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McKinsey + stricter rules for management consulting

This post is one of the few posts from Victoria, one of our TCO subscribers.

I continue to read NYT, HBR and other publications daily. While browsing NYT today, I found an interesting article on the management consulting industry entitled, “In Scandal’s Wake, McKinsey Seeks Culture Shift.”

The article discusses efforts by McKinsey to establish stricter rules, on investing and accountability, within the firm, after embarrassing scandals related to Anil Kumar and Rajat Gupta. The former was a McKinsey director who pleaded guilty to insider trading charges in 2010 and the latter was the former McKinsey managing director who was convicted for leaking boardroom information.

As a side note, it was interesting to learn that McKinsey’s 2013 revenue was $7B. This is a long leap from a tiny accounting and “management engineering” firm founded by James McKinsey in 1926.

I never would be reading these articles on ethics unless Firmsconsulting had placed such a major focus on it. I had always mistakenly assumed the analytic skills were sufficient to understand management consulting. I think Marvin Bower, the person who built McKinsey into what it became, would approve and applaud Dominic Barton’s, current McKinsey managing directors, efforts to establish stricter rules. The firm cannot afford another disgrace.

McKinsey’s culture is powerful, but only works if the values are truly embraced by all employees. Yet, McKinsey’s values can only be truly embraced by people with integrity and a true passion for management consulting, and not everyone who works for McKinsey possess both or even one of those attributes.

For those readers who would like to learn more about McKinsey’s values and how McKinsey was built into the influential firm it is today, I would strongly recommend to read a book called “McKinsey’s Marvin Bower”, written by Elizabeth Haas Edersheim. Firmsconsulting recommended this book.

Preparation:

The Mind of the Strategist, chapter 5: I worked through the 5th chapter of “The mind of the strategist” by Kenichi Ohmae, a major figure in management consulting. This chapter is entitled “Pursuing Aggressive Initiatives”.

The author explains in more detail the 3rd basic strategy explained in chapter 2, which is business strategy based on aggressive initiatives. This strategy involves challenging the accepted assumptions of how business is done in a specific industry and, therefore, changing the rules of the game.

The author states that a strategist’s weapons are strategic thinking, consistency and coherence, and that a strategist should challenge prevailing assumptions with a single question, “Why”.

Strategists should ask “Why” four or five times in succession until he or she gets to the guts of the issue. The author advises one to list the basic assumptions of the industry and ask if they still hold or are vital to the existence of the business

Items accomplished during this session:

Networking with management consulting partners: One more management consulting partner agreed to talk with me. This week I also had my first networking call with a partner from one of the major management consulting firms.

He asked me why I wanted to join his firm and than offered to submit my resume. Overall, the call lasted 10 minutes and my primary objective was to make a good impression, which I think I achieved, at least to some extent. I stepped out of the office to make this call. I work in a very busy office building and it was challenging to find a quite place to speak. However, what I realized is that it is even more important to find an area where no one can overhear your conversation than it is to find a quite area.

You cannot predict what the partner may ask you and you will want to be in an environment where you can speak freely without being concerned that someone may overhear you. Another important take away related to networking with partners is to speak, write and act as if you are a senior person.

Remember, when a consulting partner is talking to you, he or she asks: “How will this person look in front of the client?” and, “Will this person make the firm look good?”

Therefore, during the interview or during networking always remember to speak, write and act the way you think a management consulting firm expects you to act in front of the client.

Revision:

Firmsconsulting provides structures to be used as building blocks for brainstorming cases, estimation cases, structures of actual engagement analysis, networking calls, how to find management consulting partners to network with, how to answer questions during an interview and how to do data cases.

If such structures are followed, anyone will perform better than they would without a structure. I decided to take full advantage of the structures provided. I prepared summary cards for each structure, to ensure that every time I practice I actually follow the proposed structure and, hence, learn the right skills.

I will strongly recommend to all subscribers to The Consulting Offer to do the same. I think it gives one a strong competitive advantage during the recruitment process and thereafter.

Though, be warned do not memorize the structures! I watched Season 2 and I noticed Michael and Kevin developed cases where none of the structures worked. So I am now past the stage of simply having the structure, but thinking more deeply about what it means to have the structure in the first place.

Felix’s case interview preparation session 12: In the Greek crises discussion, it makes sense to present a structure of how you will answer a question, even if you do not yet know what your answer will be. This forces you to look at the key areas that you need to cover to answer the question in a logical way

You also need to cover the major points related to the specific question. Thereafter, you can use such structure as a roadmap for your actual answer.

This way even if your answer is not insightful or not accurate, you will appear smarter since laying out an initial structure shows that you are a disciplined thinker, which is what management consulting firms are looking for.

However, I think during the interview one has to be selective about which structure should be presented ahead of an answer. If structure is presented for every answer, it may be to the detriment of the interviewee, as the interviewer may conclude that this candidate complicates even the easiest questions and takes longer time than necessary to answer questions.

This is when it becomes important to use common sense and to “read” the interviewer, see how he or she reacts to the way you handle questions and adjust accordingly.

Telco brainstorming: I think in practicing brainstorming it is vital to remember to focus on the quality of your practice rather than on speed. There is temptation to go through a brainstorming exercise quickly and see what Felix’s performance was like and than see the solution video.

However, it is vital to not allow yourself to be lazy and passive. One has to do brainstorming oneself first, properly and diligently, before looking at Felix’s solution and the coach’s solution.

Google estimation case: I think one big mistake Felix made is she did not account for the fact that not everyone in the world has access to Internet.

Facebook market entry: I think that in the Felix’s equation, she had to take into account how many of mobile phone users actually had smart phones.

She just assumed that all cell phones were smartphones with Internet usage capabilities and she calculated how many of those people actually would use their mobile phones to surf the Internet. I wonder why Felix kept saying “Korea” when she clearly meant “South Korea?”

One of the things Firmsconsulting teaches is not to memorize frameworks but to really think about the problem and put together the most logical drivers when building a decision tree, as opposed to using framework such as the 4 Ps of marketing.

The solution video shows how various structures will work in this case as long as the drivers of the decision tree are logical. When I was doing this case, I first estimated the market size for users in South Korea who use cell phones to access social media.

Once I had a number, I used 30% of it as the market share that Facebook was trying to capture and I used disguised 4 Ps, changing the wording to fit this case, to see how Facebook could capture 2.1M users. 2.1M users is from the 30% of my estimated mobile phone users who access social media websites via mobile phones.

However, after watching the solution video I no longer think my proposed structure was optimal. I actually knew about the better structure from the Firmsconsulting videos/podcasts but for some reason I was under impression that this is a dangerous framework to use as interviewer may consider this approach “too smart” and “showing off”.

Yet, this framework actually makes a lot of sense as the first level of a decision tree for market entry cases and I don’t see how you can go ahead with the case without firstly considering the questions that this framework guides you to consider.

Data case: Now that I have structure to follow I actually started to enjoy data cases. However, more practice is certainly required.

The graphs given in education sector multiple exhibits case are not very useful versus the objective of the case. However, one of the learning’s of this case is to be able to identify and clearly communicate which graphs are useful and why they are useful.

Summary

Score out of 10: 8

Communication 8

Technical 8

Confidence 8

Strengths: Good judgment (common sense) and good general knowledge.

Opportunities: Need to know structures for different elements of analysis better and use them consistently.

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