The 20 Page History of McKinsey & Company

The Founder
James ‘Mac” McKinsey, University of Chicago - professor
Began 1926, company of Accounting and Engineering Advisors
General Survey approach – “undeviating sequence” of analysis.

Marvin Bower, Lawyer - Harvard MBA
Opened NY Office
1937 Memo – Pattern business after a law firm, “Serve Clients Superbly Well”
1950 – Elected Managing Partner. Company = 10 Partners and 74 Associates
1967 – Stepped down. McKinsey holds highly respected presence in Europe and N. Am.

Decade of Doubt – Continuous Slow Growth
Enter Competitor: Boston Consulting Group (BCG)
April 1971 – Commission on Firm aims and Goals
Determines that McKinsey has been growing too fast. Too many clients and low quality work.
Shift Associate to MGM ratio from 7 to 1 back to 5 or 6 to 1.
Shift away from Gereralist to In-depth industry or functional specialty.

Practice Development Initiative
1976 – Managing Director (MD) Ron Daniel
Appoints 1st ever Full-Time Dir. of Training.
Emphasis on NOT ONLY Serving its clients, but also developing its consultants
Creation of Industry-Based Clientele Sectors.
Creates internal group to re-evaluate Strategy and Organization.

1977 – Fred Gluck, NY Dir. hosts 3-day “Super Group” meeting
Gluck’s background is Bell Labs in 1967
Hire Tom Peters – Ph.D. in Organizational Theory

1982 – Creation of 15 Centers of Competence (e.g. – strategy, organization, marketing, change management, and systems)
1982 Memo from Gluck – Two-Fold role of centers
Develop Consultants and ensure continued renewal of the Firm’s intellectual resources
“Snowball Making” - Practice Development, the internal effort for improving knowledge
“Snowball Throwing” – Client Development, external consulting

Building a Knowledge Infrastructure
Early 1980’s – Publishing of Firm’s findings.
1982 – 2 Major Bestsellers
In Search of Excellence, Peters and Waterman
The Mind of the Strategist, Kenichi Ohmae

1987 – Gluck’s Knowledge Management Project
Created Database of information learned.
From T-shaped to I-shaped Consultants = Transition to deep functional specialists with narrow expertise.

Databases and Electronic Publishing:
FPIS - Firm Practice Information System
PDNet - Practice Development Network
KRD - Knowledge Resource Directory “McKinsey Yellow Pages”
1988 – (MD) Fred Gluck, open offices in Rome, Helsinki, Sao Paulo, and Minneapolis.
Total Offices = 41

Refining Knowledge Management – Ted Hall weed’s Gluck’s “garden of 1,000 flowers”
Integrating groups and knowledge Sectors into 7 Functional Capability Groups.

Client Impact – CPDC Clientele and Professional Development Committee
1991 – Shift from Engagement Team (ET) to the Client Service Team (CST)
Long-Term Client Focus, core of individuals across multiple ETs.

3 Consultant Profiles:
Jeff Peters, Sydney Office – Off. Dir. John Stuckey assembles a 5 member team for a financial industry project in Aust. Group leverages the international knowledge of the Firm to create a great set of recommendations for client.
Warwick Bray, European Telecoms – Inter-cooperation between branch offices.Intranet.
Stephen Dull and the Business Marketing Competence Center
1983 U. of Mich. MBA - Atlanta Office of McKinsey
Developed Business to Business (BtoB) Initiative – new competence center focused on cutting-edge issues in marketing. (e.g. segmentation, multi-buyer decision making, and marketing partnerships).

Future Directions
1994 – Rajat Gupta becomes MD. Expansion of McKinsey Global Institute - firm-sponsored
research center. Annual corporate Practice Olympics to spur new ideas. Also constructed a Change Center and Operations Center.