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The Speech that Defined McKinsey

Annual McKinsey & Company Partners’ Conference

Tarrytown, New York October 16 and 17,1964

MR.MARVIN BOWER: Since our last conference, since we last met together in this conference, we have lost by death two directors. Howard Smith, in the sunset of his career, died of cancer and Bob Hall, in the high noon of his career, was snatched out of the sky. These two men have made great contributions to the good things that we have here, and I’d like to pay tribute to them by simply saying that; but more specifically, to illustrate in some of the remarks that I make the contributions that they made so that they would be more real than just words. In these discussions that I’ve carried on over the years I’ve tried to pull together these meetings in terms of a single theme, and that theme is the role of the firm and the individual and what the firm’s program means to the individual. As I did that a good many years ago, I used to prepare very thoroughly for it: I would write it out and get it thoroughly in mind, and then I found that as the session went on everybody was saying everything I had planned to say. So I got wise to that and I don’t prepare any longer. What I do is to make some notes—if I showed you the pack of notes that I’ve got you’d surely be staggered—and I try to tie the things that have been said into the total theme of the meaning of the firm to the individual, and I found that that works better.

Of course some of the figures don’t jibe and a few things of that kind, a mechanical problem, but that’s what I propose to do today, to try to pull this conference together in that fashion and on that theme. The first Earl of Beaconsfield, better known as Benjamin Disraeli, one of the great Prime Ministers of Great Britain, said the secret of success is constancy to purpose; and this firm has had that as a guiding light for a long time, constancy to purpose, and my theme then is concerned with how each of the individuals making up our firm can have greater constancy to the purposes of the firm.

The first Earl of Beaconsfield, better known as Benjamin Disraeli, one of the great Prime Ministers of Great Britain, said the secret of success is constancy to purpose; and this firm has had that as a guiding light for a long time, constancy to purpose, and my theme then is concerned with how each of the individuals making up our firm can have greater constancy to the purposes of the firm.

The purposes of the firm have been discussed here, of course. It’s been quite evident during the last couple of days that we have two purposes: The first one and primary one, of course, is to solve the problems of organizations and to do that in a superior fashion. You notice I don’t say corporations and I don’t say businesses. Our purposes are broader than that, and just because we have a predominance of corporate clientele doesn’t mean that that is our only purpose. John Gallagher pointed out our weaknesses in many respects, and therefore our purpose is not to serve business alone, it’s to serve government and other kinds of organizations. The second purpose is to grow in size, stature and profitableness. We think we have to grow in all three respects in order to attract and hold the kind of people that are necessary to achieve our first purpose. So these are two interrelated objectives or purposes, and what we are concerned with is constancy to those purposes in the words of Disraeli. Our first speaker talked about the multi-national corporation, and I want to start out with some brief review of the multi-national firm that we are—with six offices in the United States, one in the United Kingdom that you’ve heard about from the leader of that office, Geneva, Amsterdam, Paris and most recently Düsseldorf. Someone asked me how soon we are going to open the office in Düsseldorf. I said as quickly as they can get the facilities ready; they have a lease and we sent a cable that we’ve taken up our option, so it’s imminent. Paris is being constructed and the people are about ready to move in.

Amsterdam is a jewel of an office—I was in both of those places this summer—and Geneva’s being cut back, of course, because the people that were gathered in Geneva have been moved to these other offices and that was, as the old saying goes, according to plan. Now our multi-national firm has one very remarkable characteristic and that is that it is one firm. It’s not only one firm in terms of purposes and attitudes and philosophy; its one firm in terms of legal entity, and this is quite a surprise to legal and tax experts. They wonder how we did it. Well, we did it because Larry and our lawyers and tax experts in these various countries made it possible, but it has a significance to it: As long as we can, we would like to have a single entity. It may be necessary sometime, as we go into other countries, to have subsidiaries. We hope, however, the subsidiaries will not keep us from being one multi-national firm. We will try to disregard the corporate entity, to refer to the legal language. We don’t have to do that yet and we are pleased as a symbol. But more important than the legal setup is the fact that we are one firm in attitude, and I believe this is a very remarkable development and a great element of strength. If you think back during the course of the last couple of days, I don’t believe you will have heard much talk about the profits of our office versus the profits of your office; and what are you doing to us that is hurting our office. And this is an element of great strength in a multi-national firm, and it’s something that we want to maintain and that we have to work at. I believe we can take great credit on ourselves for having achieved a singleness of purpose and a unity of the firm. That hasn’t come about just by happenstance. A lot of people have worked at it, and Alex Smith was one of the big workers at that. Alex was the manager of the New York office which began shucking off its people to these other offices, and Alex didn’t resist it because he could see the value of this in a multi-national firm. As the manager of the office he wasn’t worried about the profits of the New York office, and this had a great effect throughout this firm and it’s a monument to Alex Smith that it happened. Now, who are we that are trying to carry out these two basic purposes? Here’s where my figures differ—my figures are as recent as last night (laughter) and maybe Bill Watts was the last man aboard, but there are a couple of contenders for that role.

My figures tell me that we have a consulting staff of 250 which is up 24 net as of this time; that we have 50 full-time administrators; 263 operations staff—for a total firm personnel of 538. Now those people are scattered all around this world and, more than that, they are multi-national personnel. I only have the nationalities of the consulting staff, but it runs like this: We have 23 Britons,4 Swiss,2 French,3 Australians, 2 Italians, 1 German, 1 Swede, 3 Dutch, 1 New Zealander, 1 Canadian and 1 Yugoslav who’s about to become an American. That makes 42 other nationalities, and the balance of the 250 are Americans. So you can see that the proportion is changing rapidly and, as Hugh brought out, it’s likely to change with continuing rapidity. What else can we say about ourselves in terms of the people that are trying to achieve those objectives? I’ve got some more data hereabout our educational background. Education isn’t important only because of the qualities of mind that it builds in a person; it’s an evidence of drive and initiative and ambition and determination and a lot of other things to get all the degrees that this group has gathered and, while I don’t have them for the administrative staff and the operations staff, they’ve got a lot of degrees too. At the university and college level we have 247 degrees — 14 PhDs, 9 LLBs, 15 MAs of one kind or another; Masters of Science 23; MBAs from various schools,148 (laughter) — I’ll give you the breakdown: from Columbia ,2 ;from Wharton ,9 ;from Stanford ,10 ;from Harvard ,99 ;and from others ,28.Of those 99, 39 of them came directly from Harvard Business School and I think about the same proportion — if you can make a statistic out of 2 or 10 or 9—it’s about the same, maybe 100 percent for Wharton but I don’t think so. I don’t have that compiled. Anyway, the people trying to achieve those two objectives have got 461 degrees and that says more than the degrees themselves. In the achievement of these two objectives, who are we serving currently?

Again, I give you the figures as of October 8 in this case. On October 8 we had 147 clients. We’ve probably got more than that now because this doesn’t include Coca-Cola, but we haven’t quite started the Coca-Cola study and you can probably think of other ones that are about to start. I’m going to talk only about the clients that we were serving on the 8th of October. I’m not going to go back and talk about the clients we used to serve or the clients we might serve. This is a brief analysis of the clients we are serving in the achievement of those two objectives. Our largest, most important and perhaps most difficult assignment is for the Air Force Systems Command. It’s large because it’s a large activity, they have a lot of people on it; it’s important because it has to do with the superior Free World and the solvency of the United States government. (Laughter) If we don’t keep those missiles in place ready to shoot when the other fellows shoot theirs—and now the Chinese have got one to shoot—then we’re in real trouble. And if we don’t get those Air Force fellows buying them cheaper, it’s going to break us. So between those two things—remember Khrushchev said he was going to bury us economically and now they’re burying Khrushchev—but seriously we do have to control the cost at the same time that we are keeping the missiles in place, and that is a great project in which we have an important part. Our most unusual study is for the International Labor Organization, an organization that includes not only the countries of the Free World but the countries of the Communist World, and we have made an organization study there and it’s going on and being implemented. It’s a most unusual study and a very prestigious one.

Within the corporate world, we have a number of clients and I’ve classified them by industry, just to touch on them. Many of them have been already mentioned, but I think it is significant to see for whom we are trying to achieve these objectives. In the oil industry, Texaco, Socony, Shell Mex B.P., Standard of Indiana, Union Tidewater and several others too numerous to mention; in chemicals, Union Carbide, FMC, Celanese, Geigy, Monsanto, Dynamit Nobel and several others; in food, General Foods, Lever and Unilever which are unrelated—that is, one came in one way and the other came in another, and Heinz; in steel, Inland, Wheeling, English, and Stuart & Lloyd; in paper, International, Union Bag, Scott, Goldwater and others; in airlines, American, KLM; in railroads, C&O, B&O, Southern, Reading, Southern Pacific, and the Boston & Maine; in the insurance field, Metropolitan, New York Life, Life Insurance of Virginia, Equitable of Iowa, Allstate, Minnesota, British Insurance Association and several others; in banking, MorganGuaranty, First National City, Commerce Union of Nashville, North- west Bank Corporation, Seattle First National and others. And then these other miscellaneous—listen to some of the miscellaneous companies: IBM (laughter), International Harvester, Massey Ferguson, Dunlop Brothers, Bally Shoe, Volkswagen, Caterpillar Tractor and Johnson& Johnson. That’s a pretty good group of people to be pursuing these two objectives with and we are trying to serve them well, of course. Now with all of our people and all of those clients scattered around the world, how do we maintain constancy of purpose? First, we have a philosophy and a set of beliefs and strategic concepts, and, second, we have a system of management geared to our philosophy. If the system of management doesn’t sometimes seem like a system, it’s only because it doesn’t look like it. It has been planned and we are trying to program it. Not long ago you all received—and all of you who have joined the firm recently, I hope have received—a memorandum called “The Strategy for Professional Growth.”This is a document that summarizes our concepts, our beliefs and our philosophy, and also gives some thought for the future. This is a document that was prepared under the leadership of the Executive Group; it was processed seven drafts by the Management Group, in all offices; many revisions were made; many contributions went into it from people in various parts of the world. Here in a few pages—let’s see, twenty pages—we have a statement of what it is we’re trying to do and what are the things that are holding us together in terms of this scattered group of people, serving this scattered group of clients on all of the problems that we are dealing with them. And so I commend this to you as a document of real importance, if we are going to hold this group of people into one firm and make it effective for the client and make it effective for ourselves and make it grow and prosper in size and stature and in profit.

So we start out with that as a set of beliefs, and I’d like to read you a few sentences here now from The McKinsey Foundation Book that Tom Watson of IBM prepared. These are lectures, as you know, delivered in the McKinsey Foundation Lectures at Columbia. He says: “I believe the real difference between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.” What does it do to help these people find common cause with each other? How does it keep them pointed in the right direction despite the many rivalries and differences that exist among them? And how can it sustain this com-mon cause and sense of direction through the many changes which take place from one generation to another? These problems are not unique to corporations; they exist in all large organizations, in political and religious institutions. Consider any great organization, one that has lasted over the years, and I think you will find it owes its resiliency not to its form of organization or administrative skill but to the power of what we call the beliefs and the appeal these beliefs have for its people. This, then, is my thesis: I firmly believe that any organization in order to survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions.

“I believe the real difference between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.”

Now we have a set of beliefs that’s been hammered out over the years and this set of beliefs is contained in this Strategy memorandum. I don’t want to go over that memorandum. What I would like to do is to look forward rather than even look at the present but, drawing on our Strategy memorandum, to thread some of the comments on Six Basic Requirements for Continued Growth in the firm, in size, in stature and profit. None of these things, that I call requirements, is not contained in the Strategy memorandum. I’m simply putting them in a little different order and trying to pull together some of the things that we have talked about in the last couple of days so that this might be in a more cohesive form that we can think about. When you’re trying to carry out strategy, concepts, philosophy and to meet requirements, there are only two ways to do it: One is to inspire that it be done; and the other is to require that it be done. We have over the years depended chiefly on inspiring. I don’t mean by inspiring exhortation. I mean leadership and dedication of people, and that comes mostly on the job. It doesn’t come very much in the office and it doesn’t come very much in gatherings .It comes on the job where we have an inspiration from people who are really dedicated to their work ,to do that work well, and this requires people to adhere to common beliefs and to have constancy of purpose.

Now the second thing is requiring. We have insisted that certain standards be met; we have insisted that some discipline be adhered to. This over the years has been a minimum, and so we have hoped that through inspiring rather than requiring people would first be come committed to the work of this firm and these objectives, and finally become dedicated. And we hope that by the time they have been promoted to the management group they are dedicated as well as committed. Having been dedicated, they are in a much better position to inspire rather than require. So now let’s take each of these six requirements and look ahead and see what some of the problems are of meeting them and what some of the problems are of inspiring and requiring that people meet these six requirements. First requirement is to bring beliefs and the ethical values essential for a professional practice and required to attract, hold, and make fully productive the outstanding men and women needed to conduct that practice. And here is a contribution that Alex Smith made in great measure. Alex joined this firm when the management consulting profession was not much of a profession, in fact, it was very new and it was kind of scattered and people wondered if this was an activity carried on by charlatans. Alex joined the firm many years ago and I’m sure that some of you are here, joined the firm, because of Alex’s scintillating personality and eminent quality; and I’m sure that some of you stayed because of his leadership and his requiring that you stay because of the inspiration that he gave. For those of you who didn’t know him that may sound a little sticky, but there was nothing about Alex that didn’t come through in a very solid fashion. Now the belief and ethical values is something that comes out of your own training and your family background, and it can only be brought out by other people. Alex did that. In the adherence to ethical value we have some requiring.

Over the years we’ve had very few problems of people meeting high standards because we have selected them carefully. But we have had to eliminate people rather quickly because they didn’t, and we even ushered one man right off the premises without giving him a chance to do anything more than pick up his belongings and get out. This is the other side of the equation; we haven’t had to use this very often. One of the attributes of adhering to high ethical values that is essential in maintaining constancy to purpose is the supportive attitudes that we have to have for each other. If this group doesn’t support the group and if the individuals don’t support the other individuals, we can fly apart because we’re scattered around, we’re serving all these clients, we have all these nationalities. Our common denominator must be to support the group and not to downgrade the other fellow and not to pick at him, not to make it more difficult, but to help him succeed in our common purpose. This is an aspect of ethical values. It always sounds a little bit sticky to talk about ethical values. We expect that in people. They’ve been trained by the family and the church and the school and the university to have high ethical values. It’s one of our strategic concepts, and I’d like to show you how practical this can be. We have in this room a network of people scattered from Australia on one hand and Germany on the other, and if we can have confidence in each other and in the quality of the work and the professional adherence to standards, think of the power that we have to offer to our clients— when the fellow here can make an arrangement for someone else to carry out there and know that he might make some mistakes of judgment, he might be technically unqualified; he might fall on his face for a variety of reasons, but he isn’t going to fall on his face because he tries to trim any corners or to depart from ethical values. This is an element of strength of the greatest value to our clients and of the greatest value to the firm, and it must be something to which we constantly adhere. I’ve made a study of the history of the professions: The doctor, the lawyer, and all of the other professions adhere to these professional standards for selfish reasons. This is a concept, and here’s how it works. Think of the value of the doctor who establishes a reputation that he is never going to operate unless it’s necessary, that he is never going to say come back and pay me another visit at another $10, $15, $25, $35 unless it’s necessary, and only he can make that decision. It’s a subjective decision. But think of the value to him when people recognize that he meets that kind of standard, and they can go to him in confidence and put themselves in his hands. This is the reason for professional standards. It is a selfish thing although it looks unselfish at the outset. And we adhere to it for selfish reasons, if you take away the surface and look at it. So therefore the maintenance of high ethical values in this group by each of the individuals can be looked at, if you will, in a very selfish way: that any of us who departs from the highest ethical values in the professional approach to our work is cutting at the heart of the thing that we stand for and, if you will, he’s cutting our stature, he’s slowing down our size and he’s cutting our profits, because the thing that will cause people to come to us is because, like the doctor, they can put themselves in our hands and know that we are going to treat them in their interest. And this is an asset of great value.

This is the reason for professional standards. It is a selfish thing although it looks unselfish at the outset.

This firm has worked hard to achieve that role, and it’s the responsibility of each of us as individuals to maintain that constancy of purpose. And here is a place where Alex made the greatest contribution. Now, our second requirement is high standards and willingness to pay the price for enforcing them. Especially important are: the professional approach, quality standards for client work, standards for caliber and performance of consultants, and professional standards for income development. We’ve heard a lot about that during the past two days. We’ve had some excellent discussions and presentations. The M&M boys on problem-solving process were especially good, and I only want to add one thing to the Morrison and McDonald presentation and it’s a phrase that I think Hugh gave me, or someone around the firm gave me. They said, “What are the characteristics of our problem-solving process? The way that we do it is that we swarm all over the problem.”And it’s not a bad thought. We have all kinds of approaches to it and we don’t accept the client’s statement of what the problem is. When we were doing the Dunlop study we didn’t accept the fact that they wanted to have an office layout problem to determine whether they needed more space or not. We swarmed all over that problem, and Roger and Al McDonald have told us how to do it. The professional approach is something that we’ve heard alot about, and I would like to give you a specific example of the value of the professional approach.

This is how we were retained by Dynamit Nobel—I hope I have the facts accurately: Dynamit Nobel is a big explosives manufacturer in Germany with a major chemical position; it’s part of a very important German group, one of maybe fifteen of the companies in Germany that would be the best to start with and they heard about our work at Imperial Chemicals Industries Ltd., ICI to those of us who know it. Whether they heard about it through discussion with the people there or whether they read about it in the chemical journals or the general press, I don’t know, but in any event they talked with the ICI executives and they told them that they thought that we were doing, had done good work and so they got in touch with us. John McDonald and Peter Hobbins went to see them, and the thing that they started talking about was the clerical cost reduction study. Here were two people very anxious to build a practice in Germany, offered an opportunity to take on a clerical cost reduction study ,a perfectly fine thing to do, but they said, “Are you sure that this is the right place to start?”And they offered to spend three days looking at the situation. And after having spent that three days they then said, “This is not the place to start” because they found that there were some organizational concepts in that company that would make it very difficult, or at least wasteful, to try to reduce the clerical costs when, by organizing it in a different fashion, you could cut out more costs and this would affect the clerical costs. So at the risk of losing the study they came back to them and said it ought to be approached in this way. Well, this met with the approval of the executives and then they appeared before the board. In appearing before the board they described the approach, they told them about the work that had been done during these three days, and they indicated that they were ready to sign a contract. Well, they had had some unfortunate experience with other consultants and they wanted to be very careful about sign-ing the contract and so our fellows said to them, “You don’t have to sign a contract with McKinsey & Company.”They were quite surprised about that. They were more surprised about the fee. (Laughter) And Peter, who of course is fluent in German, heard one of the directors turn to another on the side and he said, “I suppose there are fees that high but I didn’t know it before.”(Laughter) So they decided that they would put themselves in our hands, and therefore the professional approach had great value.

In the first place, they had a study that was much more interesting to us and much more important to them; we had it at a high fee; and we had it without a contract which was much to their liking and to ours, because if we are pursuing a professional approach and they lose confidence in us or we don’t think that they’re going to act on our recommendations, we’d like to be free to discontinue the work. Now the third requirement for success in the future, it seems to me, is the perceptive and conceptual thinking that can detect client opportunities and needs and can detect external and internal forces affecting the firm—you saw a diagram on these forces last night—and can capitalize on these factors through developing improved and new services and better firm management methods and program. That’s what a lot of this conference has been about, how to do all those things, and we have Warren Cannon to thank for the format of this. I believe that this conference has been very well conceived and every session that I was in was well prepared and well presented; so it has helped us in the development of new services and in the improvement of existing services. This firm has a set of concepts and beliefs that as Tom Watson say sought to be immutable, but if we get rigid and we feel that everything ought to remain the same, why then we’re going to be in trouble. So this requirement says that we must be perceptive to changes going on about us, we must be perceptive to things that are going on in the firm, and we must adjust our services to clients to meet the external factors and we must adjust the policies, procedures and programs in leadership, personnel and everything else to the things that are going on in the firm because we can’t serve our clients well unless we have people in the firm who are productive and the right people to do that job. And we have been sensitive to the external factors and you have heard some client names of the 147 we’re serving currently that couldn’t have been client names a while back. In the insurance field, you heard a number of names and the figures behind those names are big .This came about because we had leadership in Dick Neuschel and John Garrity to be sensitive to the first insurance study that we had quite by chance and to capitalize on that to apply one after another good pieces of work to the insurance field. Now in the railroad field we have the same thing happening.

In the first place, they had a study that was much more interesting to us and much more important to them; we had it at a high fee; and we had it without a contract which was much to their liking and to ours, because if we are pursuing a professional approach and they lose confidence in us or we don’t think that they’re going to act on our recommendations, we’d like to be free to discontinue the work.

We were sensitive to the opportunities for work in the railroad field, and Bob Hall had the sensitivity to see the opportunities in the railroad field and he immersed himself in several railroad studies—the Southern, the Reading, the B&O and C&O—and he was providing at the time his career was so abruptly terminated a high degree of leadership in the railroad field. This leadership which Phil Babb shared has been carried on by Phil Babb, but let me give you something that is quite interesting to me about Bob Hall. This is a memorandum that I received the day after Bob died. It must have been mailed from the airport from the date on it, and it showed his continuing interest in the railroad field. I’d like to read it to you—it’s just one small page. It’s in long hand, that’s why I think he wrote it at the airport. He says, “Marvin , The reaction to the Reading report has been increasingly favorable.” (The Reading report was done under Bob Hall’s direction and was one of the things that has advanced our railroad practice.) “To date the railroad has distributed about 100 copies and has asked us for an additional supply. We are also planning a mailing of our mass transportation commission report to specific railroads and public agencies. It has been well received already by the Commission members.”So here was a man probably sitting at the airport getting ready to go to another client, thinking about his leadership in a field of our practice, and he attached to it a little printed booklet here called “The Reading Commuter.”Apparently the Reading Railroad had digested for their riders the McKinsey study and Bob had underscored the various places —there must have been eight or ten of them—where the McKinsey report is referred to in this little handbook that I suppose they distribute to the commuters on the Reading Railroad because this study had to do with their commuting business.

This is one little tangible evidence of the kind of leadership that Bob Hall was providing on that front and on the front of the development of a phase of our practice. No one asked Bob to do it, no one told Bob to do it. He seized the opportunity and he was pursuing it vigorously at the time of his death. Our fourth requirement for success in the future is continuing attention to maintaining a working atmosphere in the firm that will attract, hold, and make fully productive the high talent men we need to conduct our practice. That sounds kind of wordy to keep repeating “to attract, hold and make fully productive,” but that’s what we have to do. We have to attract the highest caliber people, which I think you can recognize we’re doing. You can’t deny it individually. (Laughter) And I think one of the things we all get out of this conference is looking at ourselves collectively and then we begin to believe it. So we have attracted the highest caliber people. Our recruiters had a conference the other day, the day before this conference started, and talked about recruiting and if you think your job is hard just think of the fact that those poor fellows have to interview from 75 to 100 people, some of us do, in order to get one. So this business of attracting is pretty expensive business. Now, to hold those people and to make them productive we have to create an atmosphere that that kind of a man likes. You must remember that the fellow that is selected from the 75 to 100 against the standards we have is a fellow who can get a job any time that he wants to. We know that, you know it, everybody knows it; we might as well face it as a fact. Therefore, you are going to stay in this work, dedicated to these common causes only so long as you find it interesting, profitable, rewarding in a whole variety of ways; and we know you won’t do it if you’re living in an atmosphere that is not conducive to doing good work, if you have to watch the other fellow—if you have to think what is the politics of this situation and is someone under cutting me, is he downgrading me—and a whole range of other things that the high talent man does not like to have in the working atmosphere where he is trying to put out as much as this demanding work requires.

And so morale for a group of high caliber people is a very intangible thing. It has to be stimulating and it has to be wholesome, and this is something that we not only try to inspire but we also require. It’s one of the cohesive things, the glue that will hold us together, and we do have to watch it all of the time. And the cliché at the moment at least is, “Let’s show supportive attitudes toward each other,” the best way to create that kind of morale for this kind of person.

And so morale for a group of high caliber people is a very intangible thing. It has to be stimulating and it has to be wholesome, and this is something that we not only try to inspire but we also require.

Our fifth requirement is a progressive, innovating, forward-looking point of view on moving ahead and taking risks in serving clients and managing the firm. Maybe some of you don’t think that we’re very good risk-takers, but in moving ahead as rapidly as we have in the international field the same time that we’ve opened an office in the United

States and putting people on the important problems for those important companies that we do, with as limited experience with us as we do, we think is risk-taking. It is risk-taking with our most important asset, our reputation and our standing with our clients. Innovation we’re a little slow at, I think. We didn’t get into the Operations Research field as soon as we should, but I think one of the characteristics of this group at least is when we do it, we do it; and those of you who had the stimulation of sitting in on our Operations Research presentations, I’m sure, feel that we are really in it—the one that was a description of what we have done for Johnson & Johnson and the one dealing with the application of Operations Research to top management. We had to go outside to get our leadership in this in Dave Hertz, and we’ve had that leadership, we’re profiting from it, and we have a whole group of fellows who are good at this. We didn’t do it as fast as we should have but it’s in and it is permeating everything we’re doing and it is stimulating a lot of thinking on a great many other fronts. I’m sure those of you who were in those presentations could just think about getting a dozen presidents together and giving them that Johnson & Johnson presentation, they would understand Operations Research. The only trouble with doing it is that we’d have so many requests for assistance that we don’t dare do it for a while. So, we have in this group some inertia. I suppose the inertia comes because we’re so analytical and so critical that we’re always finding the things that are wrong, finding the things that are difficult to do. So on the one hand we’re pretty good risk-takers in many ways, and we’re a little slow in other ways. I hope thetas we move ahead, we can be a little faster in innovating than we have been; and yet innovation in minor ways is going on all the time as people are finding new ways of doing things. These are going on, but I’m talking about innovation in the big things where I believe we could speed up if we would all open our minds a little bit more to the fact that this may be a good thing to do. Our sixth and last requirement for progress, it seems to me, is continuing attention to improving our internal management and leader-ship. At our present and future size everything we want to do requires effective management and capable leadership. Leadership in a professional firm is a peculiar sort of thing that has to be given by the man on the job, the engagement director, and it’s his responsibility to give it.

He must make the people not only work well and do a good job for the client; it’s part of his job to insure commitment and ultimately dedication to this profession and to this firm as a career. In the development of our management system, and having heard the description by Russ Aycoff of a system I couldn’t help think that maybe our system isn’t as bad as it sometimes is reported to be, because we in our management of this firm meet those requirements, I think, fairly well .But we do have some defects and we might as well face them and we ought to overcome them, and one of those is the role of what we call the specialist in our firm. That isn’t, perhaps, a good term. I had luncheon with Jim Fischer one time and I took down some notes of his that indicated to me that there is another approach to this and I’m going to try to work that out, because his concept was that this is experience in depth that runs clear across our practice, that that’s the kind of specialization that we need. We can’t be at this size; we can’t have the kinds of clients that those 147 represent, and we can’t solve the complex problems without the specialist; and if any of you were in those two sessions on OR you’re sure of that now. So here is some inertia. We’re going to do this, we are doing it, but we certainly have resistance to the concept that this firm has got to move ahead not just with generalists but with specialists and that we must not destroy our assets by having the specialist inspired to become a generalist, because he then can’t be experienced in depth and deal with these complex problems. This is something that if we have common cause, constancy of purpose, we ought to address ourselves to and the way to address ourselves to it is to be sure that we all recognize that value to every one of us in common cause in this firm in going ahead from here. And so we have the problem finally in meeting those six requirements to be sure that we are convinced of the worthwhileness of all of these requirements, the worthwhileness of what we’re doing. I don’t believe that if you stop to analyze the things that you are working on that you can question very much their worthwhileness if you would like to be a professional man working in the problem-solving of business, Government, and other kinds of organizations. You must satisfy your-self that the professional approach is valuable to the client and worth- while to the client and therefore something you want to participate in.

You must satisfy yourself that the addition of what you are doing to that client is valuable, not only valuable to the client because it produces profits but valuable to the economy because it makes things better for people. And Khrushchev was probably dumped because he couldn’t do that under their system. I talked with Dave Morse who’s Gil’s friend, the head of ILO, and Gil arranged for me to have luncheon with him and he had just comeback from behind the Iron Curtain two or three weeks ago, and he said, “I have talked with the people who belong to the ILO behind the Iron Curtain,” and he said, “They are in trouble. They admitted that.”And he had dinner with Khrushchev—I don’t suppose Khrushchev admitted it—but people very close to Khrushchev had told Dave Morse that they were in trouble. This was just a few days before the news came out during this conference that they had changed the command. So the work that we do is designed to make things better for people, and it’s designed to make the government that we’re serving better government for people. It seems to me that in making common cause we can first have commitment and later have dedication, and we have had examples here, very brief, but they were of two men who have left us who had dedication in the extreme—Alex, who made the contribution throughout his life of these very deep kinds; Bob Hall who went to Washington to add something to that office, who later took it over, and then provided the leadership for our railroad practice. It is that kind of contribution made by many men and women who are going to give us common cause in the achievement of these objectives. I want to conclude with a statement by a British economist—I asked two or three of the Britons how to pronounce his name; they weren’t sure and I’ve got two versions and I’m going to use one of those versions—the British economist Walter Badgett, who said, “Strong beliefs win strong men and make them stronger.”And my addition to that is that as our own men become stronger in their beliefs and deeper in their dedication, so will we achieve constancy of purpose in the achievement of our two objectives. (Applause)

CHAIRMAN: In just a few minutes I will adjourn this conference and we won’t be meeting again, of course, for another two years. Anything that I might add to what Marvin has just said would be anticlimactic and I therefore do not intend to say very much, but I don’t think it is inappropriate in closing this conference for me to attempt a tribute to the leadership of Marvin Bower himself.

Now some of you are here for your first annual conference hence-forth to be biennial. I myself am attending my fourteenth. Others are here on their nineteenth, twentieth and other anniversaries. Marvin Bower has just spoken to us—not to me, of course, but to this kind of a conference—for the twenty-seventh time. In the fourteen conferences that I have attended I have seen some good ones, some outstanding, some not so good, and some more or less unmemorable—let’s say indifferent—but one common feature in all of them, and I mean this without exception, has been the quality of the closing address always given by Marvin Bower. It has been a source of wonder to me, quite honestly, how any man could sustain the inspired addresses that he has given over twenty-seven years, and it seems to me that the answer or the explanation for it can be summed up in the one word leadership. (Applause)

MR.BOWER: I should have included this before but I certainly must now. Twenty-seven times here is not the total time that I have been with the firm, and obviously I’m dedicated further. One of the problems about any firm, though, that’s had someone at it as long as I have is the problem of getting rid of them, and I want everyone to know that I’m on record with the managing committee that I’m not only ready to take the first step of leaving the succession that I’ve taken but I’m ready to take all the steps just as rapidly as anyone tells me that they should be taken. This is important to me because it’s important to the firm, and I think that everybody ought to know that that is the case because one of the things that has hurt many firms and many businesses that you’ve seen is that some one person who had a hand in their development keeps his hand in too long, and it’s your responsibility to tell the managing committee when you’ve had enough.(Applause)

This is important to me because it’s important to the firm, and I think that everybody ought to know that that is the case because one of the things that has hurt many firms and many businesses that you’ve seen is that some one person who had a hand in their development keeps his hand in too long, and it’s your responsibility to tell the managing committee when you’ve had enough.

Source: Columbia University Leadership Research Anthology

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