Top 3 Service Business Insights from ‘The Firm: The Story of McKinsey and Its Secret Influence on American Business’

Recently, I read a great book titled “The Firm: The Story of McKinsey and Its Secret Influence on American Business”. It was like reading a novel that tells the history of one of the biggest consulting firm in the world, McKinsey & Company, and also history of what we now called ‘Corporation’ from a unique point of view.

If you run a service business just like I do, I found that insights from this book are really great to be applied. There are many things to learn from a firm that has endure for decades, served the majority of Fortune 500 companies, and also become the ‘factory of CEOs’. These are top 3 insights for service business I pick from the book.

No 1 : Always Have Something Proprietary

“The firm did so much work for bankers in the 1930s that General Survey Outline (GSO), James McKinsey’s proprietary model for analyzing companies, was colloquially termed the Banker’s Survey”

To endure, a business need to have something really valuable for the market that isn’t easily replicable from the competition. Note the word ‘Always’. The business’ current ‘proprietary’ might not be relevant anymore on the future. In McKinsey case, the firm’s proprietary asset is evolving from GSO, to its top-notch talents, to its knowledge management system. Today, McKinsey positions itself as the repository of all business information and theory worth knowing.

“They could make more by maximizing consultant utilization, but instead associates sit there after a project and catalog everything they learned for the next generation”

No 2 : Network to the Highest Order

“James McKinsey’s connections fed the firm’s business. He claimed to have taken ‘every important banker in Chicago or New York to lunch,’ with the result that ‘nearly every one at one time or another has given me work’.”

The same principle help the firm expands to new locations, specially outside its home country, USA. The firm usually did Pro Bono work to acquire professional networks on new locations. On several locations where the potential client was resisting talking with foreign consultants, the firm hired local talents to open the door.

The most successful McKinsey consultants are networkers of the highest order. If you didn’t bring in clients, your argued your enduring contribution.

No 3 : Build a Cult & Grow Leaders

“You are encourage to believe that you are belong to a special club of elite people” — William Hague, a Former McKinsey Consultant

From the beginning, the firm’s founder, James O. McKinsey, attracted a cohort that wanted to achieve in life the same things he did : rising above an often humble upbringing to become rich and important men. His successor, Marvin Bower, was the man that level the firm up that for years the management consulting business was dominated by one firm, McKinsey & Co. It was so outstanding was it that it became known simply as “The Firm”.

“Marvin Bower instilled the firm’s values system, Ron Daniel perfected its personnel processes and institutionalized the place, and Fred Gluck was the architect of the firm’s knowledge culture”

Throughout the decades, the firm’s director position is filled with leaders that push McKinsey forward from its competitions.

“The real competition out there isn’t for clients, it’s for people,” Explained Daniel. “And we look to hire people who are: first, very smart; second, insecure, and thus driven by their insecurity; and third, competitive.”

McKinsey system to recruit talents, grow them, and retain its alumni network is one of its biggest competitive advantage. It is so great that Fortune magazine once ran a story called ‘CEO Superbowl’ with a premise that there is a CEO factory in the country; and it is McKinsey & Co.


Most of the insights above are derived from what the firm has done right in its lifetime. There are still important insights I got from the book, especially what the firm did wrong in the past decades. If you are eager to find out what those are, I suggest you to read the book by yourself. Cheers!