To outsiders, McKinsey & Co. is a simply a consulting firm, but for many of the biggest hitters in corporate America, it is an indispensable tool: where executives turn for advice and where boards go when they need a CEO.
In the new book "The Firm," Duff McDonald takes a rare look inside the secretive world of McKinsey.
McKinsey's main function is as a management consultant, helping with corner office decisions and corporate strategy. The firm generates more than $7 billion in revenue annually, which is far smaller than many of the companies it advises. It doesn't come in and execute, it doesn't manage and it takes no credit—but it also takes no blame.
For its employees, McKinsey offers a ticket to almost anywhere in the world and a launching pad for high-profile corporate jobs Recently, a tally of Fortune 500 CEOs found that more than 70 were McKinsey alumni.
There are approximately 27,000 McKinsey alums spanning 120 nations in virtually every business sector. In recent years, 150 McKinsey alums had a top spot at companies with more than $1 billion in annual sales. According to USA Today, the odds of a McKinsey consultant becoming a CEO were the best the world, at 1 in 690.
The McKinsey advantage, according to McDonald, varies. Throughout the book, he describes the firm in numerous ways:
- "Expensive, intelligent sounding board for the executives"
- "Industrial espionage couched in the language of best practices"
- "Managerial experts"
- "Cost cutters"
- "Catalyst for corporate change"
- "Corporate mandarin elite"
- "Powerful talisman"
- "Corporate shrink for the insecure CEO"
But who does McKinsey serve in the digital age? As it turns out, the Googles and Apples of the world have shown little interest in engaging the firm—perhaps because they are more focused on winning in the short term, which has never been McKinsey's strength. The firm's signature clients remain old school: American Express, AT&T, Citibank and General Motors, to name a few.
McKinsey also dominated the MBA era of the late 1980s and early 1990s, but today, elite graduates tend to flock to smaller, more nimble companies. Facebook's Sheryl Sandberg and Google's Patrick Pichette are among the most highflying McKinsey alums in Silicon Valley.