...gni THE MCKINSEY WAY This page intentionally left blank. THE MCKINSEY WAY Using the Techniques of the World’s Top Strategic Consultants to Help You and Your Business ETHAN M. RASIEL M C G R AW- H I L L NEW YORK CARACAS SAN FRANCISCO LISBON WA S H I N G T O N , D . C . MADRID AUCKLAND BOGOTÁ MILAN LONDON NEW DELHI TOKYO MEXICO CITY SINGAPORE MONTREAL SAN JUAN SYDNEY TORONTO McGraw-Hill abc Copyright © 1999 by Ethan M. Rasiel. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-136883-3 The material in this eBook also appears in the print version of this title: 0-07-053448-9. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill...
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...line on changes well in advance of the meeting. * PREWIRE EVERYTHING To ensure no dispute during the meeting, consultants should let all the relevant players in the client organization know what they found in private before they hold a presentation or progress review. 2. DISPLAYING DATA WITH CHARTS * Keep it simple — one message per chart Following principle of simplicity, the more complex chart is less effective. Chart is used to convey the primary information. A chart should include a good lead which can express the key point of the chart in one simple sentence and a source attribution which would help people review the data at future time. * Use a waterfall chart to show the flow The waterfall chart is an outstanding way to illustrate quantitative flows. Through mixing the negative and positive item, it can depict vividly subtotal of cash flow and net income. 3. MANAGING INTERNAL COMMUNICATIONS * Keep the information flowing Information flowing can help your teammates understand how their work is contributing to the final goal, how their efforts are worthwhile. In addition, good information flow can help you spot emerging problems (or opportunities) faster because people in different areas will acquire some useful information which you don’t realize. There are two basic methods of internal communication: the message, such as voice mail, e-mail, or memo, and the meeting. Team meetings give a chance to exchange information in all directions and...
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...THE MCKINSEY WAY This page intentionally left blank. THE MCKINSEY WAY Using the Techniques of the World’s Top Strategic Consultants to Help You and Your Business ETHAN M. RASIEL M C G R AW- H I L L NEW YORK CARACAS SAN FRANCISCO LISBON WA S H I N G T O N , D . C . MADRID AUCKLAND BOGOTÁ MILAN LONDON NEW DELHI TOKYO MEXICO CITY SINGAPORE MONTREAL SAN JUAN SYDNEY TORONTO McGraw-Hill abc Copyright © 1999 by Ethan M. Rasiel. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-136883-3 The material in this eBook also appears in the print version of this title: 0-07-053448-9. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com...
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...Company’s background: McKinsey & Company is a privately owned management consulting firm that focuses on solving issues of concern to senior management in large corporations and organizations. Known among its employees simply as "The Firm" McKinsey & Company was founded in Chicago in 1926 by James O. ("Mac") McKinsey. McKinsey was a professor at the University of Chicago who pioneered budgeting as a management tool. Marshall Field's became a client in 1935, and soon convinced James McKinsey to leave the firm and become its CEO; however, he died unexpectedly in 1937. Today McKinsey has over 7,500 consultants in 90 offices across 51 countries. They help solve strategic, organizational, operational and technological problems, for some of the world's largest organizations. Clients include three of the world's five largest companies, two-thirds of the Fortune 1000, governments and other non-profit institutions. McKinsey also performs pro bono engagements for a number of charitable organizations and government agencies worldwide. 'Forbes' estimated the firm's 2005 revenues at $3.8 billion in its list of largest private companies. Company Intent To be the global leader in consulting industry, provide expertise consulting service to the worldwide clients. Company Mission To help the clients make positive, lasting, and substantial improvements in their performance and to build a great firm that is able to attract, develop, excite, and retain exceptional people. Key...
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...already knows their names. The Manhattan office that houses McKinsey & Company does not trumpet the fact in its lobby. At Bain & Company’s recent partner meeting at a Maryland hotel, signs and name-tags carried a discreet logo, but no mention of Bain. The Boston Consulting Group (BCG), which announced growing revenues in a quiet press release in April, counts as the braggart of the bunch. [pic] Consultants have a lot to smile about (see table). The leading three strategy consultancies have seen years of double-digit growth despite global economic gloom. In 2011, the last year for which Kennedy Information, a consulting-research group, has comparable revenue numbers, Bain grew by 17.3%, BCG by 14.5% and McKinsey by 12.4%. All three are opening new offices. Big trends that befuddle clients mean big money for clever consultants. Barack Obama’s gazillion-page health reform has boosted health-care consulting; firms would rather pay up than read the blasted thing. The Dodd-Frank financial reform has done the same for financial-sector work. Energy and technology are hot, too. Companies are reluctant to talk about their use of consultants, and consultancies are relentlessly tight-lipped. Bain is said to use code-names for clients even in internal discussions. Such secrecy makes this a hard industry to analyse. It also lets stereotypes flourish. McKinseyites are said to be “vainies” (who come and lecture clients on the McKinsey way). BCG people are “brainies” (who spout academic theory)...
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...1 McKinsey Global Survey Results McKinsey Global Survey Results: Assessing innovation metrics Assessing innovation metrics A recent McKinsey Global Survey shows that companies are satisfied, overall, with their use of metrics to assess innovation portfolios—though many findings suggest that they shouldn’t be. The companies that get the highest returns from innovation do use metrics well; these organizations tend to assess innovation more comprehensively than the others. Even in the current economic turmoil, innovation remains a high strategic priority for most companies, and many see it as a strong contributor to growth. Yet many also struggle to measure the performance of their innovation portfolios. In a recent McKinsey Global Survey,1 we asked senior executives which types of innovations their companies pursue, which ones they measure and with what metrics, what goals they have in using metrics, and how satisfied they are with the metrics they choose. Companies reporting the highest contribution to growth from their innovation projects tend to be more interested in pursuing and measuring their innovations as a portfolio and therefore use metrics across the whole innovation process. In the end, they are more satisfied than others with the ability of such metrics to help their organizations do everything from aligning individual performance incentives to improving innovation performance to communicating with investors. 1 Conducted in October 2008, the survey had...
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...they use and what sort of experience are they looking for? These are the questions that McKinsey consultants Dahlström and Edelman (herein referred to as ‘McKinsey’) aim to shed light upon to help companies prepare themselves for this changing world. McKinsey believes that emerging technologies will mean that consumers demand a radically different, personalized experience from companies. Sensors in devices, the Internet of Things, the rise of Big Data and the ubiquity of smartphones will hasten the current shift in the balance between consumers and brands, adding a physical dimension to previously virtual transactions. And customers will want these experiences in real time and almost everywhere. The way customers judge brands is changing. Gone were the days that our brands are judged based on the quality of one’s marketing efforts, customer-service, or of the product/service individually. In this on-demand world, consumers will judge brands by their ability to deliver heightened experiences, which McKinsey defines as interactions that offer high levels of value and are radically customized and easy to access, across the entire customer decision journey. Relevant and unique, tailored, and seamless experience is the key. So what can companies do to adapt to these changes? Companies must change what and how they deliver by finding ways to engage customers, by assessing on every way a customer engages with the company, and finally, by creating awesome experiences for their...
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...The case study recounts McKinsey’s journey from 1926 to 1996, viewed through the lens of McKinsey’s growing understanding of the value of investing in the knowledge of the firm. McKinsey is famous for its emphasis on internal training and knowledge sharing. In fact, Rajat Gupta (the managing director of the firm at the time the case study was written) has been quoted as saying that “knowledge is the lifeblood of McKinsey.” This case study gives us a glimpse of how much consistent effort has been required on the part of members of the firm at all levels to create and sustain this reputation for knowledge investment and excellence. The case study portrays a firm that seems to be seeking constantly to improve the ways in which it helps its people grow professionally. It’s also clearly committed to maintaining its position as a thought leader. In reading the study, I was struck by several things: When McKinsey created the position of full-time director of training, the person appointed to the position was one of the firm’s most senior and productive partners. This sent a clear signal that the role was strategically important for the firm. Fred Gluck (another former managing director of the firm) strove to create a more stimulating intellectual environment within the firm. Accordingly, he “set out to convert his partners to his strongly held beliefs—that knowledge development had to be a core, not a peripheral firm activity; that it needed to be ongoing and institutionalized,...
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...McKinsey Global Institute July 2013 Game changers: Five opportunities for US growth and renewal The McKinsey Global Institute The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions. MGI research combines the disciplines of economics and management, employing the analytical tools of economics with the insights of business leaders. Our “micro-to-macro” methodology examines microeconomic industry trends to better understand the broad macroeconomic forces affecting business strategy and public policy. MGI’s in-depth reports have covered more than 20 countries and 30 industries. Current research focuses on six themes: productivity and growth; natural resources; labor markets; the evolution of global financial markets; the economic impact of technology and innovation; and urbanization. Recent reports have assessed job creation, resource productivity, cities of the future, the economic impact of the Internet, and the future of manufacturing. MGI is led by two McKinsey & Company directors: Richard Dobbs and James Manyika. Michael Chui, Susan Lund, and Jaana Remes serve as MGI principals. Project teams are led by the MGI principals and a group of senior fellows, and include consultants from...
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...Strategy Implementation: An Alternative Choice of 8S’S STRATEGY IMPLEMENTATION: AN ALTERNATIVE CHOICE OF 8S’S Omar Khalid Bhatti Research Scholar International Islamic University, Malaysia “Execution, not strategy, offers an exclusive competitive advantage.” (Lippitt, 2007) INTRODUCTION Strategic implementation is an elemental step in revolving a company's vision and objectives into reality. To implement strategies successfully is critical for not only public but also for private organizations. Without proper implementation, even the most superior and fine strategy would not make the grade as established. In last few decades, a number of articles have been published to understand the significance of strategy implementation. Presenting not only models for better execution of strategies, as well highlighting factors that affect effective strategy implementation. As Aaltonen and Ikävalko (2002) and Zagotta and Robinson (2002) advocate that real value of strategy can only be recognized and accepted through execution. Hrebiniak (2006) also supports the opinion that without effective implementation of strategies no business strategy can succeed. According to Kaplan and Norton (2008) managers have always found it difficult to balance their near-term operational concerns with long-term strategic precedence. They further maintain that such pressure comes with the job and is an intrinsic tension that managers cannot avoid, yet must be addressed on a continuous...
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...The McKinsey Quarterly: The Online Journal of McKinsey & Co. Page 1 of 5 Applying lean to application development and maintenance To make application development and maintenance more productive, IT managers are getting lean. Noah B. Kindler, Vasantha Krishnakanthan, and Ranjit Tinaikar Web exclusive, May 2007 Burdened by high costs for application development and maintenance (ADM),1 many businesses have offshored up to half of their application development to low-cost locations, renegotiated rates on outsourced projects, and tightened the governance of new projects. In spite of these efforts, the costs of developing and maintaining applications now account for about half of the average IT budget and continue to rise. Labor costs make up more than 80 percent of application development, so many organizations have already reduced head counts or labor expenses where possible. Now they must begin to focus on improving the productivity of their development and maintenance staffs. In the past companies tried many methodologies, with mixed results (see sidebar, “Software-development productivity: Traditional methods”). Companies that apply the time-tested principles of lean manufacturing, which hunt for and eliminate waste from the production process (Exhibit 1), are seeing a significant impact within a matter of months. Although lean principles were originally developed for manufacturing environments, they are increasingly (and successfully) being applied to service businesses...
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...Comparing the BCG Matrix with the McKinsey 7S model 1 Structure STRUCTURE ........................................................................................................................................ 2 INTRODUCTION ................................................................................................................................. 3 BOSTON CONSULTING GROUP (BCG) GROWTH MATRIX ................................................... 3 COMPOSITION AND FRAMEWORK ....................................................................................................... 3 APPLICATION ....................................................................................................................................... 3 EXAMPLE APPLICATION: JUWI ............................................................................................................ 3 WEAKNESSES AND STRENGTHS OF THE BCG MATRIX ....................................................................... 4 THE MCKINSEY 7S MODEL ............................................................................................................ 5 COMPOSITION AND FRAMEWORK ....................................................................................................... 5 APPLICATION ....................................................................................................................................... 7 EXAMPLE APPLICATION: JUWI ..............................................................
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...McKinsey on Chemicals Number 3, Winter 2011 4 22 40 Chemicals’ changing competitive landscape Innovation in chemicals: An interview with Dow Corning’s Stephanie Burns and Gregg Zank Improving pricing and sales execution in chemicals 10 32 46 A capital-markets perspective on chemical-industry performance Capturing the lean energy opportunity in chemical manufacturing Kick-starting organic growth McKinsey on Chemicals is written Editorial Board: Florian Budde, Copyright © 2011 McKinsey & Company. by consultants in McKinsey’s global Philip Eykerman, Bob Frei, All rights reserved. chemicals practice together David Hunter, Tomas Koch, John Warner This publication is not intended to be with other McKinsey colleagues. Editor: David Hunter used as the basis for trading in the shares of any company or for undertaking This publication offers readers insights into value-creating strategies Art Direction: Veronica Belsuzarri, any other complex or significant financial and how to translate these Shoili Kanungo transaction without consulting strategies into company performance. Design Direction: Veronica Belsuzarri appropriate professional advisers. Design and Layout: Shoili Kanungo To send comments, request Editorial Production: Elizabeth No part of this publication may be copies, or to request permission to Brown, Heather Byer, Nadia Davis, copied or redistributed...
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...apparently his credo. Moreover, Harmon is a wee bit headstrong, and driven by profits. His assertion in the company's competence is effervescent and I think many may be intimidated by his way of running things. Harmon creates a clear distinction between emotion and making business decisions. Explain what Marvin Bower meant by his statement. Bower believed "that consulting was not a business but a profession" and that the "basic philosophy was to make money the old fashion way—earning it ethically." I think that he meant that the best way to build a strong company was by values and to give back also. Just by looking at the company's website, they talk about the Soul of McKinsey and its derivative from Bower. This firm speaks on how it was founded on so many of Bower's good leadership (page 255: “the art of motivating employees to enhance their performance in order to achieve corporate goals ethically) ideas and that they give back to Bower by passing on this vision. Bower's idealistic recipe for success worked for McKinsey, producing more CEOs and effective leaders ultimately evolving the business culture in general. I think that Bower knew that there were other ways to earn extreme money, but he took the road less traveled by, and recognized that doing things the moral way was the best way. (Source:...
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...1 McKinsey Global Survey Results McKinsey Global Survey Results: How companies make good decisions How companies make good decisions Companies get a lot of advice about how to make good decisions. Which decision-making disciplines really make a difference? Do strong decision-making processes lead to good decisions? This McKinsey survey highlights several process steps that are strongly associated with good financial and operational outcomes. In the survey, we asked executives from around the world about a specific capital or human-resources decision their companies made in the course of normal business. We learned who was involved, what drove the decisions, how deep the analysis was, how unfettered the discussions, and how and where politics were involved. Respondents also described the financial and operational outcomes of the decisions.1 The results highlight the hard business benefits—such as increased profits and rapid implementation—of several decision-making disciplines. These disciplines include ensuring that people with the right skills and experience are included in decision making, making decisions based on transparent criteria and a robust fact base, and ensuring that the person who will be responsible for implementing a decision is involved in making that decision. Finally, although corporate politics sometimes seems to undermine strong decision making, some types of consensus-building and alliances apparently can help create good outcomes. 1 The survey...
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