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McKinsey Growth Issues

This article highlights some of the recent struggles McKinsey has encountered while managing runaway growth.

McKinsey consultants tend to deliberately work longer hours than needed. Extreme pressure to perform and manage their images ultimately means many consultants work longer hours than needed. There is an almost inherent belief that they should be proud in having worked so late at the office. This ultimately fosters a strong case of burn-out, disconnect from families and an inability to actually complete work within a reasonable amount of time.

In a recent study for a mining company McKinsey undertook a painful study of heat curves and heat charts to estimate the correct amount of energy required. There’s nothing inherently wrong with this approach. Yet, the McKinsey analyses could not be understood.

McKinsey, by its own admission, has struggled when it comes to advising clients where knowledge of technical issues is required. That’s okay; most of their competitors have this problem. However, their response to plug this gap is a little worrisome. We have seen several instances where McKinsey had partnered with technical specialists or taken an excessively technical approach to analyse issues. In a recent study for a mining company McKinsey undertook a painful study of heat curves and heat charts to estimate the correct amount of energy required. There’s nothing inherently wrong with this approach. Yet, the McKinsey analyses could not be understood. It was difficult to link the logic of the analyses to the business case. We have seen them do this in a recent automotive, smelting, shipping and medical systems study. McKinsey really needs to reconsider its approach to blending technical analyses into business studies.

Not all McKinsey engagements are equal. The premium clients like P&G, Vale and so on command the attention of the firm’s top partners and their coterie of best associates. This is the inner circle. In the next group are the top consultants who can sometimes be placed on these crown jewel clients but can sometimes be dispatched to less important clients. In the outer circle are the business analysts and associates who almost never get the crown jewel assignments and clients. Getting into the inner circle is heavily dependent on the school you attended and the office in which you are based. An MBA graduate from the Universidad Catholica in Santiago is unlikely to be staffed on a crown jewel client like Goldman Sachs.

Location, Location, Location. Where you are located AND where you studied will impact your career path. A MBA graduate from New Zealand based in the New York or London office is very unlikely to be placed on the best projects for the firm. A Harvard MBA moving to some place like Johannesburg, South Africa is likely to get into that offices crown – jewel clients. Linked to this concept, an MBA from a top business school in South Africa is more likely to serve the crown jewel clients in South Africa then the global crown jewel clients.

 Its research teams were unable to support engagement teams in the field and quality suffered. We have seen proposals and final reports with errors, poor analyses and in some cases, fairly obvious grammar and spelling mistakes.

McKinsey’s quality has dropped in the last 4 years. This is by their own admission. It’s also clear if you look at the firm’s proposals and client work. First, a massive expansionary drive forced the firm to strain its support systems. Its research teams were unable to support engagement teams in the field and quality suffered. We have seen proposals and final reports with errors, poor analyses and in some cases, fairly obvious grammar and spelling mistakes. Those can be forgiven. Maybe. What cannot be forgiven is incorrect analyses and incorrect use of analytic techniques. Recent studies at Vale, BHP Billiton and GM all had fundamental mistakes in the analyses.

Although McKinsey likes to create the impression that sharing of information is easily done within the firm, we have it on good authority and among several sources that while this happens, there is also a fair amount of hoarding of information. The firm has several regions and partners who specialise in sectors. Getting their attention and comments can be difficult.

McKinsey prides itself on its benchmark databases and comparative data on sector players. While this has worked well in the resources, banking and other traditional sectors, it has come undone in the newly evolving media and technology sectors. How do you benchmark a social network when the data and information is changing so rapidly? Therefore the McKinsey ideas can work well in most sectors but they fail in some.

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