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By Ethan M. Rasiel
Not only a book about McKinsey, but also an introduction to consulting in general. I don't see a reason why the wisdom contained in this book can't also be of a great use for managers, executives and researchers. For anyone considering consulting as a career, this might be the starting point. Great insights from an insider. Amazon Page for details My Rating: 7 / 10 Click Here to Read My Notes |
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Why are facts so important to the way McKinsey does business? There are two reasons. First, facts compensate for lack of gut instinct.
Second, facts bridge the credibility gap.
FEEL FREE TO BE MECE To structure your thinking when solving business problems (or anything, for that matter), you must be complete while avoiding confusion and overlap.
MECE (pronounced “me-see”) stands for “mutually exclusive, collectively exhaustive”
A good McKinsey issue list contains neither fewer than two nor more than five top-line issues (of course, three is best).
The initial hypothesis (IH), the third pillar of the McKinsey problem-solving process, is the most difficult to explain. To make the explanation easier for you (and me), I will break this section into three parts:
• Defining the initial hypothesis.
• Generating the initial hypothesis.
• Testing the initial hypothesis.
My experience at the Firm (and that of the many McKinsey alumni I interviewed for this book) taught me that IHs produced by teams are much stronger than those produced by individuals.
If you are the team leader, you should try to be the thought leader too. Try to take a different approach from whatever has just been said. Ask, “What if we change this? What if we push that? How about looking at it this way?” The process involves shooting a certain amount of bull.
THE PROBLEM IS NOT ALWAYS THE PROBLEM Sometimes a business problem will land on your desk and you will be told to solve it. Fair enough. But before you go rushing off in any particular direction, make sure you’re solving the right problem—it may not be the one you were given.
DON’T REINVENT THE WHEEL (PART 1) Most business problems resemble each other more than they differ. This means that with a small number of problem-solving techniques, you can answer a broad range of questions. These techniques may be somewhere in your organization, either written down or in the heads of your fellow employees. If not, use your experience to develop your own tool kit.
The technique involves identifying the client’s suppliers, customers, competitors, and possible substitute products. We then list all the changes occurring in each of the four categories. What impact—positive or negative—could these have on our client? Also, what internal changes are affecting the client and the client’s industry? Which of these factors could actually cause major changes to the way the client designs, manufactures, distributes, sells, and services its products?
… BUT EVERY CLIENT IS UNIQUE (NO COOKIE-CUTTER SOLUTIONS) That there are many similarities between business problems does not mean that similar problems have similar solutions. You have to validate your initial hypothesis (or your gut) with fact-based analysis. This will put you in a much better position to get your ideas accepted.
If all you have is a hammer, then every problem looks like a nail.
Fact-based analysis as practiced by McKinsey requires hard proof before any recommendations are made to clients.
A sharp manager with a lot of business experience can often reach the same conclusions as McKinsey—and in a much shorter time—by gut instinct, but most executives aren’t that good.
Because McKinsey focuses so intently on a problem, it often produces a more robust solution than even the best executive can.
How do you avoid that trap? The McKinsey way is to take an occasional step back from the continual grind of fact gathering and analysis and to ask yourself what you have learned over the past week (or two weeks, or whatever).
MAKE SURE YOUR SOLUTION FITS YOUR CLIENT The most brilliant solution, backed up by libraries of data and promising billions in extra profits, is useless if your client or business can’t implement it. Know your client. Know the organization’s strengths, weaknesses, and capabilities—what management can and cannot do. Tailor your solutions with these factors in mind.
Unfortunately, when academic ideals meet business realities, business realities usually win.
As a consultant, you bear the responsibility for knowing the limitations of your client; if your client is your own employer—or your own business—that responsibility is doubled. Knowing those limitations, you must make sure that any recommendations you make fit within them.
If you get your facts together and do your analyses, the solution will come to you.
Any McKinsey-ite will tell you that no business problem is immune to the power of fact-based analysis. Put together enough facts, combine them with some creative thinking, and you will come up with a solution.
SOME PROBLEMS YOU JUST CAN’T SOLVE … SOLVE THEM ANYWAY Eventually, you will run into a brick wall that is tougher than your head. Don’t keep pounding; it has no effect on the wall and does your head no good.
The biggest obstacle—the troll guarding the bridge—is politics. The first thing to understand about politics—and how it can help or hinder you from doing your job—is that businesses are full of real people.
When you look at the boxes on an organization chart, you are really looking at people. When you move those boxes around, you change someone’s life.
When members of a McKinsey team go into a client, they carry change with them. Some at the client will welcome the bringers of change as white knights riding to the rescue; others will see McKinsey as an invading army to either flee or drive out, depending on their power in the organization.
As one former McKinsey-ite put it, “It was a rare engagement when there wasn’t at least one sector of the client organization that did not want us there and did not want us to come up with a real answer.”
Therefore, when you face political opposition, it usually means that your solution has negative implications for someone in the organization. So politics is just people acting in their own interests.
80/20 The 80/20 rule is one of the great truths of management consulting and, by extension, of business. You will see it wherever you look: 80 percent of your sales will come from 20 percent of your sales force; 20 percent of a secretary’s job will take up 80 percent of her time; 20 percent of the population controls 80 percent of the wealth. It doesn’t always work (sometimes the bread falls butter-side up), but if you keep your eyes peeled for examples of 80/20 in your business, you will come up with ways to improve it.
When a client asks the question “How do I boost my profits?” the first thing McKinsey does is take a step back and ask the question “Where do your profits come from?” The answer to this is not always obvious, even to people who have been in their particular business for years.
“Don’t boil the ocean” means don’t try to analyze everything. Be selective; figure out the priorities of what you are doing. Know when you have done enough, then stop. Otherwise, you will spend a lot of time and effort for very little return, like boiling the ocean to get a handful of salt.
FIND THE KEY DRIVERS Many factors affect your business. Focus on the most important ones—the key drivers.
In any McKinsey team meeting where problem solving is on the agenda, someone will use the inelegant phrase “key drivers,” as in, “Vik, I think these are the key drivers of this issue.” In other words, there may be a 100 different factors affecting the sales of our widgets—weather, consumer confidence, raw material prices—but the three most important ones are X, Y, and Z. We’ll ignore the rest.
Syntactical foibles aside, “key drivers” is a very powerful concept. It saves you time. It saves you effort. It keeps you from boiling the ocean.
THE ELEVATOR TEST Know your solution (or your product or business) so thoroughly that you can explain it clearly and precisely to your client (or customer or investor) in 30 seconds. If you can do that, then you understand what you’re doing well enough to sell your solution.
PLUCK THE LOW-HANGING FRUIT Sometimes in the middle of the problem-solving process, opportunities arise to get an easy win, to make immediate improvements, even before the overall problem has been solved. Seize those opportunities! They create little victories for you and your team. They boost morale and give you added credibility by showing anybody who may be watching that you’re on the ball and mean business.
MAKE A CHART EVERY DAY During the problem-solving process, you learn something new every day. Put it down on paper. It will help you push your thinking. You may use it, or you may not, but once you have crystalized it on the page, you won’t forget it.
HIT SINGLES You can’t do everything, so don’t try. Just do what you’re supposed to do and get it right. It’s much better to get to first base consistently than to try to hit a home run—and strike out 9 times out of 10.
“Don’t try to knock the ball out of the park. Hit singles. Get your job done—don’t try to do the work of the whole team.”
It took several years of gaining perspective before I understood the wisdom of the CEO’s words. There are three reasons he was right: • It’s impossible to do everything yourself all the time. • If you manage it once, you raise unrealistic expectations from those around you. • Once you fail to meet expectations, it is very difficult to regain credibility.
LOOK AT THE BIG PICTURE Every now and then, take a mental step back from whatever you’re doing. Ask yourself some basic questions: How does what you’re doing solve the problem? How does it advance your thinking? Is it the most important thing you could be doing right now? If it’s not helping, why are you doing it?
“Perhaps the most valuable thing I learned during my time at the Firm was to think about the big picture—to take a step back, figure out what I’m trying to achieve, and then look at whatever I’m doing and ask myself, ‘Does this really matter?’”
JUST SAY, “I DON’T KNOW” The Firm pounds the concept of professional integrity into its associates from their first day on the job, and rightly so. One important aspect of professional integrity is honesty—with your clients, your team members, and yourself. Honesty includes recognizing when you haven’t got a clue. Admitting that is a lot less costly than bluffing.
DON’T ACCEPT “I HAVE NO IDEA” People always have an idea if you probe just a bit. Ask a few pointed questions—you’ll be amazed at what they know. Combine that with some educated guessing, and you can be well along the road to the solution.
If you ask people a question about their business and they tell you, “I have no idea,” don’t just walk away in defeat. “I have no idea” is a code; it really means, “I’m too busy to take the time to think about this,” or “I don’t think I’m smart enough to know about these things,” or worst of all “I’m too lazy to come up with anything useful.”
Just as you shouldn’t accept “I have no idea” from others, so you shouldn’t accept it from yourself, or expect others to accept it from you.
HOW TO SELL WITHOUT SELLING Business problems are like mice. They go unnoticed until they start nibbling your cheese. Just building a better mousetrap will not make the world beat a path to your door. People who don’t have mice won’t be interested—until the mice show up; then they need to know you have the mousetrap. This might sound like the musings of a Zen monk (or perhaps a management consultant from California). But sometimes the right way to sell your product or service is not to barge into your customer’s home with a bunch of free samples. Just be there, at the right time, and make sure the right people know who you are.
Although a partner’s compensation depends in large part on the amount of business he brings to the Firm, no one goes out to knock on doors. The Firm waits for the phone to ring.
And ring it does, not because McKinsey sells, but because McKinsey markets.
BE CAREFUL WHAT YOU PROMISE: STRUCTURING AN ENGAGEMENT When structuring your project, whether you are selling your services as a consultant or have been picked by your organization to solve an internal problem, don’t bite off more than you can chew. Set definite milestones that you can meet. That way, you’ll have targets you can achieve and your client will be satisfied.
If your boss steps into your office and says, “We have a little problem and we want you to head up a team to solve it,” then the lesson for you is a bit more complicated. Don’t blithely accept the assignment and say, “Sure, boss.” If you do, you could be setting yourself up for a fall.
GETTING THE MIX RIGHT You can’t just throw four random people at a problem and expect them to solve it. Think about what sorts of skills and personalities will work best for your project. Then choose your teammates carefully.
McKinsey-ites subscribe to one of two theories of team selection. The first theory states that intellectual horsepower is everything—find the smartest people for your team regardless of their experience or personal hygiene.
The second theory says that what really matters is specific experience and skills; intelligence is a given within the Firm—every McKinsey consultant is smart or he wouldn’t be there.
A smart EM always talks to potential team members before taking them on.
A LITTLE TEAM BONDING GOES A LONG WAY It’s a truism that a team will perform better and its members will have a better time if the team members get along well. As a team leader, you should make an effort to promote team bonding; just make sure it doesn’t become a chore.
So, when managing your team, be selective with team-bonding activities.
Try to get your team’s “significant others” involved; this will help them understand what their loved ones—your teammates—are doing, and it will help you understand your teammates.
Above all, respect your teammates’ time.
One former associate noted that, at McKinsey, the best team dinners were at lunch—they showed that the EM knew the associates had lives.
TAKE YOUR TEAM’S TEMPERATURE TO MAINTAIN MORALE Maintaining your team’s morale is an on-going responsibility. If you don’t do it, your team will not perform well. Make sure you know how your team feels.
Take your team’s temperature.
Steer a steady course.
Let your teammates know why they are doing what they’re doing.
No one on your team should ever feel, “I’ve just spent two weeks of my life for nothing.”
Treat your teammates with respect.
As an associate, I always felt a bit better knowing that if I was in the office at midnight, my EM was too.
Get to know your teammates as people.
When the going gets tough, take the Bill Clinton approach.
MAKE YOUR BOSS LOOK GOOD If you make your boss look good, your boss will make you look good. That’s the quid pro quo of hierarchy.
Making your boss look good means two things. Firstly, it means doing your job to the best of your ability. Clearly, if you produce high-quality work, it will make your boss’s job easier. Second, make sure your boss knows everything you know when she needs to know it.
AN AGGRESSIVE STRATEGY FOR MANAGING HIERARCHY If you have the stomach for it, assert your equality in the organization. Keep on doing it until someone tells you otherwise. Obviously, this is not a strategy for everyone.
DON’T REINVENT THE WHEEL (PART 2) Whatever the problem, chances are that someone, somewhere, has worked on something similar. Maybe that person is in your organization and can answer all your questions in the course of a phone call. Maybe other people in your field, in another division or another company, have seen the same problem already—find out who they are and get to know them. Do your research and ask questions; you will save yourself a lot of time and effort. Your time is valuable, so don’t waste it by reinventing the wheel!
Start with the annual report. If you want to get up to speed on a company as quickly as possible, the first place to turn is the annual report. It’s easy to obtain (many companies now post their annuals on the World Wide Web) and contains a great deal of information beyond the financial data.
Look for outliers. When you’ve collected a large amount of data on a particular aspect of your problem, look for outliers—things that are especially good or bad. Use a computer to get a quick picture.
Look for best practice. There’s an old saying that no matter how good you are at something, there’s always somebody better. This is as true in business as it is anywhere else. Find out what the best performers in the industry are doing and imitate them. Often, this is the quickest antidote to poor performance.
Sometimes you can find best practice within your company. Someone, some team, or some division is outperforming the rest of the company. Find out why. Figure out how to implement the top performer’s secrets throughout your organization. The result will be a huge payoff to your business.
There is always someone who has information that the team needs: an executive at the client, a production-line supervisor, a supplier, a customer, an industry expert, even a competitor. Interviewing is the way McKinsey consultants fill the gaps in their knowledge base and tap into the experience and knowledge of their clients.
You might think that even though interviewing McKinsey-style is a good technique for consultants who need to get up to speed on unfamiliar industries, it is of little use to executives in more settled positions. I disagree. In today’s business world, no matter who you are, from the most junior of junior managers to the most senior of senior vice presidents, you may find yourself in a situation where you need the information in someone else’s head.
BE PREPARED: WRITE AN INTERVIEW GUIDE When you go into an interview, be prepared. You may have only 30 minutes with a person whom you may never see again. Know what you’re going to ask.
Once you’ve written your guide, look at it and ask yourself, “What are the three things I most want to know by the end of the interview?” These are the things you will focus on when you go into the interviewee’s office, the three things that you will try your hardest to obtain before you leave.
Finally, every interview guide should conclude with what I call the prototypical McKinsey question. When you’ve asked all your questions, or you’re running out of time, put away your guide and ask the interviewee if there’s anything else he’d like to tell you or any question you forgot to ask.
WHEN CONDUCTING INTERVIEWS, LISTEN AND GUIDE When you’re picking people’s brains, ask questions and then let them do the talking. Most people like to talk, especially if you let them know you’re interested in what they’re saying. Keep the interview on track by breaking in when necessary.
McKinsey consultants receive a lot of training in interviewing techniques. The first thing we were taught was “always let the interviewee know you are listening.”
When McKinsey consultants conduct interviews, it’s because they want access to the information, experience, and anecdotes in other person’s heads.
Consultants are there to listen, not to talk.
The main thing to remember when trying to get information from other is that they need to feel you are listening and that you’re interested in what they have to say.
SEVEN TIPS FOR SUCCESSFUL INTERVIEWING Always think strategically when conducting an interview. You have a goal to reach and limited time to reach it. Here are seven tried-and-tested stratagems to help you get what you want from an interviewee.
DON’T LEAVE THE INTERVIEWEE NAKED Remember that, for many people, being interviewed about problems in their job or business can be unnerving. You have a responsibility to be sensitive to their fears. It’s not only the right thing to do; it makes good business sense too.
DIFFICULT INTERVIEWS Conduct enough interviews and you will encounter difficult ones. Some of them are easy enough to handle, once you know how. Others will test your strength and spirit.
The limits to this strategy are the limits of your authority in the organization. McKinsey consultants usually have the backing of the top management at the client and can thus stand up to anyone. If you aren’t so favored, just remember that if the person you are interviewing is more senior than the person who authorized your project, you will probably have to back down when challenged.
You may also encounter difficulty when interviewing what psychiatrists might call the passive-aggressive type, but I like to call “the Sandbagger.” Sandbaggers will talk all you want; they just won’t tell you anything,
ALWAYS WRITE A THANK-YOU NOTE When you get back to your office after interviewing someone, take the time to write a thank-you letter. It’s polite and professional, and could pay you back in unexpected ways.
Brainstorming is the sine qua non of strategic consulting. It’s what the clients really buy.
The most important ingredient for successful brainstorming is a clean slate. There’s no point calling a meeting if you’re just going to look at the data in the same old way. You have to leave your preconceptions and prejudices at the door of the meeting room. That way, you are free to manipulate the facts in your mind.
PROPER PRIOR PREPARATION Although brainstorming has an airy-fairy, college bull session connotation to some, in reality effective brainstorming requires some hard-nosed advance work.
The cardinal rule of brainstorming is that you cannot do it successfully in a vacuum. Before you go into that meeting, you have to know something about the problem you’ll be working on. Don’t just stride into the meeting expecting to wow everyone with your brilliance.
As with all things McKinsey, there is a method to preparing for your brainstorming session, whether you are the leader (or, as some prefer, moderator or facilitator) or just a participant.
The first group says, “Familiarize yourself with the outlines of the problem and the data. Don’t try to come up with an answer before the session starts.”
The counterproposition states, “Always come in with a hypothesis; otherwise, you waste too much time flailing around looking for ideas.”
IN A WHITE ROOM The point of brainstorming is the generation of new ideas. So start with tabula rasa—a clean slate. When you get your team into the room, leave your preconceptions at the door. Bring the facts you know, but find new ways of looking at them.
Again, brainstorming is about generating new ideas. If all the team members come into the room saying the same old things and agreeing with one another, then you’ve gained nothing and wasted time.
Even worse, if the team leader comes in and imposes her view on everyone else, the team has missed an opportunity to achieve a solution that’s more creative and, possibly, better.
No one should be afraid to speak his mind in the brainstorming room. So, along with your preconceptions, check your hierarchy and deference at the door.
To get your clients to buy into your solution, you have to sell it to them.
McKinsey communicates with its clients through presentations. They may be formal presentations: meetings held around boardroom tables with neatly bound blue books.
BE STRUCTURED For your presentation to succeed, it must take the audience down the path of your logic in clear, easy to follow steps.
A presentation reflects the thinking of the person or team that put it together.
If your presentation is sloppy and muddled, your audience will assume that your thinking is also sloppy and muddled—regardless of whether that is the case.
REMEMBER THAT THERE ARE DIMINISHING MARGINAL RETURNS TO EFFORT Resist the temptation to tweak your presentation right up to the last minute. Weigh the value of a change against a good night’s sleep for you and your team. Don’t let the best be the enemy of the good.
PREWIRE EVERYTHING A good business presentation should contain nothing new for the audience. Walk all the players at the client through your findings before you gather them into one room.
When prewiring, you must remember the cardinal rule of being a successful consultant or corporate troubleshooter: Not only do you have to come up with the “right” answer; you also have to sell that answer to your client.
KEEP IT SIMPLE — ONE MESSAGE PER CHART The more complex a chart becomes, the less effective it is at conveying information. Use charts as a means of getting your message across, not as an art project.
The simpler things are, the easier they are to understand.
Therefore, McKinsey prints its charts in black and white; it avoids three-dimensional graphics unless absolutely necessary to convey the message; and it adheres to the cardinal rule of one message per chart.
The medium must not overpower the message; hence the ban on distracting colors or deceptive 3-D perspectives.
McKinsey charts always include one. Why?
One final word about charts: Too many will bore your audience. Use the absolute minimum necessary to make your point, or you may find that your audience hasn’t absorbed the last 10 to 15 pages of your presentation.
USE A WATERFALL CHART TO SHOW THE FLOW The waterfall chart—seldom seen outside McKinsey and not generally available in computer graphics packages—is an excellent way to illustrate quantitative flows.
KEEP THE INFORMATION FLOWING Information is to your team what gasoline is to a car’s engine. If you choke off the flow, you’ll stall.
Whatever setup your organization has, make sure you find your own mentor.
Treat everyone with tremendous respect. Sometimes McKinsey people can be demanding and impatient; then they fail to understand why they don’t get what they want. Some of my colleagues were amazed at how I would get upgraded, or would get a bag on after the plane was full—things like that. Flight attendants, concierges, assistants at clients—these people have more authority than you realize and want to help those who show respect for them. It also keeps your stress level down—it’s easier to be friendly than frustrated—so it’s a win/win.
With all this heavy weaponry, the Firm hunts first and foremost for analytical ability.
I always looked for analytical thinkers, people who could break apart problems into their components. I wanted evidence that they knew how to structure problems. I also looked for business judgment, the sense that the person knew the implications of his solutions. That’s why I always used cases.
What matters is not the numbers, but the method you use to reach them.
McKinsey consultants work in teams, so personality counts too.
No doubt, many of you want to know how to get a job at McKinsey. The answer is simple: Be of above average intelligence, possess a record of academic achievement at a good college and a top business school, show evidence of achievement in all previous jobs, and demonstrate extraordinary analytical ability.
If you manage to clear all those hurdles, the key to your joining the Firm may be the case interview.
Make one day a week off-limits. Pick a day—most people take Saturday or Sunday—and tell your boss (and yourself) that you never work on that day unless it’s an absolute emergency.
Don’t take work home. Keep work and home separate.
Plan ahead. If you travel during the workweek this is the most important rule. Don’t come back from the airport on a Friday night and expect to find stuff to do over the weekend.
When all else fails, have a doorman. Then, at least, you’ll come home to clean laundry.
Do The Wall Street Journal test. If you are comfortable with reading about your actions on the front page of the WSJ, then it’s OK. If not, you are pushing the ethical envelope—don’t.
Putting the client first is the key to successful client service; to do so, you must maintain your professional objectivity.
The Firm taught me that every problem has a solution; it may not be perfect, but it will allow me to take actions that are directionally correct.
I can’t point to any one thing. It has to do with problem solving—the idea that any problem, no matter how daunting, can be broken into its constituents and solved.
I would rather be surrounded by smart people than have a huge budget. Smart people will get you there faster.
Anything that gets in the way of efficient communication is anathema to a strong organization. Fuzzy thinking, obfuscatory jargon, impenetrable hierarchy, and playing the “yes-man” get in the way of adding value for customers or clients.
Structured thinking, clear language, a meritocracy with the obligation to dissent, and professional objectivity allow an organization and its people to reach their maximum potential. Of course, McKinsey has its own word for this—it’s called “professionalism.”
“Do unto others as you would have others do unto you. The rest derives from that. Go and learn.”
To wit: Fact-based, structured thinking combined with professional integrity will get you on the road to your business goals. The rest derives from that. Go and learn.
Second, facts bridge the credibility gap.
FEEL FREE TO BE MECE To structure your thinking when solving business problems (or anything, for that matter), you must be complete while avoiding confusion and overlap.
MECE (pronounced “me-see”) stands for “mutually exclusive, collectively exhaustive”
A good McKinsey issue list contains neither fewer than two nor more than five top-line issues (of course, three is best).
The initial hypothesis (IH), the third pillar of the McKinsey problem-solving process, is the most difficult to explain. To make the explanation easier for you (and me), I will break this section into three parts:
• Defining the initial hypothesis.
• Generating the initial hypothesis.
• Testing the initial hypothesis.
My experience at the Firm (and that of the many McKinsey alumni I interviewed for this book) taught me that IHs produced by teams are much stronger than those produced by individuals.
If you are the team leader, you should try to be the thought leader too. Try to take a different approach from whatever has just been said. Ask, “What if we change this? What if we push that? How about looking at it this way?” The process involves shooting a certain amount of bull.
THE PROBLEM IS NOT ALWAYS THE PROBLEM Sometimes a business problem will land on your desk and you will be told to solve it. Fair enough. But before you go rushing off in any particular direction, make sure you’re solving the right problem—it may not be the one you were given.
DON’T REINVENT THE WHEEL (PART 1) Most business problems resemble each other more than they differ. This means that with a small number of problem-solving techniques, you can answer a broad range of questions. These techniques may be somewhere in your organization, either written down or in the heads of your fellow employees. If not, use your experience to develop your own tool kit.
The technique involves identifying the client’s suppliers, customers, competitors, and possible substitute products. We then list all the changes occurring in each of the four categories. What impact—positive or negative—could these have on our client? Also, what internal changes are affecting the client and the client’s industry? Which of these factors could actually cause major changes to the way the client designs, manufactures, distributes, sells, and services its products?
… BUT EVERY CLIENT IS UNIQUE (NO COOKIE-CUTTER SOLUTIONS) That there are many similarities between business problems does not mean that similar problems have similar solutions. You have to validate your initial hypothesis (or your gut) with fact-based analysis. This will put you in a much better position to get your ideas accepted.
If all you have is a hammer, then every problem looks like a nail.
Fact-based analysis as practiced by McKinsey requires hard proof before any recommendations are made to clients.
A sharp manager with a lot of business experience can often reach the same conclusions as McKinsey—and in a much shorter time—by gut instinct, but most executives aren’t that good.
Because McKinsey focuses so intently on a problem, it often produces a more robust solution than even the best executive can.
How do you avoid that trap? The McKinsey way is to take an occasional step back from the continual grind of fact gathering and analysis and to ask yourself what you have learned over the past week (or two weeks, or whatever).
MAKE SURE YOUR SOLUTION FITS YOUR CLIENT The most brilliant solution, backed up by libraries of data and promising billions in extra profits, is useless if your client or business can’t implement it. Know your client. Know the organization’s strengths, weaknesses, and capabilities—what management can and cannot do. Tailor your solutions with these factors in mind.
Unfortunately, when academic ideals meet business realities, business realities usually win.
As a consultant, you bear the responsibility for knowing the limitations of your client; if your client is your own employer—or your own business—that responsibility is doubled. Knowing those limitations, you must make sure that any recommendations you make fit within them.
If you get your facts together and do your analyses, the solution will come to you.
Any McKinsey-ite will tell you that no business problem is immune to the power of fact-based analysis. Put together enough facts, combine them with some creative thinking, and you will come up with a solution.
SOME PROBLEMS YOU JUST CAN’T SOLVE … SOLVE THEM ANYWAY Eventually, you will run into a brick wall that is tougher than your head. Don’t keep pounding; it has no effect on the wall and does your head no good.
The biggest obstacle—the troll guarding the bridge—is politics. The first thing to understand about politics—and how it can help or hinder you from doing your job—is that businesses are full of real people.
When you look at the boxes on an organization chart, you are really looking at people. When you move those boxes around, you change someone’s life.
When members of a McKinsey team go into a client, they carry change with them. Some at the client will welcome the bringers of change as white knights riding to the rescue; others will see McKinsey as an invading army to either flee or drive out, depending on their power in the organization.
As one former McKinsey-ite put it, “It was a rare engagement when there wasn’t at least one sector of the client organization that did not want us there and did not want us to come up with a real answer.”
Therefore, when you face political opposition, it usually means that your solution has negative implications for someone in the organization. So politics is just people acting in their own interests.
80/20 The 80/20 rule is one of the great truths of management consulting and, by extension, of business. You will see it wherever you look: 80 percent of your sales will come from 20 percent of your sales force; 20 percent of a secretary’s job will take up 80 percent of her time; 20 percent of the population controls 80 percent of the wealth. It doesn’t always work (sometimes the bread falls butter-side up), but if you keep your eyes peeled for examples of 80/20 in your business, you will come up with ways to improve it.
When a client asks the question “How do I boost my profits?” the first thing McKinsey does is take a step back and ask the question “Where do your profits come from?” The answer to this is not always obvious, even to people who have been in their particular business for years.
“Don’t boil the ocean” means don’t try to analyze everything. Be selective; figure out the priorities of what you are doing. Know when you have done enough, then stop. Otherwise, you will spend a lot of time and effort for very little return, like boiling the ocean to get a handful of salt.
FIND THE KEY DRIVERS Many factors affect your business. Focus on the most important ones—the key drivers.
In any McKinsey team meeting where problem solving is on the agenda, someone will use the inelegant phrase “key drivers,” as in, “Vik, I think these are the key drivers of this issue.” In other words, there may be a 100 different factors affecting the sales of our widgets—weather, consumer confidence, raw material prices—but the three most important ones are X, Y, and Z. We’ll ignore the rest.
Syntactical foibles aside, “key drivers” is a very powerful concept. It saves you time. It saves you effort. It keeps you from boiling the ocean.
THE ELEVATOR TEST Know your solution (or your product or business) so thoroughly that you can explain it clearly and precisely to your client (or customer or investor) in 30 seconds. If you can do that, then you understand what you’re doing well enough to sell your solution.
PLUCK THE LOW-HANGING FRUIT Sometimes in the middle of the problem-solving process, opportunities arise to get an easy win, to make immediate improvements, even before the overall problem has been solved. Seize those opportunities! They create little victories for you and your team. They boost morale and give you added credibility by showing anybody who may be watching that you’re on the ball and mean business.
MAKE A CHART EVERY DAY During the problem-solving process, you learn something new every day. Put it down on paper. It will help you push your thinking. You may use it, or you may not, but once you have crystalized it on the page, you won’t forget it.
HIT SINGLES You can’t do everything, so don’t try. Just do what you’re supposed to do and get it right. It’s much better to get to first base consistently than to try to hit a home run—and strike out 9 times out of 10.
“Don’t try to knock the ball out of the park. Hit singles. Get your job done—don’t try to do the work of the whole team.”
It took several years of gaining perspective before I understood the wisdom of the CEO’s words. There are three reasons he was right: • It’s impossible to do everything yourself all the time. • If you manage it once, you raise unrealistic expectations from those around you. • Once you fail to meet expectations, it is very difficult to regain credibility.
LOOK AT THE BIG PICTURE Every now and then, take a mental step back from whatever you’re doing. Ask yourself some basic questions: How does what you’re doing solve the problem? How does it advance your thinking? Is it the most important thing you could be doing right now? If it’s not helping, why are you doing it?
“Perhaps the most valuable thing I learned during my time at the Firm was to think about the big picture—to take a step back, figure out what I’m trying to achieve, and then look at whatever I’m doing and ask myself, ‘Does this really matter?’”
JUST SAY, “I DON’T KNOW” The Firm pounds the concept of professional integrity into its associates from their first day on the job, and rightly so. One important aspect of professional integrity is honesty—with your clients, your team members, and yourself. Honesty includes recognizing when you haven’t got a clue. Admitting that is a lot less costly than bluffing.
DON’T ACCEPT “I HAVE NO IDEA” People always have an idea if you probe just a bit. Ask a few pointed questions—you’ll be amazed at what they know. Combine that with some educated guessing, and you can be well along the road to the solution.
If you ask people a question about their business and they tell you, “I have no idea,” don’t just walk away in defeat. “I have no idea” is a code; it really means, “I’m too busy to take the time to think about this,” or “I don’t think I’m smart enough to know about these things,” or worst of all “I’m too lazy to come up with anything useful.”
Just as you shouldn’t accept “I have no idea” from others, so you shouldn’t accept it from yourself, or expect others to accept it from you.
HOW TO SELL WITHOUT SELLING Business problems are like mice. They go unnoticed until they start nibbling your cheese. Just building a better mousetrap will not make the world beat a path to your door. People who don’t have mice won’t be interested—until the mice show up; then they need to know you have the mousetrap. This might sound like the musings of a Zen monk (or perhaps a management consultant from California). But sometimes the right way to sell your product or service is not to barge into your customer’s home with a bunch of free samples. Just be there, at the right time, and make sure the right people know who you are.
Although a partner’s compensation depends in large part on the amount of business he brings to the Firm, no one goes out to knock on doors. The Firm waits for the phone to ring.
And ring it does, not because McKinsey sells, but because McKinsey markets.
BE CAREFUL WHAT YOU PROMISE: STRUCTURING AN ENGAGEMENT When structuring your project, whether you are selling your services as a consultant or have been picked by your organization to solve an internal problem, don’t bite off more than you can chew. Set definite milestones that you can meet. That way, you’ll have targets you can achieve and your client will be satisfied.
If your boss steps into your office and says, “We have a little problem and we want you to head up a team to solve it,” then the lesson for you is a bit more complicated. Don’t blithely accept the assignment and say, “Sure, boss.” If you do, you could be setting yourself up for a fall.
GETTING THE MIX RIGHT You can’t just throw four random people at a problem and expect them to solve it. Think about what sorts of skills and personalities will work best for your project. Then choose your teammates carefully.
McKinsey-ites subscribe to one of two theories of team selection. The first theory states that intellectual horsepower is everything—find the smartest people for your team regardless of their experience or personal hygiene.
The second theory says that what really matters is specific experience and skills; intelligence is a given within the Firm—every McKinsey consultant is smart or he wouldn’t be there.
A smart EM always talks to potential team members before taking them on.
A LITTLE TEAM BONDING GOES A LONG WAY It’s a truism that a team will perform better and its members will have a better time if the team members get along well. As a team leader, you should make an effort to promote team bonding; just make sure it doesn’t become a chore.
So, when managing your team, be selective with team-bonding activities.
Try to get your team’s “significant others” involved; this will help them understand what their loved ones—your teammates—are doing, and it will help you understand your teammates.
Above all, respect your teammates’ time.
One former associate noted that, at McKinsey, the best team dinners were at lunch—they showed that the EM knew the associates had lives.
TAKE YOUR TEAM’S TEMPERATURE TO MAINTAIN MORALE Maintaining your team’s morale is an on-going responsibility. If you don’t do it, your team will not perform well. Make sure you know how your team feels.
Take your team’s temperature.
Steer a steady course.
Let your teammates know why they are doing what they’re doing.
No one on your team should ever feel, “I’ve just spent two weeks of my life for nothing.”
Treat your teammates with respect.
As an associate, I always felt a bit better knowing that if I was in the office at midnight, my EM was too.
Get to know your teammates as people.
When the going gets tough, take the Bill Clinton approach.
MAKE YOUR BOSS LOOK GOOD If you make your boss look good, your boss will make you look good. That’s the quid pro quo of hierarchy.
Making your boss look good means two things. Firstly, it means doing your job to the best of your ability. Clearly, if you produce high-quality work, it will make your boss’s job easier. Second, make sure your boss knows everything you know when she needs to know it.
AN AGGRESSIVE STRATEGY FOR MANAGING HIERARCHY If you have the stomach for it, assert your equality in the organization. Keep on doing it until someone tells you otherwise. Obviously, this is not a strategy for everyone.
DON’T REINVENT THE WHEEL (PART 2) Whatever the problem, chances are that someone, somewhere, has worked on something similar. Maybe that person is in your organization and can answer all your questions in the course of a phone call. Maybe other people in your field, in another division or another company, have seen the same problem already—find out who they are and get to know them. Do your research and ask questions; you will save yourself a lot of time and effort. Your time is valuable, so don’t waste it by reinventing the wheel!
Start with the annual report. If you want to get up to speed on a company as quickly as possible, the first place to turn is the annual report. It’s easy to obtain (many companies now post their annuals on the World Wide Web) and contains a great deal of information beyond the financial data.
Look for outliers. When you’ve collected a large amount of data on a particular aspect of your problem, look for outliers—things that are especially good or bad. Use a computer to get a quick picture.
Look for best practice. There’s an old saying that no matter how good you are at something, there’s always somebody better. This is as true in business as it is anywhere else. Find out what the best performers in the industry are doing and imitate them. Often, this is the quickest antidote to poor performance.
Sometimes you can find best practice within your company. Someone, some team, or some division is outperforming the rest of the company. Find out why. Figure out how to implement the top performer’s secrets throughout your organization. The result will be a huge payoff to your business.
There is always someone who has information that the team needs: an executive at the client, a production-line supervisor, a supplier, a customer, an industry expert, even a competitor. Interviewing is the way McKinsey consultants fill the gaps in their knowledge base and tap into the experience and knowledge of their clients.
You might think that even though interviewing McKinsey-style is a good technique for consultants who need to get up to speed on unfamiliar industries, it is of little use to executives in more settled positions. I disagree. In today’s business world, no matter who you are, from the most junior of junior managers to the most senior of senior vice presidents, you may find yourself in a situation where you need the information in someone else’s head.
BE PREPARED: WRITE AN INTERVIEW GUIDE When you go into an interview, be prepared. You may have only 30 minutes with a person whom you may never see again. Know what you’re going to ask.
Once you’ve written your guide, look at it and ask yourself, “What are the three things I most want to know by the end of the interview?” These are the things you will focus on when you go into the interviewee’s office, the three things that you will try your hardest to obtain before you leave.
Finally, every interview guide should conclude with what I call the prototypical McKinsey question. When you’ve asked all your questions, or you’re running out of time, put away your guide and ask the interviewee if there’s anything else he’d like to tell you or any question you forgot to ask.
WHEN CONDUCTING INTERVIEWS, LISTEN AND GUIDE When you’re picking people’s brains, ask questions and then let them do the talking. Most people like to talk, especially if you let them know you’re interested in what they’re saying. Keep the interview on track by breaking in when necessary.
McKinsey consultants receive a lot of training in interviewing techniques. The first thing we were taught was “always let the interviewee know you are listening.”
When McKinsey consultants conduct interviews, it’s because they want access to the information, experience, and anecdotes in other person’s heads.
Consultants are there to listen, not to talk.
The main thing to remember when trying to get information from other is that they need to feel you are listening and that you’re interested in what they have to say.
SEVEN TIPS FOR SUCCESSFUL INTERVIEWING Always think strategically when conducting an interview. You have a goal to reach and limited time to reach it. Here are seven tried-and-tested stratagems to help you get what you want from an interviewee.
DON’T LEAVE THE INTERVIEWEE NAKED Remember that, for many people, being interviewed about problems in their job or business can be unnerving. You have a responsibility to be sensitive to their fears. It’s not only the right thing to do; it makes good business sense too.
DIFFICULT INTERVIEWS Conduct enough interviews and you will encounter difficult ones. Some of them are easy enough to handle, once you know how. Others will test your strength and spirit.
The limits to this strategy are the limits of your authority in the organization. McKinsey consultants usually have the backing of the top management at the client and can thus stand up to anyone. If you aren’t so favored, just remember that if the person you are interviewing is more senior than the person who authorized your project, you will probably have to back down when challenged.
You may also encounter difficulty when interviewing what psychiatrists might call the passive-aggressive type, but I like to call “the Sandbagger.” Sandbaggers will talk all you want; they just won’t tell you anything,
ALWAYS WRITE A THANK-YOU NOTE When you get back to your office after interviewing someone, take the time to write a thank-you letter. It’s polite and professional, and could pay you back in unexpected ways.
Brainstorming is the sine qua non of strategic consulting. It’s what the clients really buy.
The most important ingredient for successful brainstorming is a clean slate. There’s no point calling a meeting if you’re just going to look at the data in the same old way. You have to leave your preconceptions and prejudices at the door of the meeting room. That way, you are free to manipulate the facts in your mind.
PROPER PRIOR PREPARATION Although brainstorming has an airy-fairy, college bull session connotation to some, in reality effective brainstorming requires some hard-nosed advance work.
The cardinal rule of brainstorming is that you cannot do it successfully in a vacuum. Before you go into that meeting, you have to know something about the problem you’ll be working on. Don’t just stride into the meeting expecting to wow everyone with your brilliance.
As with all things McKinsey, there is a method to preparing for your brainstorming session, whether you are the leader (or, as some prefer, moderator or facilitator) or just a participant.
The first group says, “Familiarize yourself with the outlines of the problem and the data. Don’t try to come up with an answer before the session starts.”
The counterproposition states, “Always come in with a hypothesis; otherwise, you waste too much time flailing around looking for ideas.”
IN A WHITE ROOM The point of brainstorming is the generation of new ideas. So start with tabula rasa—a clean slate. When you get your team into the room, leave your preconceptions at the door. Bring the facts you know, but find new ways of looking at them.
Again, brainstorming is about generating new ideas. If all the team members come into the room saying the same old things and agreeing with one another, then you’ve gained nothing and wasted time.
Even worse, if the team leader comes in and imposes her view on everyone else, the team has missed an opportunity to achieve a solution that’s more creative and, possibly, better.
No one should be afraid to speak his mind in the brainstorming room. So, along with your preconceptions, check your hierarchy and deference at the door.
To get your clients to buy into your solution, you have to sell it to them.
McKinsey communicates with its clients through presentations. They may be formal presentations: meetings held around boardroom tables with neatly bound blue books.
BE STRUCTURED For your presentation to succeed, it must take the audience down the path of your logic in clear, easy to follow steps.
A presentation reflects the thinking of the person or team that put it together.
If your presentation is sloppy and muddled, your audience will assume that your thinking is also sloppy and muddled—regardless of whether that is the case.
REMEMBER THAT THERE ARE DIMINISHING MARGINAL RETURNS TO EFFORT Resist the temptation to tweak your presentation right up to the last minute. Weigh the value of a change against a good night’s sleep for you and your team. Don’t let the best be the enemy of the good.
PREWIRE EVERYTHING A good business presentation should contain nothing new for the audience. Walk all the players at the client through your findings before you gather them into one room.
When prewiring, you must remember the cardinal rule of being a successful consultant or corporate troubleshooter: Not only do you have to come up with the “right” answer; you also have to sell that answer to your client.
KEEP IT SIMPLE — ONE MESSAGE PER CHART The more complex a chart becomes, the less effective it is at conveying information. Use charts as a means of getting your message across, not as an art project.
The simpler things are, the easier they are to understand.
Therefore, McKinsey prints its charts in black and white; it avoids three-dimensional graphics unless absolutely necessary to convey the message; and it adheres to the cardinal rule of one message per chart.
The medium must not overpower the message; hence the ban on distracting colors or deceptive 3-D perspectives.
McKinsey charts always include one. Why?
One final word about charts: Too many will bore your audience. Use the absolute minimum necessary to make your point, or you may find that your audience hasn’t absorbed the last 10 to 15 pages of your presentation.
USE A WATERFALL CHART TO SHOW THE FLOW The waterfall chart—seldom seen outside McKinsey and not generally available in computer graphics packages—is an excellent way to illustrate quantitative flows.
KEEP THE INFORMATION FLOWING Information is to your team what gasoline is to a car’s engine. If you choke off the flow, you’ll stall.
Whatever setup your organization has, make sure you find your own mentor.
Treat everyone with tremendous respect. Sometimes McKinsey people can be demanding and impatient; then they fail to understand why they don’t get what they want. Some of my colleagues were amazed at how I would get upgraded, or would get a bag on after the plane was full—things like that. Flight attendants, concierges, assistants at clients—these people have more authority than you realize and want to help those who show respect for them. It also keeps your stress level down—it’s easier to be friendly than frustrated—so it’s a win/win.
With all this heavy weaponry, the Firm hunts first and foremost for analytical ability.
I always looked for analytical thinkers, people who could break apart problems into their components. I wanted evidence that they knew how to structure problems. I also looked for business judgment, the sense that the person knew the implications of his solutions. That’s why I always used cases.
What matters is not the numbers, but the method you use to reach them.
McKinsey consultants work in teams, so personality counts too.
No doubt, many of you want to know how to get a job at McKinsey. The answer is simple: Be of above average intelligence, possess a record of academic achievement at a good college and a top business school, show evidence of achievement in all previous jobs, and demonstrate extraordinary analytical ability.
If you manage to clear all those hurdles, the key to your joining the Firm may be the case interview.
Make one day a week off-limits. Pick a day—most people take Saturday or Sunday—and tell your boss (and yourself) that you never work on that day unless it’s an absolute emergency.
Don’t take work home. Keep work and home separate.
Plan ahead. If you travel during the workweek this is the most important rule. Don’t come back from the airport on a Friday night and expect to find stuff to do over the weekend.
When all else fails, have a doorman. Then, at least, you’ll come home to clean laundry.
Do The Wall Street Journal test. If you are comfortable with reading about your actions on the front page of the WSJ, then it’s OK. If not, you are pushing the ethical envelope—don’t.
Putting the client first is the key to successful client service; to do so, you must maintain your professional objectivity.
The Firm taught me that every problem has a solution; it may not be perfect, but it will allow me to take actions that are directionally correct.
I can’t point to any one thing. It has to do with problem solving—the idea that any problem, no matter how daunting, can be broken into its constituents and solved.
I would rather be surrounded by smart people than have a huge budget. Smart people will get you there faster.
Anything that gets in the way of efficient communication is anathema to a strong organization. Fuzzy thinking, obfuscatory jargon, impenetrable hierarchy, and playing the “yes-man” get in the way of adding value for customers or clients.
Structured thinking, clear language, a meritocracy with the obligation to dissent, and professional objectivity allow an organization and its people to reach their maximum potential. Of course, McKinsey has its own word for this—it’s called “professionalism.”
“Do unto others as you would have others do unto you. The rest derives from that. Go and learn.”
To wit: Fact-based, structured thinking combined with professional integrity will get you on the road to your business goals. The rest derives from that. Go and learn.