Free The Firm: The Story of McKinsey and Its Secret Influence on American Business by Duff McDonald

near certainty.
    If they are to be believed, they do continue to trust themselves. It’s the reason McKinsey partners spend such a ridiculous amount of time each year evaluating one another. And while there will certainly be more bad behavior by foolish people at McKinsey, it has never been aplace that attracted the truly greedy. People obsessed with wealth tend to go elsewhere: to investment banking, private equity, hedge funds, or venture capital.
    Trust issues aside, McKinsey’s greatest challenge is finding things to tell its clients that they don’t already know. The business world is overflowing with MBAs these days, and McKinsey-like advice can be easily bought at low, un-McKinsey-like rates. What’s more, McKinsey’s vaunted “transformational relationship” isn’t a priority for many clients embroiled in global economic turmoil; results are. Even the most trusting client can lose enthusiasm for his consultants if they’re not helping him solve his immediate problems. Many companies today don’t have the luxury of indulging in long-term strategizing. They need to win right now. That’s never been McKinsey’s strength.
    McKinsey was a great partner to the industrial era. This was especially true in the years after World War II—the era of Peter Drucker and the “invention” of management—when America was a place of giant firms that were quite literally out of control, conglomerates so large that their managers had trouble getting their arms around them. Marvin Bower and his peers gave them new tools and techniques for how to manage. The firm helped reshape the corporate sector as well as the government, often using McKinsey’s own internal designs as a template.
    After being sideswiped by more aggressive competition once or twice, the firm was also a great partner to the first postindustrial era. McKinsey was an invaluable partner to CEOs in industries facing rapid change—from finance to pharmaceuticals. Indeed, McKinsey seems to have played a part in every big trend of the past century, from deregulation and loosened capital markets to the spread of new technologies and globalization. 1 Whatever the corporate problem, McKinsey has often been able to offer a fix.
    But while the firm continues to grow, there’s an argument to bemade that its influence has not kept pace. Few of today’s winners got where they are today because McKinsey told them how to get there—consider Apple or Google. McKinsey’s signature winners are from the old school: American Express, AT&T, Citibank, General Motors, or Merrill Lynch. McKinsey didn’t work for Microsoft until the software company was already huge. McKinsey, in a way, is the Microsoft of its own industry—never out ahead but with the resources to play catch-up occasionally when others advance first.
    As McKinsey loses its vitality, it has become less alluring for young talent. The firm dominated the era of the MBA—the late 1980s and early 1990s—when all any business student wanted to do was get a job in consulting or banking. Nicholas Lemann wrote in the New Yorker in 1999 that McKinsey had effectively encapsulated the zeitgeist of the moment, much as the CIA had done in the 1950s, the Peace Corps in the 1960s, Ralph Nader in the 1970s, and First Boston in the 1980s. 2
    But that was thirteen years ago. Today, the crème de la crème flock to younger, more vibrant companies, in both entry-level and much higher positions. The brightest students tend to not want to work for large companies anymore, and McKinsey is a large company. In the 1970s every smart student received an offer from Arthur Andersen, then about ten thousand strong. The more adventurous went to McKinsey, which employed a paltry four hundred by comparison. Today Arthur Andersen is gone, and McKinsey has taken its place in the student imagination. It’s for the average Harvard Business School graduate, not the Baker scholars. And, as has always been the case, McKinsey consultants continue