TO: Huseyin Leblebici
FROM: Doo Young Kim, Meghna Rao, Liang Xu, Xueting Peng, Kevin Chatman
DATE: Jan. 28, 2015
SUBJECT: McKinsey and Company
1. What should be McKinsey’s path forward? Could the firm continue to grow successfully with its current strategy and organization?
McKinsey’s path forward should incorporate its previous strategy and organization in order to grow further globally. The company focuses on hiring the best professionals and works with them so that they can ultimately succeed in the company. Furthermore, McKinsey believes in charging its clients higher fees in order to build the firm’s reputation as an “economically stable firm” with “high-caliber consultants” (pg. 3). Continuing to focus on these two strategies will allow the company to further succeed globally since these strategies have worked very well for the company in the past. Also, the company should continue to spend time on formulating company goals and expectations and clearly expressing these expectations to its employees so that the organization works efficiently as a whole. We believe that it is important that the company reflects on these goals every few years in order to ensure that these goals align with the current economic situation.
2. What are some of the major challenges the firm is facing in 2013?
We find out three main challenges that this firm faces recently. First, as what the case mentioned, the geographic growth approach is one of the enduring elements in McKinsey’s strategy, and McKinsey began to use this strategy in the 1940s. Until 2013, the firm has expanded to 102 offices in the world. With the development of the Internet, many regional business may no longer depend on the firm office’s location; instead, many consulting works can be operated and discussed by using the Internet, and Internet become the main resource to gain and develop the business. Therefore, if the firm still keep focusing on the regional offices’ expansion but ignoring the internet consulting business expansion, this may become a main challenge for the company operation.
The second challenge comes from the way of the firm to develop and sustaining talent. During the recent years, more and more clients may require the consulting firm to deal with many professional issues in a specific industry, such as the chemistry, vehicle, or pharmacy industry. Therefore, all these detailed consulting works require consultants with an in-depth knowledge so as to provide a reliable work. However, based on the case description, McKinsey would like to recruit more law school graduates or MBA, and this recruitment method may become a challenge and restrict the business operation and lose the competitive advantage in the future.
The last challenge is about the company organization. McKinsey is a partnership organization, and there are several levels for employee to get promoted, from associates, engagement manager, associate principals, directors, and finally partners. Compared to the networked structure, this organization has become relatively obsolete is more inflexible and easily create the bureaucracy.
3. How is the firm governed and should there be any change in its governance structure?
McKinsey is governed as a private corporation with the Global Managing Director as the main person in charge. The firm is also governed by various committees such as the Shareholder’s Council, the Knowledge committee, and the director’s committee. Each of these committees are comprised of directors chosen by the Global Managing Director and they act to maintain and improve firm governance. In addition, the directors of these various committees are responsible for choosing the next Global Managing Director every three years in an electoral process overseen by three retired or ineligible directors.
The firm governance at McKinsey appears quite top heavy as directors seem to have almost all decision
