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 40

by Duff McDonald

Obermeyer, Michael, 314

  Ocampo, Juan, 145

  off-balance-sheet financing: banking industry and, 288

  at Enron, 243, 244, 245, 247, 249

  office managers, McKinsey, 121, 122, 128

  Ogilvy, David, 62

  O’Hanley, Ron, 175, 305

  Ohmae, Kenichi, 136, 140, 147, 148, 161–64

  oil industry, 156

  OnVance, 236

  opera performance: by McKinsey partners, 208

  Oppenheim, Jeremy, 248

  The Organization Man (Whyte), 64

  Organizational Health Index (OHI), McKinsey, 302

  organizational structure; strategy and, 141–42

  Orr, Gordon, 227–28, 229–30

  O’Shea, James, 260–61

  Otero, Carolina, 181

  Our Efficient Life: The Dictatorship of the Economy and Its Consequences (Kurjuweit), 213

  outsourcing, 237, 309

  Pan American World Airways, 65

  Paramount Pictures, 58

  Paris, France: managers of McKinsey office in, 80, 108, 126, 128, 162

  McKinsey European expansion and, 74, 79

  number of consultants in, 126

  Parker, Hugh, 75–76, 107, 108

  partners, McKinsey: books by, 156

  compensation for, 87, 126, 165, 233, 235, 238, 268, 271, 296

  conferences of directors and, 72, 73, 117, 165, 171, 198, 208, 218, 234, 238, 245–46, 266, 294, 316–17

  contributions to McKinsey capital base by, 268

  and control of McKinsey, 277–78

  and Davis election as managing director, 274

  disenchantment among, 321

  and Enron-McKinsey relationship, 245–46

  evaluations and, 86, 133, 169, 204–5, 325, 331

  and future direction of McKinsey, 117–18

  and Gupta insider-trading case, 316–17

  Gupta leadership and, 238, 266, 278

  and invulnerability of McKinsey, 129

  and Kumar as inside trader, 308

  McDonald and, 128, 129

  and McKinsey culture/values, 266

  and McKinsey in the future, 325, 331

  McKinsey power structure and, 121

  morale among, 321

  number of, 222, 235, 274

  opera performance of, 208

  as organizing structure, 24, 86

  and personalizing of McKinsey, 275

  relationship among, 274

  retirement of, 277–78

  and self-governing partnership, 276

  share buyback program and, 127

  and size of McKinsey, 321

  time to becoming, 235

  turnover of, 128

  women as, 170. See also directors, McKinsey; specific person

  Pascale, Richard, 149

  A Passion for Excellence (Peters), 152

  Patsolos-Fox, Michael, 273, 274

  Patton, Arch, 65–66, 120, 121, 128–29, 155–56

  Peace Corps, 327

  Pearl, David, 208

  Pearson, Andrall, 121, 303

  Pechiney, 79

  Pemex, 103

  Pendleton Dudley, 46

  PepsiCo, 148, 182, 303

  Perez, Javier, 238

  Perkins, Tony, 228

  personalizing of McKinsey, 275

  personnel committees, McKinsey, 121

  Perspective on McKinsey (Bower), 275

  Perspectives (BCG), 111, 116

  Pet Quarters, 265

  Peters, Tom, 66, 136, 146–55, 164, 180, 239, 308

  petroleum industry, 93

  Pets.com, 266

  Petters Group, 291

  Philip Morris, 64, 92–93

  Pichette, Patrick, 327

  Pinault, Lewis, 190, 212, 251

  Ping An Insurance, 229

  Planning Research Corporation, 118

  PlaNYC, 283

  Polaroid, 233

  political appointments, 67

  Polli, Rolando, 162

  Poor Charlie’s Almanack (Munger), 334

  The Pope of Wall Street (Coleman), 62

  Porter, Michael, 90, 164, 198

  Porter, Suzanne, 207

  The Power of Productivity (McKinsey & Co.), 156

  practice bulletins, Gluck’s, 141, 278

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

  The Practice of Management (Drucker), 55

  Price Waterhouse/ PricewaterhouseCoopers, 199, 200, 322, 328

  Principal Candidate Evaluation Committee (McKinsey), 105

  principals, McKinsey: compensation for, 208, 233

  promotions to, 208

  Principles of Accounting (McKinsey and Hodges), 21

  Principles of Scientific Management (Taylor), 26

  private equity firms, 232

  Proctor & Gamble, 53, 211, 224, 295, 311, 314, 315, 316

  Professional Standards Committee, McKinsey, 317

  professionalism: Bower’s views about, 51–52, 68, 105, 260

  Project Alpha, 145

  Project Destiny (AIG-McKinsey), 293–94

  Prudential, 307

  public/private partnerships, 176

  publicity: and advertising by McKinsey, 45–46

  and impact of Kumar and Gupta cases on McKinsey, 324

  and Matassoni as communications chief, 155

  about McKinsey accomplishments, 218–19

  and McKinsey relationship with the press, 156–57

  McKinsey reluctance about, 76

  and McKinsey self-assurance, 206

  and McKinsey’s Condé Nast consulting, 279–80

  publishing industry: McKinsey clients in, 279–81. See also specific organization

  Purcell, Phil, 177, 232

  Puri, Tino, 170

  pyramid principle: at McKinsey, 123

  The Pyramid Principle (Minto), 123, 169–70

  quality: of clients, 266

  criticisms of McKinsey about, 104

  and McKinsey in the future, 331, 332

  recruiting/training and, 295

  and size of McKinsey, 331

  Race for the World (Bryan, Fraser, Oppenheim, and Rall), 248

  railroad industry, 121

  Railway Express Agency, 108–9

  Rajaratnam, Raj, 7, 8, 308, 310, 312–13, 315–19, 322

  Rall, Wilheim, 248

  Ranieri, Lew, 111

  rank and yank, Enron’s, 244–45

  Rattner, Steven, 231

  Raytheon, 64

  Razorfish, 265

  reading program (McKinsey, Wellington), 50

  real estate market, 245, 252, 287, 288, 292

  recruiting/training: broadening of, 277

  and characteristics of consultants, 47, 170–71

  of Chinese, 228

  concerns and questions about, 261–63

  and consistency focus of McKinsey, 85, 235

  and control of McKinsey, 276

  and Davis as managing director, 277

  as essence of efficient management, 113

  Google-McKinsey competition and, 295

  and Gupta achievements, 237, 259–60

  at Harvard, 61

  in India, 170

  Kihn views of, 178

  as local decisions, 276

  and McKinsey ads in Time and New York Times, 45–46, 94

  and McKinsey commercial orientation, 236

  and McKinsey culture, 170–71

  for McKinsey in the future, 327, 328, 332

  by McKinsey (James O.), 33

  and midcareer hires, 210

  in 1960s and 1970s, 94, 102, 327

  in 1990s, 219

  “nontraditional,” 67

  and overstaffing at McKinsey, 269

  quality and, 295

  and war for talent, 90, 247–48, 263, 290. See also employees, McKinsey

  Reed Elsevier, 323

  reengineering concept, 210–12

  Reengineering the Corporation (Champy and Hammer), 210

 
regulation, federal, 18–19, 285, 288. See also deregulation

  Reilly, Ewing “Zip,” 38, 130

  Renault, 79

  Republic Steel, 28

  retirement plan, McKinsey, 119, 199, 291

  Reuter, Edzard, 157

  revenue/fees, McKinsey: for Bank One, 185–86

  banking industry and, 204, 286, 292, 293

  Bower-Kearney split and, 56

  Bower tenure and, 95–96

  Bower views about, 73

  for China clients, 283

  client dissatisfaction with, 186

  and client-McKinsey long-term relationships, 185

  and client reactions to Gupta and Kumar cases, 322

  and compensation of employees, 87

  competition and, 137, 190–91, 203–4

  contingency, 266

  culture/values and, 266

  and decline in billing rate, 236

  decline in, 267–70

  dot-com bubble and, 267–68

  and effect of McKinsey on clients, 173, 174

  Enron and, 239

  European expansion and, 75, 77

  and feigned ignorance of financials, 296

  and Fortune-Huey story about McKinsey, 206

  FSI and, 234

  and government as clients, 72–73

  In Search of Excellence and, 153

  from IT, 200

  justification for premium, 204

  and Kumar-Rajaratnam investigation, 310

  and McKinsey arrogance, 206

  and McKinsey as brand, 93

  and McKinsey in the future, 329

  in 1930s and 1940s, 25, 37, 52

  in 1960s and 1970s, 95–96, 102, 108, 126, 134, 138, 164

  in 1980s, 125, 164, 203, 222

  in 1990s, 164, 197, 203, 222, 235, 236

  premium, 190–91

  from public sector clients, 283

  as secondary to serving clients, 44

  sources of, 329

  and strategy work, 142

  for Tanzania clients, 79

  between 2001 and 2010, 137, 235–36, 266, 267–70, 294, 296–97, 322

  value billing and, 57. See also specific managing director or client

  Rhône-Poulenc, 79

  risk-adjusted return on capital (RAROC), 289

  RiskMetrics, 311

  RJR Nabisco, 41, 81

  Robert Heller & Associates, 55

  Rockefeller, David, 19, 91

  Rockefeller, Nelson, 68

  Roddick, Harrison, 47, 50, 56

  Roeder, Ulrich, 228

  Rolls-Royce, 78

  Romney, Mitt, 1, 111, 232, 284

  Rosenthal, Jim, 145

  Rotten Corps, 84

  Royal Dutch Shell, 74–75, 76

  Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors (Keller), 183

  “The Rules of Three and Four” (Henderson), 115–16

  Russia: McKinsey office in, 160, 228

  Saatchi & Saatchi, 200

  Safran, 323

  Salinas, Carlos, 176

  Salomon Brothers, 111

  Samsung, 309

  San Francisco, California: McKinsey office in, 42, 52, 64, 127, 147, 265

  Sandberg, Sheryl, 327

  Sandoz, 79

  Sanson, Norman, 176, 223

  Santa Fe Institute, 217

  Sanwa Bank, 115

  Sapient, 265

  Sara Lee, 134, 224

  Sarbanes-Oxley Act, 252

  Savoy Plaza Hotel (New York City): as Bower client, 34–35

  Sawhill, John, 156, 239–40

  Saxena, Parag, 312, 313

  Say It with Charts (Zelazny), 123, 156

  SBC Communication, 179

  SBC Warburg, 227, 232

  Scale and Scope (Chandler), 16, 78

  Scandinavian Airlines Systems (SAS), 255

  Schiefer, Friedrich, 158

  Schumpeter, Joseph, 247

  Schwab, Klaus, 324

  Schwartz, Mark, 312, 313

  Science magazine, 78

  Scient, 265

  Scott, H. Lee Jr., 313

  Scottish Development Agency, 175–76

  Scovell, Wellington & Company, 31–32, 50

  Sculley, John, 168, 182

  Sears Roebuck, 17, 54

  The Secrets of Excellence. See In Search of Excellence

  Securities and Exchange Commission (SEC), 315, 316, 317, 318

  Securitization of Credit (Rosenthal and Ocampo), 145

  Seimens, 148, 161

  Servan-Schreiber, Jean-Jacques, 78

  7-S framework, 149, 153

  sexual discrimination, 207

  The Shadow Government (Guttman and Willner), 68, 70

  share buyback program, 127

  shareholder capitalism, 103–4

  shareholder value added (SVA), 289

  shareholders committee, McKinsey, 121, 135, 138, 206, 233, 329

  Sharer, Kevin, 220

  Sharman, Graham, 217, 218

  Shaw, Charles, 129

  SHC, Inc., 235

  Shearson Lehman, 165

  Shell Oil, 147–48

  Shepard, Steve, 154

  Sherman Antitrust Act (1890), 18

  Sidebottom, Peter, 254

  Silicon Valley, 264, 294

  Singh, Manmohan, 312

  Skilling, Jeff, 7, 81, 238–46, 248

  Sloan, Alfred P., 19, 54

  Small Business Administration, 284

  Smart Money magazine, 281

  The Smartest Guys in the Room (McLean and Elkind), 241, 245

  Smith, Adam, 20

  Smith, Everett, 58, 76, 80, 94, 100, 101

  Smith, Roger, 177, 183, 184

  Smith, Yves, 235, 253

  society: role of business in, 261–63

  Socony Mobil Oil Company, 82, 91

  Solow, Robert, 219

  Sony Corporation, 114

  South African Airlines, 256

  Southern California Symphony, 64

  Spalding Sporting Goods, 235

  Spansion, 309

  Special Operating Risk Committee (SORC), McKinsey, 307–8

  specialization, 120–23, 142–46, 215

  St. Petersburg Hermitage Museum, 228

  Standard Oil, 18

  State Street, 121

  steel industry, 28, 29, 175

  Steiner, Tom, 182, 204, 205–6, 216–17, 305

  Stern, Stefan, 329

  Stewart, Clothilde de Veze, 270

  Stewart, MacLain, 83, 230

  Stewart, Matthew, 25–26, 28, 84, 89, 112, 151, 184, 206

  Stewart, Michael, 307–8

  Strategic Planning Associates, 110

  strategic planning/thinking: analytical approach to, 113

  and BCG as competition for McKinsey, 88–89

  BCG role in promotion of, 88–89

  Bower’s views about, 41

  and business school curriculums, 89–90

  Citibank-McKinsey consulting and, 91–92

  competition and, 186

  decentralization and, 89–90

  emergence of, 55–56

  as essential to management, 89

  focus on, 88–90

  Fortune magazine survey about, 140

  at GE, 113–15

  Gluck and, 153, 197

  GM-McKinsey and, 184

  goal of, 186

  Industrial Prussianism and, 186

  as justification for corporate existence, 184

  as large source of McKinsey revenue, 73

  as learning process, 113

  McKinsey knowledge focus and, 139–40

  McKinsey’s idea of, 41

  nine-box matrix and, 143–45

  organizational structure and, 141–42

  Peters views about, 151

  phases in, 141

  as pipe dream, 112–13

  Superteam for, 140–42

  strategy revolution, 112

  Strategy and Structure (Chandler), 77

  Sturdivant, Fre
d, 168, 190–91

  succession planning, 66

  Sumitomo Bank, 162, 165

  Sun Oil, 91

  Sunbeam Electric, 53

  Superteam, McKinsey, 140–42

  Supplementing Successful Management (McKinsey & Company), 45

  surveys, McKinsey: as tools, 53–54

  Sussex University: as McKinsey client, 77

  Swain & Moore, 310

  Swedish bank industry, 252

  Swift & Company, 24

  Swiss banks, 252–53, 286

  Swiss Re, 232

  Swissair, 2, 58, 86, 255–57

  Switzerland: McKinsey activities in, 79, 128, 255–57

  Sylvania Electric, 53

  Systems Development Corporation, 118

  Taj Capital, 312

  Talbert, Harold, 68

  talent: competition for, 90, 119, 166, 247, 263, 290

  Tate & Lyle, 78

  Taylor, Frederick Winslow, 26, 28

  Taylor, Myron, 31

  Taylorism, 26–27

  technology, 74, 170, 171, 193, 196, 201–3, 276. See also information technology (IT)

  Telefonica, 266

  TeleSoft Partners, 312

  terrorism, 214

  Texaco, 74, 91

  Texas Pacific Group, 279

  Thatcher, Margaret, 176

  The Firm. See McKinsey (The Firm)

  Thiam, Tidjane, 307

  Thompson, Hine & Flory, 32–33

  Thompson, Ken, 254–55

  Thomson Reuters, 323

  Thuillez, Gerard, 162

  Time, Inc., 15, 280, 281

  Time magazine: McKinsey advertising/recruiting in, 45–46, 94

  Time Warner, 253, 281

  The Tom Peters Phenomenon (Crainer), 173

  Total Quality Management, 89–90

  Towers Perrin, 42

  Townsend, Charles, 280

  Toyota, 4, 174, 183, 184

  TPG Capital, 167

  “transformational relationships,” client-McKinsey, 6, 136–37, 180, 211, 326

  Triad Power (Ohmae), 161, 163

  Trippe, Juan, 65

  Trotsky, Leon, 26

  Tsinghua University, 228

  Turner, Lord Adair, 285

  Tutu, Desmond, 314

  Tzu, Han Fei, 4

  UBS, 227, 232, 253, 292

  Unilever, 78

  Union Bank, 79

  Union Carbide, 194

  Union Oil, 91

  United Parcel Service (UPS), 53

  United Technology, 201

  University of Chicago: McKinsey as graduate of, 13

  McKinsey as professor at, 4, 13–14, 24

  Universum surveys, 295

  Unleashing the Department Store (Bower), 52

  “up-or-out” system, 4, 83–84, 127, 244, 245, 248, 269, 279, 330

  Upjohn Company, 53

  Urkowitz, Mike, 204

  U.S. Steel, 17, 18, 31, 37, 53

  U.S. Trust, 127

  USA Today: McKinsey alumni story in, 192, 281

  Useem, Michael, 79

  USG, 233

  value-delivery systems, 144

  values. See culture/values, McKinsey

  van den Berg, Jan, 108

  Vance, Jack, 48, 128

  Vascellaro, Jerome, 277

 

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