’s Brain” (Ohmae), 163

  Insurance Company of North America, 106

  insurance industry, 66, 121, 232. See also specific organization

  Intel Corporation, 264

  Internal Revenue Service (IRS), 244

  International Chamber of Commerce, 314

  International Harvester, 18

  InterNorth, 239

  investment banking, 253, 261, 290, 291. See also Wall Street; specific organization

  investor capitalism: rise of, 124–25

  ITT (International Telephone & Telegraph), 74, 211

  James O. McKinsey & Company. See McKinsey (The Firm)

  Japan: automobile industry in, 104, 163, 183

  McKinsey activities in, 115, 134, 146, 148, 161–64, 165

  Peters and Waterman’s work and, 150. See also Ohmae, Kenichi

  Japan Airlines, 115

  Jarrard, Michelle, 276–77, 294, 306, 320

  Jenkyn, Oliver, 293

  Jensen, Michael C., 124

  Jesuits: McKinsey & Company compared to, 3, 41

  Jobs, Steve, 11, 168, 328

  Johns Manville, 53

  Johnson & Johnson, 250, 305

  Johnson, Abigail, 305

  joint venture: Donaldson, Lufkin & Jenrette and McKinsey as, 117–18

  Jones Day, 33–34

  Jordan, Michael, 303

  Jordan, Vernon, 169

  JP Morgan, 287

  JPMorgan Chase, 1, 185, 232, 253, 287, 296, 328

  Justice Department, U.S., 315, 318

  Kaiser Associates, 110–11

  Kanagat, Atul, 314

  Kanarek, Larry, 188, 189, 300

  Kantrow, Alan, 157, 161–62, 185, 216, 223

  Katzenbach, Jon, 73, 91, 126, 170–71, 197, 208

  Kaufman, Stephen, 303

  Kayser, Olivier, 228

  Kearney, A. Tom, 24, 31, 37, 38, 42, 44, 56, 205, 236, 305

  Keller, Maryann, 183, 184

  Kennedy Information, 249

  Kennedy, John F., 49, 69

  Kestenbaum Commission, 70

  Khurana, Rakesh, 27, 65, 124–25

  Kibasi, Tom, 286

  Kidder, C. Robert, 305

  Kiechel, Walter, 55, 110, 139, 141, 160–61, 167, 212, 236, 268

  Kihn, Martin, 80, 84, 178

  Killefer, Nancy, 106, 198, 222, 282–85

  Kinder, Rich, 240

  Kinsey, Alfred E., 158

  Kipping, Matthias, 138, 168, 198–99

  Kissinger, Henry, 158, 241

  KLM Airlines, 79, 255

  Kmart, 2, 254, 258

  Knowledge Center, McKinsey (New Delhi), 237

  knowledge focus, McKinsey: and Barton, 302, 303

  Daniel focus on, 133, 138–39, 145, 146, 197, 218

  Davis view about, 278

  generalist-specialist discussion and, 142–46

  Gluck focus on, 145, 197, 214–18, 223, 278

  Gupta views about, 222–23, 237, 268, 278

  and McKinsey reputation, 223

  and practice-information system/practice-development network, 142–43

  proprietary, 302–3

  and sharing of knowledge, 216

  spending on, 216, 222–23

  Knowledge Unplugged (McKinsey Co.), 156

  Kohlberg Kravis Roberts, 125

  Korea, 301

  Kovats, Ernie, 195–96

  KPMG, 199, 281, 322, 328

  Kraft, 224

  Kuhn, Loeb & Co., 25

  Kumar, Anil: clients of, 322

  and Gupta case, 310, 317, 318

  Gupta as mentor to, 309

  as head of Knowledge Center, 237

  impact on McKinsey of conviction of, 320–21, 322, 324

  insider trading by, 307–10, 312, 315, 317

  as McKinsey alum, 7, 8

  Rajaratnam and, 308, 310, 315, 317

  Kurjuweit, Dirk, 213

  Kwak, James, 81

  Lack, Andy, 323

  Lafley, A. G., 314

  Lang, Laura, 281

  Lanning, Michael, 181

  Latham & Watkins, 167–68

  lawsuits, McKinsey, 249–50

  Lay, Kenneth “Kenny Boy,” 241

  layoffs. See cost cutting/layoffs

  Lazard Frères, 231

  Le Monde newspaper, 77

  “lead-or-leave” approach, 83

  leadership, business: in American Century, 16–18

  budgeting and control as part of, 114

  conformity and, 82

  dilemma of, 16–18

  function of, 335

  McKinsey as creator of, 192, 233, 304

  and McKinsey in the future, 331

  power and, 17. See also CEOs; management

  Leavitt, Harold, 177

  Lee, Charles, 74

  Lee, Jimmy, 253

  Lee Myung-bak, 302

  Legend Computers, 229

  LEGO, 4

  Lehman Brothers, 230, 232, 287

  Leiding, Ernst, 107

  Leif, Thomas, 214

  Lemann, Nicholas, 262, 327

  Lenin, Vladimir, 26

  Levi Strauss, 233

  Levinson, Linda, 170

  Lewis, Drew, 188

  Liddy, Edward, 258, 293

  Life magazine, 15

  Linden, Larry, 232

  Lindsay, John, 70–71

  local government: McKinsey activities with, 283

  London Daily Mail, 286

  London, England, McKinsey office in: Barton in, 301

  and client dissatisfaction, 180–81

  managers of, 80, 108, 162

  McKinsey in 1970s in, 107, 108

  and McKinsey alumni, 285–86

  McKinsey expansion to, 73–80, 106–7

  and McKinsey foreign strategy, 106–7

  and McKinsey influence in Great Britain, 286

  Parker retirement in, 108

  power of, 108

  and public/private partnerships in England, 176

  public sector activities of, 285–86

  revenue at McKinsey in, 127

  Scottish Development Agency and, 175–76

  staffing of, 106–7

  London Financial Times, 156, 329

  London Sunday Times, 77, 187, 226, 259, 288

  Long, Augustus “Gus,” 74

  The Lords of Strategy (Kiechel), 55, 110, 139, 141, 268

  Los Angeles, California: McKinsey office in, 64, 128

  LOT, 256

  Lotz, Kurt, 107

  Loudon, John, 74–75

  Lowe, Rob, 220

  Lowry, Jim, 106

  LTU, 256

  Luce, Henry, 15–16

  Lufthansa, 257

  Lukens Steel, 53

  M-Form, 16–18, 54–55, 77, 79, 107–8

  MAC Group, 168

  MacCormack, Bill, 328

  MacLehose, Murray, 80

  Macomber, John, 77, 80

  Macy’s, 30

  Madigan, Charles, 260–61

  Madison, Mitchell, 305

  Madison Square Garden, 279

  Magnetar, 291

  management: accountability of, 124

  in American Century, 16–18

  Bower’s views about, 124

  dilemma of, 16–18

  economy of 1970s and, 104

  and emergence of strategic planning, 55–56

  and end of era of managerialism, 103

  essence of efficient, 113

  growth of professional, 27

  history of, 25–26

  increase in number of people in, 99

  justification for, 89

  as management engineers, 24

  matrix, 179, 180

  McKinsey dealings with level of, 63–64

  McKinsey (James O.) impact on corporate, 12

  in 1970s, 99

  and organizational structure, 54, 63–64r />
  and post–World War II boom, 63

  professionalization of, 19–20

  reputation of, 25–26

  and rise of consulting, 18–20

  “scientific,” 4, 26, 27

  separation of corporate ownership and, 20

  strategy as essential discipline of, 89

  “visible” hand of, 20. See also clients; executive compensation; leadership, business; specific person or corporation

  management capitalism, 99

  Management Group Administration Committee (McKinsey), 105

  The Management Myth (Stewart), 25–26, 151, 206

  Management by Objectives, 90

  The Management Viewpoint in Credit Extension (Bower), 52

  Manager magazine, 164

  Managerial Accounting (McKinsey), 22

  “managerial intensity,” 99

  managing director, McKinsey: Barton elections as, 297, 299–300, 301, 324

  compensation for, 208

  Daniel election as, 129

  Davis election as, 273–74

  and elections for Bower’s successor, 100–102

  FIG and, 277

  first non-Westerner elected, 221

  Gluck elections as, 153, 197, 198

  Gupta as creating office of, 277

  Gupta elections as, 221, 223–24, 268, 273, 274

  losers in elections for, 274

  McDonald election as, 126

  power structure and, 121

  powers of, 238

  terms for, 100. See also specific person

  Mandela, Nelson, 241

  Mandelbaum, Jay, 232

  Manilow, Barry, 208

  Manufacturers Hanover, 182, 287

  Manville, Brook, 216, 223

  Marakon Associates, 111

  Marines, U.S.: McKinsey & Company compared with, 3, 41, 165

  Marquez, Vernon “Marq,” 195–96

  Marshall Field & Company, 29–30, 35–36, 53, 96

  Massachusetts Institute of Technology (MIT): McKinsey as recruiter at, 170

  Massey, Ed, 120

  Massey Ferguson, 76

  Matassoni, Bill, 148, 155–56, 161, 167, 201, 216, 223, 304

  matrix management, 109, 113, 143–45, 179, 180

  Mattern, Frank, 122, 161, 201, 202, 214, 303

  Matzinger, Stefan, 160, 209

  McColl, Hugh, 176, 177

  McCollom, James, 179–80

  McCraw, Thomas, 17

  McDonald, Al, 105, 112, 125–31, 133, 134, 135, 299

  McDonald’s, 333

  McKenna, Christopher, 18, 43, 69, 77, 85, 88, 107, 260

  McKinsey & Company. See McKinsey (The Firm)

  McKinsey, James O.: accomplishments/contributions of, 35, 39

  and accounting as basis of management, 12, 13–14, 15, 89

  ambitions of, 15, 53

  American Management Association and, 29

  appearance of, 13

  Bower hired by, 34

  Bower relationship with, 32, 35, 36, 95

  Bower as successor to, 4, 56–57, 61–62

  Bower-Wellington relationship and, 32

  and company name, 36

  consulting dictum of, 63

  death of, 12, 32, 35

  and founding of The Firm, 4

  impact on McKinsey of, 225, 333

  Marshall Field and, 29–30, 35–36, 53, 96

  personal and early professional background of, 12–15

  reputation of, 11–12, 27

  self-image of, 13

  speeches of, 50

  strategic planning concept of, 41

  style/confidence of, 11–12, 13, 14–15, 24–25, 30–31, 35

  views about clients of, 266

  writings of, 20, 21–23

  McKinsey (The Firm): accomplishments of, 1–2, 4–5, 8–9, 39, 67, 181, 218, 326, 332–34

  arrogance at, 90–95, 128–29, 165, 205–9, 219, 226

  as brand, 205, 206, 211, 278, 289

  British perception of, 78

  as business model for the future, 248

  centralization of, 108, 276

  challenges facing, 326, 331, 336

  character of, 86, 117, 238

  commercial orientation of, 236

  complexity of, 331

  concerns about direction of, 116–20

  as consultants of last resort, 231

  contradictions concerning, 3

  control of, 276–78, 297

  core principles of, 63–64, 301

  corporate governance at, 234

  credibility of, 175

  criticisms of, 6, 77, 112, 137, 171, 212–14, 261–63, 279, 280–81

  decentralization at, 276

  demand for services of, 335

  description of, 128

  early years of, 28–30

  effects of, 173–92

  enduring competitive edge of, 116

  exceptionalism of, 94

  exclusivity at, 53, 296

  failures/missteps of, 2–3, 178–82, 191, 206, 252–59, 292–94, 309

  feigned ignorance of own finances at, 296

  foreign strategy of, 106–7

  founding of, 4, 23–25

  funding for, 38

  future of, 325–36

  goals of, 336

  greatest weakness of, 334

  image of, 78, 194

  incorporation of, 86

  investment losses of, 291

  as Jesuits of Capitalism, 215–20

  as leadership factory, 192, 304

  and McKinsey process, 57–59

  and McKinsey as verb, 77, 96

  mission/purpose of, 38, 43, 44, 117, 138, 139, 169, 233–35, 268, 275

  mistakes/missteps of, 332–34

  as model for others, 167–68

  morale at, 238, 274

  motivation of, 77

  motto of, 93

  name of, 36

  New York City as power center for, 221, 226

  in 1970s, 97, 106–23

  off-the-rack ideas of, 77

  organization/structure of, 121–22, 138–42, 248, 331

  overextension of, 95

  personalizing of, 275

  popularity of, 113

  power and influence of, 2, 3, 5–6, 9–10, 157, 230, 231, 260, 271, 327

  power within, 222

  problem-solving abilities of, 53–56

  product of, 88

  rebranding of, 146–47

  reorganization of, 37

  reputation of, 1–2, 9–10, 27, 28, 71, 90, 93, 143, 175, 187–90, 206, 223, 251, 260, 324, 329, 330, 332

  respect for, 231

  sales pitch of, 191

  as scapegoat for clients, 8, 96, 107, 117, 248

  secrecy of, 36

  self-confidence of, 191, 275

  as self-governing, 102, 276, 330

  self-image of, 8, 57, 119, 128–29, 165–69, 237, 247

  as self-perpetuating, 43

  self-reflection at, 104, 105–6, 277, 320–24

  self-regard of, 182

  selflessness at, 44–45

  service approach at, 44–45

  setbacks of, 168

  size of, 227, 294, 320, 321, 325, 329–31

  as success, 64, 116, 191, 294–97, 331–32, 336

  superiority of, 205

  tax issues for, 86

  as The Firm, 45

  uniqueness of, 42, 43

  vision of, 52. See also specific person or topic

  McKinsey Global Institute (MGI), 218–19, 226, 285, 290–91

  McKinsey Investment Office, 165, 314

  McKinsey Is Coming (Hochhuth play), 213–14

  McKinsey, Kearney & Company, 37

  McKinsey Knowledge Center, 309

  McKinsey Quarterly, 111, 123, 157, 218, 229, 243, 290

  McKinsey Reports, 49, 50, 85, 123, 229

  McKinsey Staff Paper, 141

  McKinsey, Wellington & Company, 31–32, 37, 50

  McKinsey’s Purge, 29–30, 53

  M
cLean, Bethany, 241, 245

  Mead Johnson, 64

  media, 135, 156–57, 307. See also specific person or organization

  Mellon Bank, 174–75

  Mellon Financial, 305

  Mellyn, Kevin, 186, 263, 289, 290

  Mendonca, Lenny, 287

  Mer, Francis, 323–24

  Meredith Corporation, 280

  mergers and acquisitions, 17, 63, 92, 100, 176, 234, 254. See also specific deal

  Merrill Lynch, 7, 72, 165, 286, 287, 327

  Michaels, Ed, 248

  Microsoft Corporation, 111, 182, 264, 327, 328

  Milbank, Dana, 137

  Miller, Heidi, 186

  Mills, Karen, 284

  “mimetic isomorphism,” 54

  The Mind of the Strategist (Ohmae), 161

  Ministry of Defense, British, 270

  Minto, Barbara, 123, 169–70

  Mintzberg, Henry, 113

  Mitchell Madison Group, 205–6

  Mitton, E.N.B., 27

  Mobil, 92, 135

  Molino, Jean, 307

  Monitor, 164, 198, 204, 223, 226

  Moreno, Paco, 162

  Morgan Guaranty, 179

  Morgan Stanley, 7, 42, 177, 232, 233

  Morrison, Roger, 79, 80

  Morvillo, Robert, 309

  Moses, Robert, 62

  Mother Teresa, 225

  Muhlemann, Lukas, 223, 232, 245, 253, 257

  multidivisional (M-form) structure, 16–18, 54–55, 77, 79, 107–8

  Munger, Charles “Charlie,” 334

  Murden and Co., 46

  Nader, Ralph, 327

  Naftalis, Gary, 313, 316, 319

  National Aeronautical and Space Agency (NASA), 68, 69

  National Bank of Detroit, 287

  National Biscuit, 17

  National Economic Council, 284

  National Health Service, British, 78, 180, 286

  national security: McKinsey consulting about, 68

  NationsBank, 177

  NBC: GE purchase of, 189–90

  Nestlé, 79

  Netherlands: McKinsey activities in, 79, 108

  Neukom, John, 23, 24, 29, 105

  Neul, Chuck, 268

  Neuschel, Dick, 66, 94, 100, 101, 121

  New Jersey Bell, 55

  New Silk Route, 312

  New York City: Daniel as manager of McKinsey in, 134

  McKinsey consulting work with, 70–71, 92–93, 283

  McKinsey office in, 25, 31, 35, 37, 38, 52, 56, 71, 126, 182, 221, 226

  as McKinsey power center, 221, 226

  in 1970s, 111

  New York Observer, 280

  New York Times, 71, 76, 94, 106, 201, 268, 291

  New Yorker, 262–63, 279, 327

  Newman, William, 15

  Newsweek magazine, 318

  Nimocks, Suzanne, 242, 250

  nine-box matrix, McKinsey, 143–45

  Nippon Life Insurance, 165

  Nortel Networks, 195

  North American Aviation, 69

  North Carolina National Bank (NCNB), 174, 176–77

  Northern Electric, 195–96, 245

  Northern Telecom, 195

  Nyerere, Julius, 79

  Obama, Barack, 224, 282, 284–85, 312

 

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