The McKinsey Way

Newsweek published an article this week reviewing recent predictions made by the management consulting firm McKinsey and Company.  McKinsey advises many large corporations, companies, and institutions, and their influence has dominated strategic management consulting for much of it’s 75 year history.

Newsweek tallied the accuracy of predictions made in their 2007 State of the World report, The New Power Brokers, and cites how, in almost every instance, they got the future dead wrong.  Unfortunately, their updated 2009 report is likely to have the same accuracy because they commit the same errors: assuming that trends of the recent past predict events in the near future.

Why should we care?

McKinsey’s theories and data are enormously influential across upper management.  I have seen a groupthink tendency across Forbes 500 executives and aspirants: they follow a uniform set of  journals, conferences, books, and gurus.  Advice from McKinsey carries disproportionate weight in this circle, heavily influencing thinking and behaviors: if McKinsey is wrong, there’s a greater chance that C-level thought and actions will be wrong.

McKinsey is also called to help ratify decisions as well as to create them.  A CEO who wants to implement change will use McKinsey to give objectivity for their strategy and legitimacy to their plan.  McKinsey’s analysts will, in turn, draw on the firm’s data and predictions to support their recommendations.  A poorly rationalized decision, undermines the company’s leadership, diminishing trust and motivation among employees.

I interviewed with McKinsey several years ago, where I was honestly told that they wanted to hire associates with no experience, people who could simply be trained in the firm’s practices.  They were seeking (and this is a direct quote) “the men you want to be and the women you want to be with” as figureheads to work with their clients.   I was amazed by the shallowness of the pitch and the arrogant assertion  that real-world experience only got in the way of their jobs.

In light of my personal experience, I am not surprised that they got things wrong, yet they remain highly respected and widely listened to.  And, as we think about how to (re) build strong companies, this is a problem.

It seems to me that companies must commit to seeking out genuine expertise and experience when they look for advice.  They need to critically assess the performance of their gurus based on evidence rather than on cachet.

They need to find a different Way.