McKinsey Junior — The Jump ‘Outside the Box’

Twitter: @SpirosMargaris

Duff McDonald, author of The Firm: The Story of McKinsey and Its Secret Influence on American Business, said to me,

“Few companies spend as much time analysing their own business model as thoroughly as McKinsey does. One can only assume that they’ve considered the concept of a ‘McKinsey Junior’ — a truly independent entity — even if they have yet to actually create one.”

As The Economist put it:

Mr McDonald points out that whereas McKinsey has led the “financialisation” of basic industries such as oil and gas, it has had little if any role in shaping the giants of the internet economy, such as Apple and Google. The new lords of business are engineers in hoodies, not MBAs in pinstripes.”

McKinsey Junior could give McKinsey & Company a chance to attract internet giants like Apple, Amazon, Google, Facebook and Yahoo as clients.

McKinsey Junior is not to be confused with McKinsey’s Business Technology Office (BTO).

The specific task of McKinsey’s BTO is to develop McKinsey’s competencies in technology and lever them for the firm’s clients.

BTO and McKinsey work on the same principles and the consulting work is fully integrated with the other McKinsey offices.

But what McKinsey Junior and McKinsey’s BTO have in common is that they both provide independent and objective advice with no conflicts of interest with regard to system manufacturers or IT service providers.

An interesting insight regarding the powerful advantage of independent and objective advice can be found in a quote from the New Yorker article, “The Revenge of the Nerds II: Nerds in the C.E.O.’s Office” by Duff McDonald from August 1, 2013.

“Because we’re not actual vendors of technology like most I.T. consultants, we’re sitting on the same side of the table as the C.I.O., not the opposite side,” said Frank Mattern, the head of McKinsey’s German office, in a July, 2011, interview. “That’s an enormously powerful and valuable position to be in.”

What distinguishes McKinsey Junior from McKinsey’s BTO work is McKinsey Junior’s true independence from the parent company, the firm philosophy, the corporate culture and the business model.

Although McKinsey Junior is a truly independent entity, the parent company McKinsey would participate in its success through its equity stake in McKinsey Junior.

McKinsey Junior’s advantages will be similar to those of a son of a successful father with the same name. In other words, Junior can take advantage of the status, wealth, and influence of its parents — McKinsey & Company — but can and will go its own way.

McKinsey Junior’s talent pool will be different in their mix of expertise, qualifications and professional backgrounds than what you might find — or will be hired, for that matter — at traditional consulting firms.

McKinsey Junior will take advantage of McKinsey know-how through McKinsey Solutions, which gives McKinsey Junior clients access to the collected data-knowledge of McKinsey but without the consulting team.

Two recent publications have shed some light on the issues McKinsey is facing. It is Duff McDonald’s book The Firm and the article published in the Harvard Business Review., “Consulting on the Cusp of Disruption,” by Clayton M. Christensen, Dina Wang, and Derek van Bever.

Both publications come to the conclusion that the best days of the consulting management industry may have passed.

That is exactly the moment when new previously unthinkable ideas should be thought and executed.

One of the great challenges McKinsey faces is that they have to find new ways for their advice to be relevant for the Internet economy.

Since the biggest consulting companies make their money with the problems of the big companies, one can see the problem McKinsey might have if it doesn’t have an essential role with the leading Internet companies.

One of the big issues that management consulting companies face is that the technology is moving much faster than management can adjust to it. A fact that is known to McKinsey. However, identifying the problem and solving it are two different things altogether.

McKinsey Junior is one such solution that should be further evaluated, since it resembles more closely an Internet company than a classic consulting company.

McKinsey has to reinvent itself in order to attract those Internet giants as clients.

What is so different with McKinsey Junior and what is the added value for McKinsey and its clients?

That is the million-dollar question, or better said, the billion-dollar question.

It is exactly because McKinsey Junior is so different from what McKinsey stands for or at least what people believe it stands for.

McKinsey Junior stands for young, daring, passionate, entrepreneurial, mixed professional backgrounds. Dare to think the unthinkable and execute it and make the impossible possible.

This makes McKinsey Junior more credible in the eyes of the clients, who would never have considered going to a traditional consulting firm for advice but would consider McKinsey Junior’s advice.

The young managers and founders of Internet companies can easier identify themselves with a consulting firm which has “Junior” in its company title than with an old established firm which is not known to be the best innovator, as indicated by McDonald in his book The Firm.

For those companies, McKinsey Junior would seem like a perfect fit.

McKinsey Junior will represent a new consulting business model and appeal to clients who drive business model innovation.

It is difficult to think ‘Outside the Box’ if you are in the box.

That is true for all companies, and it is also true for management consulting firms.

It is unlikely that McKinsey has not tried to adapt its business model. One successful example is the previously mentioned McKinsey Solutions, which works without the active involvement of a McKinsey team, an idea that originally caused quite some uproar within the McKinsey ranks. And the other very successful example is McKinsey’s BTO.

Why is it so difficult for consulting firms to reinvent themselves?

It might be that the success of a business model makes it more difficult to change what has worked so well so far. Or maybe it is the know-how which McKinsey has collected over all these years and has passed on so successfully to their young talent pool like a doctrine, that makes it harder to break out of the existing business model. Any such idea might feel like blasphemy, which associates who want so much what the McKinsey partners have, will likely try to avoid committing.

Some solutions just cannot be found from within an organisation.

The greatest strength is also the greatest weakness.

Even when a company is on the top of its game, it should dare to change how it plays that game going forward.

One has to look no further than Tiger Woods, the world’s No 1 golfer. He committed twice to an overhaul of his swing and both times after a historic feat. First after winning the Masters 1997 by 12 strokes and after winning seven of eleven majors in a run that ended 2002. Woods had never regretted his decision.

As Woods explained it “People thought it was asinine for me to change my swing after I won the Masters by 12 shots, like, ‘Why would you want to change that?’ “ he said. “Well, I thought I could become better. I’ve always taken risks trying to become a better golfer, and that’s one of the things that has gotten me this far.”

Obviously one thing that McKinsey has is plenty of talent. But maybe it is a talent pool which is more attracted to McKinsey’s world than to Apple’s, Amazon’s or Google’s world.

Therefore, one can only assume that if you do not fit in the traditional McKinsey world, it might be implied that candidates should not apply. What a shame.

You might find some McKinsey Junior talent also within other consulting firms, but it is not unlike cooking, where a single recipe does not necessarily produce the same desired result when prepared by different cooks.

Some key qualifications one needs to work for McKinsey Junior are exceptional technology or science talent, passion, out of the box thinking, a doer mentality, determination, entrepreneurial, and a strong customer focus.

A legitimate question would be why should someone want to work for McKinsey Junior, if the same talent is very much in demand at the same technology companies McKinsey Junior wants to attract as clients?

The answer might lie in the fact that there are enough people out there, who would prefer not to advise or work for one giant technology company but rather for many. It would make their work so much more interesting.

What should not be underestimated is the attractiveness of a high-energy work environment, working together with the smartest people and the non-traditional corporate lifestyle for top talent to join McKinsey Junior.

Besides, the McKinsey Junior employee can always decide to take up later an offer from one of the technology companies, which would not hurt McKinsey Junior or McKinsey but make it stronger. It is very well-known that McKinsey alumni hire their old firm when they need help, so one can assume the same for McKinsey Junior alumni.

McKinsey Junior is a company that might be not very different from what one would expect to find in Silicon Valley.

It was Marvin Bower (1903–2003), who is considered the father of modern management consulting who shaped McKinsey with his personal and business values. Bower had also defined the McKinsey dress code: dark suits, hats, and garters.

It took Bower another three years after John F. Kennedy did not wear a hat at his inauguration in 1961, to come to the office without a hat and, therefore, change his defined McKinsey dress code.

One can only guess what Bower would have thought of the McKinsey Junior casual dress code.

Bower’s original McKinsey dress code was supposed to build confidence and an identity with its clients. The new casual dress code of McKinsey Junior does exactly that, it builds confidence and a new identity with the Internet companies it wants so much to win over.

McKinsey Junior Advantages

1) Internet and technology companies will be attracted to the unique pool of talent.

2) Newly-acquired clients will also be the clients of the future.

3) Top talent that does not want to work in a traditional corporate environment will be attracted.

4) The McKinsey reputation will be strengthened.

5) McKinsey will be able to serve an even broader spectrum of client needs, and this is more credible.

6) The McKinsey Junior halo effect will have a positive impact on McKinsey’s top and bottom-line growth.

One can say many bad or good things about McKinsey, but it is clear that they will stay relevant in the consulting world for the big companies for years to come, but maybe not for all big companies and maybe not for the giants of the Internet economy.

McKinsey Junior is a small step for the firm, but maybe a huge step for McKinsey’s future.

The biggest risk is not taking any risk.

— Mark Zuckerberg (1984), founder, Chairman & CEO of Facebook Inc.