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The Firm: The Story Of McKinsey And Its Secret Influence On American Business (2013)

by Duff McDonald(Favorite Author)
3.57 of 5 Votes: 3
ISBN
1439190992 (ISBN13: 9781439190999)
languge
English
publisher
Simon & Schuster
review 1: Yep. Just confirmed what I already suspected. Major corporations are all using the same phrases that seem canned because they're All using this company. These people even consult government and military personnel. So I'm still questioning some of these CEO salaries when the first thing they do is hire this firm, just to justify eliminating jobs. Of course, it's their choice to run things as they want to. Just very interesting.
review 2: By Jeffrey GoldfarbUnderstanding McKinsey is no easy feat. The doyen of management consulting firms is at once ubiquitous and mysterious. Its advice is coveted yet often misguided. Dysfunction, typical of any organization, belies McKinsey’s well-cultivated prestige. “The Firm,” a new book by journalist Duff McDonald, goes
... morea long way to unraveling some of these complexities in a highly readable history of the consigliere to the world.Just how McKinsey managed over 80 years to gain access to so many executive suites and other corridors of power around the world is an impressive tale that starts, remarkably enough, in the corporate underbelly of accounting. James McKinsey transformed bookkeeping into budgeting and budgeting into strategy, laying the foundation for a new sort of practice that eventually would reshape industrial and government leadership.While it doesn’t always achieve the aim, the firm has at least crafted an image of being willing to speak hard truths to its clients. McDonald does the same with McKinsey. And though his brother runs smaller McKinsey rival Oliver Wyman – a fact buried, and strangely rationalized, in the acknowledgments on page 340 – McDonald’s research is nevertheless exhaustive.“The Firm” is sprinkled with anecdotes that support the idea of the organization’s vast sway. The role of White House chief of staff exists because McKinsey advised Dwight Eisenhower on how to reorganize the executive branch. One consultant was credited with persuading the Federal Reserve to tally piles of money by weight instead of counting bills. Another, Arch Patton, discovered in 1951 that worker wages had been increasing faster than those of management, thus initiating an era of runaway executive compensation that continues to this day.The firm even infiltrated the upper echelons of corporate Germany, where efficiency was already paramount and most executives wondered “why someone in authority would pay someone else to tell him what to do.” At one point, the firm’s German office under Herbert Henzler worked for 27 of the country’s top 30 companies. Further, McKinsey parlayed its work on deregulated interest rates with the U.S. Comptroller of the Currency into helping launch an era of bank consolidation in the 1980s. The firm’s diaspora, especially atop Fortune 500 companies, is also impressive.Nevertheless, McDonald’s claims about McKinsey’s “secret influence,” as expressed in the book’s subtitle, are perhaps overstated. The author sometimes covers a shortage of evidence with rhetoric, for example in blaming the consulting firm for mass job cuts: “While this is surely impossible to measure, there is a distinct possibility that McKinsey may be the single greatest legitimizer of mass layoffs than anyone, anywhere, in modern history.”“The Firm” at times concedes that McKinsey can only really dispense advice, not actually implement the changes it recommends, but other times McDonald forgets this. In reality, there are limits to the power of a firm that operates so heavily on a “wash, rinse, repeat” business model of advice. And while much is made in the book of the lavish fees of some $10 million that companies like Citigroup spend on McKinsey advice, they are rarely contextualized appropriately. The bank’s operating expenses run to at least $70 billion annually and it routinely solicits opinions from dozens of outside advisers.For similar reasons it shouldn’t be a complete surprise that McKinsey has a Teflon-like ability to avoid blame for the failings of its clients. McDonald places the firm at the scene of a great many corporate disasters. They include Enron, Kmart and Scandinavian Airlines Systems. McKinsey also can be linked to the merger of AOL and Time Warner, Wachovia’s acquisition of Golden West and Credit Suisse’s takeover of Donaldson, Lufkin & Jenrette. The firm once told JPMorgan to get out of the lending business and AT&T that cellphones was a market going nowhere fast.“The Firm” also stretches to connect McKinsey to the financial crisis. McDonald posits that because every major bank had hired the consultant in the mid-1990s, they were all focused on global strategy at the same time. “While the firm’s fingerprints were once again nowhere to be found in the detritus of the real estate collapse, its consultants had been advisers to many of the companies that both inflated the bubble and collapsed as a result of it,” he writes.McKinsey’s ability to preserve its reputation – and to continue to grow – is perhaps what is most impressive of all. Even the conviction of Rajat Gupta, one of only 11 McKinsey leaders, on insider trading charges, hasn’t derailed the firm. And as McDonald notes, the one thing McKinsey has had to do since its inception is justify its own existence. It remains a master of the dark art of selling itself, if little else.The firm slowly but surely has moved away from many of the guiding principles established by its most influential managing director, Marvin Bower, who followed McKinsey himself. It invited conflicts by accepting equity stakes in its clients in lieu of cash payments and by linking pay to client performance. And instead of being discriminating about who it would work for, McKinsey started accepting assignments for almost anyone willing to pay.The message from McDonald seems to be that a sort of existential threat hangs over McKinsey, evidenced in part by the partners and former employees who regret the changes and having neglected to prevent them. For now, it is a challenge left to the worldly Canadian Dominic Barton to sort out. While greed certainly can lead to the undoing of some institutions, McKinsey is one that has reinvented itself enough times to suggest it will find a fresh way to keep itself healthily in business. less
Reviews (see all)
NYDiamond
A must read for all new joiners and others
matt
the history of mgt consulting explained
KickerTJF
Got to P205
Katie
599
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