The Firm: A book review by Bob Morris

Posted on: December 2nd, 2013 by bobmorris

The FirmThe Firm: The Story of McKinsey and Its Secret Influence on American Business
Duff McDonald
Simon & Schuster (2013)

A remarkably circumspect examination of “the best finishing school in business”

After briefly but sufficiently reviewing the historical background to the creation and subsequent development of McKinsey & Company, Duff McDonald correlates this frame-of-reference with the process by which “The Firm” has had an increasingly greater impact, not only on American business but indeed on almost every part of the world where business is conducted. However, there are several acknowledgments throughout McDonald’s narrative that it is difficult (if not impossible) to quantify the nature and extent of that impact, directly through its client relations and indirectly through its former partners who have relocated to corporate C-suites and through books and articles published by partners and former partners.

Here in Dallas near the downtown area, there is a Farmer’s Market at which some of the merchants offer slices of fresh fruit as samples of their wares. In that spirit, I now provide a few brief excerpts.

“[Alfred] Sloan and his ilk were perfect customers for McKinsey: Lacking the legitimization of actual ownership, professional managers felt great pressures to show they were using cutting-edge practices. And who better to bring those practices to their attention than consultants who were talking to everyone else?” (Pages 19-20)

“From the very beginning, James McKinsey went to great lengths to distinguish his firm from its less savory predecessors — he and his partners had multiple university degrees and strong connections to the establishment. And just as McKinsey flipped accounting on its head, he and his contemporaries likewise turned Taylorism on its head. Instead of focusing on line workers at the bottom of the organizational chart, they zeroed in on the growing white-collar bureaucracy and top managers.” (27)

“It’s an impossible number to quantify [the firm’s economic impact], given that McKinsey doesn’t actually make final decisions for its clients, but it may not be too far off the mark to suggest that McKinsey has been the impetus for more layoffs than any other entity in corporate history.” (96)

“Marvin Bower told his protégés that the secret to success was to act successful. He wasn’t just talking about McKinsey. He was talking about a specific kind of American confidence that allowed the country to conquer the economic globe to a degree that is only now being called into question, some fifty years later. The country has that confidence — or it used to — and McKinsey expressed that as totally and fully as any company the world has ever seen. So it made mistakes. It could fix them. And it did.” (191)

“McKinsey’s main asset continues to be the trust its clients have in the firm, an unquantifiable, intangible thing that is constantly being tested. The consultants’ secondary assets — their trust in each other and the internal culture of the place — have likewise come under stress. The more the organization grows, the harder it is to enforce a coherent set of values.” (325)

These are among the dozens of business subjects and issues of special interest and value to me, also listed to indicate the scope of McDonald’s coverage.

o Bastards Require No Diplomacy (Pages 25-38)
o Death of a Pioneer: James McKinsey (35-36)
o The Repeater: Marvin Bower (41-44)
o A Strategy Around Strategy (53-56)
o The McKinsey Process (57-59)
o Organization Man (64-67)
o London Ho! (73-80)
o The Emergence of Arrogance (90-95)
o Lost Moorings (99-103)
o Having Their Lunch Eaten (109-116)
o The Last of the Great Generalists (120-125)
o Hiring McKinsey Just to Make a Point (187-190)
o Enter the Dragon: China (227-230)
o Doing a 180 (273-275)
o Mercenaries, Not Missionaries (278-282)
o Victims of The Own Success (294-297)
o The Double-Edge Diaspora (303-307)

No single book can do full justice to the scope and complexity of a professional services firm as large and as complex as McKinsey & Company has become since founded by James McKinsey and then by Marvin Bower during a period of spectacular growth. Nor can a brief commentary such as mine do full justice to the scope and depth of coverage provided. What lies ahead for The Form? Here’s Duff McDonald’s response to that: “McKinsey’s greatest challenge going forward — the true test of its genius — is no longer finding solutions to its clients’ problems. The test is managing the complications that have resulted from its own stupendous success. One of the firm’s recently stated goals is helping to ‘[solve] the world’s great problems.’ But if it wants to achieve this, it’s going to have to continue solving its own.”

Those who share my high regard for this boom are urged to check out Marvin Bower’s The Will to Lead: Running a Business With a Network of Leaders, Elizabeth Haas Edersheim’s McKinsey’s Marvin Bower: Vision, Leadership, and the Creation of Management Consulting, and Walter Kiechel’s >The Lords of Strategy: The Secret Intellectual History of the New Corporate World.

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