Could You be a McKinsey Consultant?

One of the premier consulting organizations in the consulting world is McKinsey Associates. They charge premier rates for their consultants, but are they worth it? McKinsey is expensive, and the client would rather not be paying such rates, but the rate is thought justifiable when the reward promised by McKinsey is a 20x return.

Why even get in a McKinsey consultant? After all, I’m sure you have smart, pragmatic people within your own organization who should be able to come up with the necessary solutions?  Maybe, but probably not: McKinsey follow a problem solving process that is useful when there are only a few critical facts available, but solutions are still expected. Because they are expensive, there is an expectation that the engagement be limited in duration, so McKinsey have to gather and analyze information with speed. They use a method to divine what the problem actually is, and then attempt to zero in on the problem area. Once identified they understand the constituent parts of the problematic area, and then make informed conjecture to create a hypothesis that is backed by information. Crucial to this method is leveraging frameworks that most quickly pinpoint and channel attention, and discard extraneous information that doesn’t inform the solution.

Take for instance, the age-old issue of “Why are we not making money?” Suggestions will come thick and fast and discussion of those issues will eat week and months:

·       We need to add/decrease to the product line

·       We should expand/consolidate

·       We should increase/decrease the retail price

Within seconds, a McKinsey is already focused not on product, but instead on business fundamentals: revenue, cost, profit. Has revenue fallen? Have costs increased? Then once they understand if it is a revenue or cost issue that is impacting profit, they continue refinement. If revenue they might ask, “Has market share deceased?”, “Is the share the same, but market is shrinking?” If costs, “Have supplier costs increased?”, “Has materials or labor costs increased?” McKinsey have trained their staff to force insight into the fundamentals. They might, in the end, come up with the same conclusions as some in the workplace, but it will be from speedy analysis of data.

At my clients I usually see what we will charitably call “unproductive conversation”, where endless conjecture replaces concrete analysis and action. Such caution stems from the fear that implementing imperfect actions can generate issues, but action beats inaction almost all the time. And inaction is hugely expensive, so hiring a McKinsey-like consultant might be worth it.

And if you think you could be a McKinsey consultant, imagine you are in an interview and the interviewer has breezed past the usual questions, and then suddenly asks, “How much gas should an average gas station order every week?” If you seem perplexed, and say so, that is the end of the interview. If instead, you start saying, “Well, a typical gas station has two islands, and on each island is two stations, 2 pumps (back to back) up front and 2 at the rear, so 8 pumps”. If you then start making assumptions about how long a car takes to gas up, how many gallons on an average fill, peak and off-peak customer volume, do all the math to come up with a number, then you are likely McKinsey material. Maybe that 20x return is real after all.