Friday, February 25, 2005
Consultant's Profile-Calcutta Mail, Rajat Gupta
Source-Mckinsey Quarterly and Business Today
"Congratulations," said Ron Daniel, "I'm very happy for the Firm." That's all Rajat Gupta needed to hear on the telephone while on vacation in Colorado (US) on Friday, March 25. After 21 years of working for the world's most influential and prestigious management consultancy firm, the $1.3-billion McKinsey & Co. (McKinsey, a.k.a. the Firm), 45-year-old Rajat Gupta had finally arrived: he had just been elected its managing director.
That call from Daniel, the chairman of the election committee and a former McKinsey managing director, brought the Gupta-Daniel story full circle. Two decades earlier, it was Daniel who had hired Gupta straight out of Harvard B-School for McKinsey's New York office--after Gupta had been turned down because he didn't have any work experience. That's when one of Gupta's professors at Harvard, Walter Salmon, wrote to Daniel, then manager of the New York office, asking him to reconsider the decision. He did, and the rest, as they say, is history.
For the Chicago-based Gupta, it is the culmination of a journey. A long and arduous journey by a young man from Maniktala in Calcutta, where he was born in a middle-class family, to the top of a $1.3-billion powerhouse of business savvy. Although McKinsey-watchers had predicted that a non-American could take over as CEO this time around, Gupta wasn't always mentioned as the top choice. "McKinsey is truly a meritocracy. I don't think anybody would have considered for too long whether I was Indian or American," says Gupta.
Despite his characteristic humility, Gupta will have done more than cross a milestone on July 1, 1994, when he becomes the first-ever India-born CEO of a US transglobal corporation. Indeed, Gupta is the first Indian to have successfully broken through the impenetrable glass ceiling at the top which most transnationals have erected. Reckons Gupta, who was interviewed for two hours by BUSINESS TODAY at his 29th-floor office in Chicago, which he heads: "Over the last few decades, McKinsey has become truly global." Adds McKinsey's India office managing director, Anupam P. "Tino" Puri: "Rajat was selected inspite of his being Indian. The process of choosing the managing director is blind to nationality."
With 62 offices in 31 countries, priorities at the 68-year-old company--which now earns 60 per cent of its revenues outside the US--are shifting overseas more than ever before. Says Norman Sanson, managing director of McKinsey's London office: "The time was near for a non-American to be the MD. This shows the non-Americanism within McKinsey."
FACTFILE NAME: Rajat Kumar Gupta
DESIGNATION: Managing director-elect, McKinsey & Co. Takes office on July 1, 1994
DATE OF BIRTH: December 2, 1948
AGE: 45 years
PLACE OF BIRTH: Maniktala, Calcutta
NATIONALITY: India-born US citizen (US citizen since 1984)
EDUCATION:Modern School, New Delhi, 1966; B. Tech (mechanical eng), IIT-Delhi, 1971; MBA, Harvard Business School, 1973
CAREER: Joined McKinsey in 1973; New York office, 1973-1981;Scandinavia office (Copenhagen), 1981-86; Chicago office, 1986-1989; elected principal 1980; elected director 1984; managing director (Chicago), 1989-94, managing director-elect, McKinsey & Co., 1994
SPECIALISATION: Strategy, energy, industrial goods, consumer products WIFE'S NAME: Anita Mattoo Gupta, engineer
CHILDREN: Geetanjali, 16; Megha, 12; Aditi, 9; Deepali, 4
AFFILIATIONS: Advisory boards of Harvard & Kellogg B-schools
LANGUAGES KNOWN: English, Hindi, Bengali
CURRENTLY READING: The Complete Works of Vivekananda, Gita Mehta's The River Sutra
INTERESTS: Bridge, old Hindi film songs, and Western classical music To the casual observer, Gupta's education--Indian Institute of Technology-Delhi (IIT-D), Harvard Business School--and his membership of the Firm could suggest he's part of the old boy network that is so special at McKinsey; a typical McKinsey consultant has been to an Ivy League college and graduate school. Gupta's past tells another story. After living in Calcutta for the first five years of his life, he moved to Delhi in 1953. One of four children, Gupta lost both his parents by the time he was 18 years old. Completing most of his education with the help of scholarships, Gupta passed out of Modern School at Delhi, and was ranked 15th in the all-India IIT entrance test in 1966. At IIT-D, he won not only a five-year mechanical engineering degree, but also his future wife: Anita Mattoo, an electrical engineering student who was two years his junior. They first met at a play rehersal-- "Ratan" was a keen debator and actor--where she played Gupta's grandmother. In 1973, the duo married.
When Gupta finished at IIT-D in 1971, he had several choices: a job at ITC, a management degree from IIM-Ahmedabad--or an MBA from Harvard Business School. Not surprisingly, he picked the last. Boston brought culture shock--he'd never even seen TV before--but the academics was easy.Recalls Reuben Aragon, a Mexican-American dorm-mate from Harvard, now CEO of the Oklahoma-based Duralast Rubber: "There was a spark there. You knew he would definitely be going some place."
That turned out to be McKinsey. When he joined McKinsey in 1973, it wasn't as if he was the first Indian to work for the Firm. Puri had signed up in1970 and became Gupta's mentor and big brother. Interestingly, around three per cent of the Firm's 3,000 professionals were born in India--and that doesn't include second-generation Americans of Indian origin.
Of these, 80 are associates, 10 are principals, and three are directors: Gupta, Puri, and Adal "Scratch" Zainulbhai, who works at the New York office. "Good Indian minds are good at consulting," reckons Arun Maira, a former TELCO executive director, who now works with the Boston-based consultants, Arthur D. Little. Consider some of the qualities that allowed Gupta to beat the pack:
WHAT TOOK RAJAT TO THE TOP
Several partners, consultants, and directors at McKinsey--as well as McKinsey's clients and alumni--were interviewed to identify the specific factors for Rajat Gupta's rise to the top:
Intelligence: Was a brilliant student at IIT-D and Harvard
Vision: Has always seen the big picture very quickly
Integrity: No doubts about his dedication to his clients
Track Record: Did exceptional work in Scandinavia and in Chicago
Experience: Experience in India, Europe, and the US will be handy
Loyalty: Has worked with McKinsey for 20 years
Patience: Low-key approach is refreshing
Hard Work: Willing to work at a problem until the job's done
Team Play: Spends time building teams and working by consensus
Creative: Uses unusual methods to arrive at solutions
Open: Always available to offer advice
Maturity: Is one of the youngest in most settings
Humility: Has a down-to-earth approach and did not lobby for the job
GLOBAL PERSPECTIVE: As McKinsey gears up for the challenge, who better than the India-born Gupta, who won his spurs in Europe and the US? Gupta's first test came in 1981 when he was sent to Scandinavia to manage McKinsey's operations there. Gupta was one of the youngest partners to have been entrusted with such a responsibility. "I was 32, and still a principal. It was very unusual for a principal to be office manager," he admits. At the Scandinavian office, Gupta turned around McKinsey's prospects.
LEADERSHIP: Gupta showed early signs of being a general rather than a foot soldier. Soon after he graduated from IIT-D--where he was general secretary--Gupta was called for a job interview at ITC. On the panel was R.C. Sarin, who now heads Carrier Aircon. Twenty years later, Sarin bumped into Gupta at a seminar in Delhi and instantly remembered the young man he had once interviewed. For, when asked the attributes of a leader, Guptahad given a memorable reply: "One who can motivate his colleagues and get things done without making his teammates feel that it was the leader who had actually got the work done." Summing up Gupta's leadership style, a colleague in the Chicago office, director Chip Chandler says: "Very quiet. Leads from behind. Builds consensus."
INTEGRITY: Advocated by Marvin Bower--the guiding spirit of the company founded by James O. McKinsey in 1926--McKinsey consultants are expected to function by the Firm Code. The five tenets: to put client interests ahead of Firm interests; to serve the client in a superior manner; to adhere to high ethical standards in everything the Firm does; to preserve the confidence of clients; to be ready to differ with client managers and tell them the truth even if it hurts. Not surprisingly, Gupta has treated the code as sacred and has won a squeaky-clean image in the process.
PEOPLE-ORIENTED: Gupta always finds time for people and their problems; he personally knows all the 148 senior McKinsey partners around the globe, and most of the 400 partners. Says Varun Bery, a former McKinseyite, who is now with the investment bank CS First Boston: "He has a very down-to-earth style. He is approachable by colleagues at all levels." In December 1993, Gupta flew down from Chicago to spend three days with the young McKinsey recruits in India. Says Ashok Alexander, partner, McKinsey India: "He found the time to have dinner with a group of associates whom he will possibly never see again in his life." Adds Shashi Khanna, director, MAP Consultants, Delhi, a friend from his IIT-D days: "He values relationships."
LOYALTY:At a time when loyalty is at a premium, Gupta has spent his entire working life with one organisation. Especially as McKinsey is a rich hunting ground for CEOs: IBM's Louis Gerstner, Westinghouse Electric's Michael H. Jordan, American Express's Harvey Golub, Tele-Communications' John Mallone, and Levi Strauss' Robert Haas have all been McKinsey consultants. Gupta, however, has never looked askance at any McKinsey command, always putting the Firm's interests before his own. He refused the offer to try out Copenhagen for two weeks when the Scandinavian move was mooted. And while moving back to Chicago, he only asked a McKinsey associate to buy him a suitable house to move into--without even seeing it.
PERSONAL VALUES: Despite cut-throat competition, Gupta is admired in the McKinsey world for his humility and unassuming airs. Says Sanson: "He cares for other people's successes like his own, and does the right things for his clients. And more than everything, he is very humble." Adds Richard Cavanagh, executive dean, Kennedy School of Government, who worked on-and-off at McKinsey for 17 years: "I'm a real fan of Rajat. He has astounding maturity for someone so young."
That is important, as McKinsey's partnership environment is a flat organisation, where the managing director of the firm isn't a typical CEO. Even the election--not selection--is more like the cardinals in Rome electing the Pope. There is no electioneering and you cannot declare yourself a candidate. All the directors around the world vote on the top few candidates every three years. This year, the 148 directors narrowed it down to two candidates, Gupta and Don Waite, head of the New York office.The vote was by secret ballot, processed by Price Waterhouse.
Does Gupta's appointment mean that Indians are finally ready to storm the bastion of White Anglo-Saxon Male CEOs? Not likely. Says Shyam Lal, an IIT-D and University of Chicago McKinseyite: "It is less a breaking through of the glass ceiling, and more a reflection of the fact that it was time for a young man with a global background to step forward." Adds Atul Kanagat, 38, a principal at McKinsey's Chicago office: "It will not have that kind of effect. Few companies would model themselves along our lines. At the same time, Rajat's been one of our most successful partners, and so, it's quite a natural progression for him."
McKinsey follows a brutal up-or-out policy: if you don't make it to the next level within a reasonable number of years, you are expected to leave. Associates, the new recruits, usually take about six years to become principals; about one in six makes it. It takes another six years to become a director, and only one in 10 associates becomes one. As a result of this policy and the constant headhunting, McKinsey has about 3,500 well-connected alumni the world over.
Ironically, getting to the driving seat may prove to be a lesser challenge for Gupta than steering the McKinsey juggernaut in the future. One criticism is that the Firm has grown too fast to deliver value for money. McKinsey has also been accused of being too bloated to serve its clients well. Gupta admits he needs to fix this: "We'll simplify our structure a little bit. We may have become--because of our size and growth--a little complex in our governance structure."
In the meantime, smaller firms-- A.T. Kearney, Bains & Co.--are chipping at McKinsey's business. While they don't have the Firm's reach, they are expanding. For instance, A.T. Kearney CEO Fred Steingraber is initiating a blitz in India this month.
Another sore point with carpers is McKinsey's fees, which are the highest in the business. Gupta agrees, but says: "We are expensive because of what it takes to attract outstanding talent." Talent doesn't come cheap: associates earn up to $250,000 a year until it's time for a promotion. And according to David Lord, editor of Consultants News, Gupta should make "between $2 million and $4 million a year" when he takes over.
In the history of the Firm, two managing directors are credited with playing a crucial role: Ron Daniel and Marvin Bower. If Tom Peters is correct, Rajat Gupta may be the third CEO whose tenure could be a watershed in the history of the Firm.
'Rajat Is The Firm's Future' THAT the world's best-known management guru is a former McKinseyite shouldn't surprise you. Fifty-one-year-old Tom Peters is now an institution himself, but he used to work with McKinsey until 1981. In fact, it was a McKinsey project which led to the publication of the seminal best-seller, In Search of Excellence, which was written by Bob Waterman, another McKinseyite, and Peters himself.
On Gupta's election: To say that I was thrilled is an understatement. It came as a total surprise. I wrote Rajat a little note saying how delighted I was. He's the best thing to happen to McKinsey since Marvin Bower's days at the Firm.
On McKinsey's search for excellence: The project set out to answer one question: if we're so smart at generating great ideas, why are clients having problems implementing them? An informal core group of 15 to 20 people worked on the project between1977 and 1981. One of the best people in the core group was Rajat.
On McKinsey today: It's hard to criticise its effectiveness. It adds tremendous value for clients. It's still the best place to turn to.
On fixing McKinsey:McKinsey isn't showing the kind of intellectual leadership that it should. McKinsey always defined the business model. But no longer. Why is Microsoft defining the business model, and not McKinsey? Many of the best thinkers have moved on. There's a sense of predictableness. There's too much conservatism. Things aren't as wild, woolly, and wacky as they could be.
On Gupta and McKinsey: McKinsey could be a more exciting place than it is. Rajat can make it so. He's the future of the Firm. He has the ability to understand clients well and then give them creative solutions. But remember, I have a very strong bias!
McKinsey's Indian Connection
December 1993. Fort Aguada, Goa. A few hours before the conclusion of the first-ever annual retreat of McKinsey in India, an unassuming person, who had sat quietly at the back through the three-day meet, walked up to the dais at the invitation of McKinsey's India office managing director, Anupam P. "Tino" Puri.
For the next 45 minutes, Rajat Gupta, then head of McKinsey's Chicago office, spoke animatedly about his career path, the choices he had made, the values of the company that he holds dearly and, finally, McKinsey in India. Says Ashok Alexander, partner, McKinsey India: "At the end, there was no applause. We were too stunned." Explains Puri: "Rajat is sympathetic to India. He will do what is expected of a managing director. And McKinsey is truly committed to this country."
Indeed, McKinsey's India affair began equally passionately in 1988, when the Puri-Rajat duo came on a recce mission. Whirlwind meetings withbureaucrats, businessmen and cabinet ministers set the basis of a courtship that was formalised four years later, when the Firm set up itsIndia office. In the last two years, the Firm has grown from a fledging six-person bureau into a 40-strong team; 10 of whom are Indian repats.
As corporate India scrambles to restructure, McKinsey is targeting four kinds of clients: large Indian groups, smaller business houses,transnational corporations, and state governments. Says Puri: "These are unusual times, with most of our clients undergoing an unprecedented degree of turmoil." And the Firm's clients include the State Bank of India,Larsen & Toubro, RPG Enterprises, Hindustan Lever, Arvind Mills, HindustanMotors, Shriram Fibres, the Council for Leather Exports, Coca-Cola--Parle, and the State Industrial and Investment Corporation of Maharasthra.
In the next few months, the group plans to focus on transnational corporations for whom India is an integral part of the global market, and public sector units desperate to become competitive. But McKinsey India will well and truly pick up the gauntlet when it tries to rebuild at least a dozen companies into Indian transnationals. Says Puri: "We have plans totake about 10 to 12 companies in different sectors and make them world leaders. The idea is to build on the competitive advantage of Indian companies."
To effect these changes, McKinsey has already prescribed radical solutions, based on its organisational restructuring models. Clients trying to instil cultural changes and cost reduction exercises, for example, are asked to go beyond total quality management (TQM) and apply McKinsey's model of a transformational corporation. Similarly, the consultancy supremo advocates setting up horizontal companies, rather than flat organisations, for better and quicker results.
New offices are expected to come up soon in Madras and Calcutta, and McKinsey is in the market for quality personnel. Already, the consultancy faces a dilemma in finding the right kind of people and training them. In the last two years, to circumvent the scarcity of skilled people for specialised tasks, it has flown in at least 35 senior consultants from McKinsey overseas. Increasingly, the focus will be on developing local talent, which is a time-consuming mission. Points out Puri: "Consulting is like a craft. To major from a carpenter to a master craftsman takes time. Our size here is supply-constrained, not demand-constrained."
Manpower is important for the services company, since the Firm will need 70 to 100 staffers to gain critical mass. Until then, McKinsey plans to bring in consultants from outside the organisation to work on specific aspects of a project, or even work side by side with other consultancy organisations in the country.
Points out Alexander: "We do not think in terms of competition. If it makes sense to work with other consultants, then we will do it." Still, McKinsey must watch out for the competition. Global rivals Coopers & Lybrand set up local operations much before the Firm, while Booz Allen & Hamilton, A.T. Kearney, Arthur D. Little, the Boston Consulting Group and Bains & Co. are also testing the waters.
Says CEO-elect Gupta about McKinsey's India strategy: "We have no quantitative objectives of any kind. We want to build the practice one client at a time, one study at a time. We want to be a long-term partner to improve the performance of Indian institutions, as the country becomes more and more part of the global economy. We are there for the long run."
For his mentor "Tino" Puri, the implications are clear and simple: he will probably have less time in future for his wine collection, classical music, dance, and the game of golf that he loves to play.
'I'm A Product Of McKinsey'
IF YOU are a young man dressed in a business suit, visiting Chicago's First National Plaza for the first time, the chances are pretty high that the security guard there will ask you: "29th floor, right?" Right, but how did he know? "A lot of young men like you go there to be interviewed for a job." The 29th is one of the three floors occupied by the Chicago offices of one of the world's most influential and prestigious management consultancy companies, the $1.3-billion McKinsey & Co. It is also where Rajat Gupta, 45, who will take over as McKinsey's next managing director on the historic day, July 1, 1994, works.
Last fortnight, the receptionist at the CHO--as this office is called in McKinsey-speak--had a sign on her desk saying Congratulations, Rajat, On Becoming Firm Managing Director. Yes, plenty of eager young MBAs do come here to be interviewed.
Q. When former managing director Ron Daniel called to say that you had been elected, were you surprised?
A. Surprised is not the right word. I'd say I was very honoured. Obviously, I knew I was in the running, and there were two candidates in the final round. So, I wasn't so much surprised as honoured by my election as managing director.
Do you remember the thoughts that went through your mind at that very moment? I think the thoughts running through my mind had pretty much to do, frankly, with how terrific a place McKinsey is. I've never worked anywhere else in my life. So, whatever I am, I'm a product of McKinsey. I take all the congratulations as a great compliment to the Firm.
What role did your Indian-ness play in your election? What I feel about the Indian-ness is that it's a great tribute to McKinsey. I can safely say that this is one place which is truly a meritocracy. I don't think anybody would have considered for too long whether I was Indian or European or American or from anywhere else. That is characteristic of the fact that McKinsey, over the last few decades, has truly become a global institution. That's reflected in what we now see as priorities for the Firm. Although the US is still important, many of our priorities are outside the country. It's become a global institution, and in a sense, McKinsey is blind to the nationalities of its partners.
Is the fact that an Indian has become the head of such a huge American corporation the equivalent of the running of the four-minute mile? I wouldn't quite characterise it that way. I've never felt, throughout my 20 years here, that there was any issue about my nationality or the colour of my skin.
Tell me about your India days. I'll give you a quick snapshot. I was born in Maniktala in Calcutta, and lived there for the first five years of my life. My parents, Ashwini Kumar Gupta and Pran Kumari Gupta, had three other children. I have a sister a year older, another two years younger, and a brother 10 years younger than me. My father was a journalist with the Ananda Bazar Patrika Group. He was a prominent freedom fighter and had been to jail many times. My mother taught at a Montessori school. When I was five we moved to Delhi, where my father went to start Hindustan Standard, and I studied at Modern School on Barakhamba Road. My father died when I was 16. My mother died when I was 18.
What did you four brothers and sisters do then? We decided to live by ourselves. It was pretty unusual in those days. Normally, we would have been sent off to live with various relatives. Instead, we asked a spinster aunt to come and live with us. All of us were good students, so we all had scholarships. After Modern School, I went to the Indian Institute of Technology at Delhi (IIT-D) to study mechanical engineering.
What were your options after you graduated from IIT-D? Well, everybody was going into management; you either began as an management trainee or you went to B-school. I had got a wonderful job at ITC. I had also applied to B-schools, both in India and abroad. I was accepted at the Indian Institute of Management at Ahmedabad, but preferred Harvard, where I got financial aid. I told ITC then that I wasn't going to join them. They wouldn't believe me because nobody had turned them down. So, they actually paid my airfare to come and meet them in Calcutta to explain why I wasn't joining them. Ajit Haksar, who was then ITC's chairman, was among those whom I met. I explained to them that I was going to Harvard, and only then did they understand.
What was Harvard like? It was sort of classic. You always feel you're going to flunk in the first month. They give you so much to do that you say this is impossible. But once I got over that initial scared feeling, it was relatively easy.Because the IITs give you a wonderful education, better than you get anywhere, actually.
Were there many Indians at Harvard with you? There were a couple in my class. One was Praful Gupta, now with Reliance, who worked at Booz-Allen & Hamilton for 20 years. He's a very good friend of mine...
How difficult was it being an Indian student at Harvard? Well, people were surprised about how good your English was. Another thing is that Indians typically don't speak up that much, which you must at business school. I was very reticent in class.
Did your professors point that out? Yes, everybody would comment on that. Right after the first term, there were only two of us who got perfect grades. Most of my classmates were surprised that I got all excellents. I never said much, you know.
Why did you opt for a consulting job after school? The most practical reason was that there were precious few companies who would even want to talk to me since I was on a student visa. Second, consulting was the most sought-after job at B-school.
Why did you choose McKinsey? McKinsey was important, and willing to talk to me. We had two interviews, back to back, on campus. The second was conducted by Bill Clemens, who was then head of recruiting in McKinsey's New York office. He told me that my credentials were terrific. "And you're obviously very smart, but you need to go and work somewhere else for three or four years before we'll consider you." I was, obviously, not very happy with that. One of my professors, Walter Salmon, who was a classmate of Ron Daniel, who then ran McKinsey's New York office, wrote to him to reconsider the decision. Then, I was invited to a full day of interviews at the New York office and, eventually, offered a job.
Why have you stayed on at McKinsey for so long? I was never tempted to leave. I believe McKinsey is an absolutely unique institution.
Why? Its people and its culture. McKinsey is a collection of extraordinarily talented people, who are also very interesting in their diversity. What ultimately keeps you is the people.
Former managing director Daniel describes the CEO's job at McKinsey as trying to herd cats. How would you describe it? It isn't a classic CEO job. This is a sort of servant-leader job. We don't have one leader; we have at least 150, if not 400, leaders. So, you have all these highly talented leaders who--given the freedom--will do the right thing. What you need to do is figure out what their aspirations are, synthesise them, and distil them in the direction the Firm should take. Create the environment so that they can do what they think is right.
Only one in 10 associates at the Firm becomes a director. How did you make it? You need the basic skills of consulting: problem-solving, interpersonal skills, developing relationship, serving clients, and so on. Then, you have to constantly think about how you can make a difference to the Firm. About the leadership you can provide.
What are your special skills? The dimension I would pick is team building. The ability to build a real partnership.
Are there some areas you need to work on? I'm sure there are plenty. At times, I'm not tough enough or firm enough. Generally, I'm a soft person. I'm probably not as good in large public settings as I am in more intimate settings.
How will your life change when you become CEO? I suppose I'll have to do less of client work and more travel...
Will you move to New York? I'm not planning to move to New York. Only a fraction of our partners and principals are in New York. So, there's no particular reason to be in New York, or any particular place. There's no such thing as the Firm's headquarters. It doesn't exist.
What makes McKinsey so unique? It's a global partnership, which is almost impossible to build from scratch. We have an extraordinary internal value system that holds it together. The people are special. We attract the best and we hire the best. We have a unique way of developing them. We invest a lot in building competencies in various industries and functions.
Critics complain that McKinsey is simply too expensive. Do you agree?
We are very cogniscent of the fact that we are expensive. We are expensive because of what it takes to attract outstanding talent. While some of our clients may comment on that--I mean, who wouldn't?--they still come back and are very happy with what we do...
What about clients who have had problems? It is always easier to tell in hindsight. We hope that we can turn things around, but sometimes it just doesn't work...
What is your personal vision for McKinsey? We will continue in many ways the way we are. We'll simplify our structure a little bit. We may have become, because of size and growth, a little complex in our structure of governance...
Isn't there too much management by committee? You can take off a bunch of committees, I don't think all of them are essential. You can involve the director group in making more decisions directly. You can emphasise the value system, and manage more through values...
How practical are Marvin Bower's (McKinsey's guiding spirit) values these days, when the bottomline is everything? The bottomline isn't everything. I think professional values--the interests of the client come before the interests of the Firm--all hold true. If we do those things well, the financial rewards will follow. The financial rewards are a result, rather than an objective.
What criteria, then, do you use to judge performance? In order to be a real member of the Firm, you have to adhere to its values. And have a strong personal impact, radiating those values. We look at two dimensions: client impact, and firm impact. Client impact means: what difference are you making to the performance of our clients? Firm impact means: what is your contribution to building the institution?
How closely are you in touch with India? Very close. I go every year... I was involved in the opening of our India office. Of course, Tino Purie pretty much led our effort to establish ourselves there. I have very strong ties with India, and I would like to contribute as much as I can. I owe my success to the basic, underlying philosophy of India.
Which is? It goes back to the fundamental philosophy of the Gita, which is that you worship work and do it for its own sake and don't judge it by what results you achieve. Concentrate on doing your best in what you do.
What is your relationship with Tino Purie? Tino has meant more to me than anyone else at the Firm. He's been my big brother and my mentor for 20 years now. He was the senior-most Indian here when I joined. Whenever I need personal advice, I turn to him.
What are your plans for McKinsey's India office? We have no quantitative objectives of that kind. We want to build the practice one client at a time, one study at a time. We want to be a long-term partner, as India becomes more and more a part of the global economy. We are there for the long run.
Why didn't you go back to work in India? I have been extensively involved in the governance of the Firm in some form or another for about 10 years, and I feel that all the things I was doing would be difficult to do if I went to India. The other reason is that it would have been difficult for our children; they've all grown up here.
Tell me about your wife, Anita. First of all, let me make it clear that she is a lot smarter than me. She was a gold medalist at IIT. After doing her electrical engineering there, she studied at Columbia and worked at Bell Labs. We married after she finished IIT, and before I started at McKinsey. She stopped working after our second child. Now, our youngest is four years old.
You met at IIT? Yes, she was two years junior to me. We used to do plays together. I was quite active in dramatics, both in school and at IIT-D. I did 17 plays in those five years, Hindi and English, modern and classical.
Is there still life outside the Firm? Of course there is, in many different dimensions. Even though I work about 12 hours a day, I make it a point not to work weekends, unless I'm travelling. I've been involved with the Harvard Business School Club and the advisory board of Northwestern University's Kellogg Business School. I have also been involved with Bala Balachandran at Kellogg in helping him think through Indian projects. Beyond that, I have four daughters and they can keep you pretty busy.
Since you are only 45, you could serve five three-year terms until you retire at 60 as McKinsey's CEO. Is that how you see it? This is a very intense job. Like everything else we do here, it ought to be a rotating position. I don't know precisely, but somewhere between five and 10 years is more than enough.
"Congratulations," said Ron Daniel, "I'm very happy for the Firm." That's all Rajat Gupta needed to hear on the telephone while on vacation in Colorado (US) on Friday, March 25. After 21 years of working for the world's most influential and prestigious management consultancy firm, the $1.3-billion McKinsey & Co. (McKinsey, a.k.a. the Firm), 45-year-old Rajat Gupta had finally arrived: he had just been elected its managing director.
That call from Daniel, the chairman of the election committee and a former McKinsey managing director, brought the Gupta-Daniel story full circle. Two decades earlier, it was Daniel who had hired Gupta straight out of Harvard B-School for McKinsey's New York office--after Gupta had been turned down because he didn't have any work experience. That's when one of Gupta's professors at Harvard, Walter Salmon, wrote to Daniel, then manager of the New York office, asking him to reconsider the decision. He did, and the rest, as they say, is history.
For the Chicago-based Gupta, it is the culmination of a journey. A long and arduous journey by a young man from Maniktala in Calcutta, where he was born in a middle-class family, to the top of a $1.3-billion powerhouse of business savvy. Although McKinsey-watchers had predicted that a non-American could take over as CEO this time around, Gupta wasn't always mentioned as the top choice. "McKinsey is truly a meritocracy. I don't think anybody would have considered for too long whether I was Indian or American," says Gupta.
Despite his characteristic humility, Gupta will have done more than cross a milestone on July 1, 1994, when he becomes the first-ever India-born CEO of a US transglobal corporation. Indeed, Gupta is the first Indian to have successfully broken through the impenetrable glass ceiling at the top which most transnationals have erected. Reckons Gupta, who was interviewed for two hours by BUSINESS TODAY at his 29th-floor office in Chicago, which he heads: "Over the last few decades, McKinsey has become truly global." Adds McKinsey's India office managing director, Anupam P. "Tino" Puri: "Rajat was selected inspite of his being Indian. The process of choosing the managing director is blind to nationality."
With 62 offices in 31 countries, priorities at the 68-year-old company--which now earns 60 per cent of its revenues outside the US--are shifting overseas more than ever before. Says Norman Sanson, managing director of McKinsey's London office: "The time was near for a non-American to be the MD. This shows the non-Americanism within McKinsey."
FACTFILE NAME: Rajat Kumar Gupta
DESIGNATION: Managing director-elect, McKinsey & Co. Takes office on July 1, 1994
DATE OF BIRTH: December 2, 1948
AGE: 45 years
PLACE OF BIRTH: Maniktala, Calcutta
NATIONALITY: India-born US citizen (US citizen since 1984)
EDUCATION:Modern School, New Delhi, 1966; B. Tech (mechanical eng), IIT-Delhi, 1971; MBA, Harvard Business School, 1973
CAREER: Joined McKinsey in 1973; New York office, 1973-1981;Scandinavia office (Copenhagen), 1981-86; Chicago office, 1986-1989; elected principal 1980; elected director 1984; managing director (Chicago), 1989-94, managing director-elect, McKinsey & Co., 1994
SPECIALISATION: Strategy, energy, industrial goods, consumer products WIFE'S NAME: Anita Mattoo Gupta, engineer
CHILDREN: Geetanjali, 16; Megha, 12; Aditi, 9; Deepali, 4
AFFILIATIONS: Advisory boards of Harvard & Kellogg B-schools
LANGUAGES KNOWN: English, Hindi, Bengali
CURRENTLY READING: The Complete Works of Vivekananda, Gita Mehta's The River Sutra
INTERESTS: Bridge, old Hindi film songs, and Western classical music To the casual observer, Gupta's education--Indian Institute of Technology-Delhi (IIT-D), Harvard Business School--and his membership of the Firm could suggest he's part of the old boy network that is so special at McKinsey; a typical McKinsey consultant has been to an Ivy League college and graduate school. Gupta's past tells another story. After living in Calcutta for the first five years of his life, he moved to Delhi in 1953. One of four children, Gupta lost both his parents by the time he was 18 years old. Completing most of his education with the help of scholarships, Gupta passed out of Modern School at Delhi, and was ranked 15th in the all-India IIT entrance test in 1966. At IIT-D, he won not only a five-year mechanical engineering degree, but also his future wife: Anita Mattoo, an electrical engineering student who was two years his junior. They first met at a play rehersal-- "Ratan" was a keen debator and actor--where she played Gupta's grandmother. In 1973, the duo married.
When Gupta finished at IIT-D in 1971, he had several choices: a job at ITC, a management degree from IIM-Ahmedabad--or an MBA from Harvard Business School. Not surprisingly, he picked the last. Boston brought culture shock--he'd never even seen TV before--but the academics was easy.Recalls Reuben Aragon, a Mexican-American dorm-mate from Harvard, now CEO of the Oklahoma-based Duralast Rubber: "There was a spark there. You knew he would definitely be going some place."
That turned out to be McKinsey. When he joined McKinsey in 1973, it wasn't as if he was the first Indian to work for the Firm. Puri had signed up in1970 and became Gupta's mentor and big brother. Interestingly, around three per cent of the Firm's 3,000 professionals were born in India--and that doesn't include second-generation Americans of Indian origin.
Of these, 80 are associates, 10 are principals, and three are directors: Gupta, Puri, and Adal "Scratch" Zainulbhai, who works at the New York office. "Good Indian minds are good at consulting," reckons Arun Maira, a former TELCO executive director, who now works with the Boston-based consultants, Arthur D. Little. Consider some of the qualities that allowed Gupta to beat the pack:
WHAT TOOK RAJAT TO THE TOP
Several partners, consultants, and directors at McKinsey--as well as McKinsey's clients and alumni--were interviewed to identify the specific factors for Rajat Gupta's rise to the top:
Intelligence: Was a brilliant student at IIT-D and Harvard
Vision: Has always seen the big picture very quickly
Integrity: No doubts about his dedication to his clients
Track Record: Did exceptional work in Scandinavia and in Chicago
Experience: Experience in India, Europe, and the US will be handy
Loyalty: Has worked with McKinsey for 20 years
Patience: Low-key approach is refreshing
Hard Work: Willing to work at a problem until the job's done
Team Play: Spends time building teams and working by consensus
Creative: Uses unusual methods to arrive at solutions
Open: Always available to offer advice
Maturity: Is one of the youngest in most settings
Humility: Has a down-to-earth approach and did not lobby for the job
GLOBAL PERSPECTIVE: As McKinsey gears up for the challenge, who better than the India-born Gupta, who won his spurs in Europe and the US? Gupta's first test came in 1981 when he was sent to Scandinavia to manage McKinsey's operations there. Gupta was one of the youngest partners to have been entrusted with such a responsibility. "I was 32, and still a principal. It was very unusual for a principal to be office manager," he admits. At the Scandinavian office, Gupta turned around McKinsey's prospects.
LEADERSHIP: Gupta showed early signs of being a general rather than a foot soldier. Soon after he graduated from IIT-D--where he was general secretary--Gupta was called for a job interview at ITC. On the panel was R.C. Sarin, who now heads Carrier Aircon. Twenty years later, Sarin bumped into Gupta at a seminar in Delhi and instantly remembered the young man he had once interviewed. For, when asked the attributes of a leader, Guptahad given a memorable reply: "One who can motivate his colleagues and get things done without making his teammates feel that it was the leader who had actually got the work done." Summing up Gupta's leadership style, a colleague in the Chicago office, director Chip Chandler says: "Very quiet. Leads from behind. Builds consensus."
INTEGRITY: Advocated by Marvin Bower--the guiding spirit of the company founded by James O. McKinsey in 1926--McKinsey consultants are expected to function by the Firm Code. The five tenets: to put client interests ahead of Firm interests; to serve the client in a superior manner; to adhere to high ethical standards in everything the Firm does; to preserve the confidence of clients; to be ready to differ with client managers and tell them the truth even if it hurts. Not surprisingly, Gupta has treated the code as sacred and has won a squeaky-clean image in the process.
PEOPLE-ORIENTED: Gupta always finds time for people and their problems; he personally knows all the 148 senior McKinsey partners around the globe, and most of the 400 partners. Says Varun Bery, a former McKinseyite, who is now with the investment bank CS First Boston: "He has a very down-to-earth style. He is approachable by colleagues at all levels." In December 1993, Gupta flew down from Chicago to spend three days with the young McKinsey recruits in India. Says Ashok Alexander, partner, McKinsey India: "He found the time to have dinner with a group of associates whom he will possibly never see again in his life." Adds Shashi Khanna, director, MAP Consultants, Delhi, a friend from his IIT-D days: "He values relationships."
LOYALTY:At a time when loyalty is at a premium, Gupta has spent his entire working life with one organisation. Especially as McKinsey is a rich hunting ground for CEOs: IBM's Louis Gerstner, Westinghouse Electric's Michael H. Jordan, American Express's Harvey Golub, Tele-Communications' John Mallone, and Levi Strauss' Robert Haas have all been McKinsey consultants. Gupta, however, has never looked askance at any McKinsey command, always putting the Firm's interests before his own. He refused the offer to try out Copenhagen for two weeks when the Scandinavian move was mooted. And while moving back to Chicago, he only asked a McKinsey associate to buy him a suitable house to move into--without even seeing it.
PERSONAL VALUES: Despite cut-throat competition, Gupta is admired in the McKinsey world for his humility and unassuming airs. Says Sanson: "He cares for other people's successes like his own, and does the right things for his clients. And more than everything, he is very humble." Adds Richard Cavanagh, executive dean, Kennedy School of Government, who worked on-and-off at McKinsey for 17 years: "I'm a real fan of Rajat. He has astounding maturity for someone so young."
That is important, as McKinsey's partnership environment is a flat organisation, where the managing director of the firm isn't a typical CEO. Even the election--not selection--is more like the cardinals in Rome electing the Pope. There is no electioneering and you cannot declare yourself a candidate. All the directors around the world vote on the top few candidates every three years. This year, the 148 directors narrowed it down to two candidates, Gupta and Don Waite, head of the New York office.The vote was by secret ballot, processed by Price Waterhouse.
Does Gupta's appointment mean that Indians are finally ready to storm the bastion of White Anglo-Saxon Male CEOs? Not likely. Says Shyam Lal, an IIT-D and University of Chicago McKinseyite: "It is less a breaking through of the glass ceiling, and more a reflection of the fact that it was time for a young man with a global background to step forward." Adds Atul Kanagat, 38, a principal at McKinsey's Chicago office: "It will not have that kind of effect. Few companies would model themselves along our lines. At the same time, Rajat's been one of our most successful partners, and so, it's quite a natural progression for him."
McKinsey follows a brutal up-or-out policy: if you don't make it to the next level within a reasonable number of years, you are expected to leave. Associates, the new recruits, usually take about six years to become principals; about one in six makes it. It takes another six years to become a director, and only one in 10 associates becomes one. As a result of this policy and the constant headhunting, McKinsey has about 3,500 well-connected alumni the world over.
Ironically, getting to the driving seat may prove to be a lesser challenge for Gupta than steering the McKinsey juggernaut in the future. One criticism is that the Firm has grown too fast to deliver value for money. McKinsey has also been accused of being too bloated to serve its clients well. Gupta admits he needs to fix this: "We'll simplify our structure a little bit. We may have become--because of our size and growth--a little complex in our governance structure."
In the meantime, smaller firms-- A.T. Kearney, Bains & Co.--are chipping at McKinsey's business. While they don't have the Firm's reach, they are expanding. For instance, A.T. Kearney CEO Fred Steingraber is initiating a blitz in India this month.
Another sore point with carpers is McKinsey's fees, which are the highest in the business. Gupta agrees, but says: "We are expensive because of what it takes to attract outstanding talent." Talent doesn't come cheap: associates earn up to $250,000 a year until it's time for a promotion. And according to David Lord, editor of Consultants News, Gupta should make "between $2 million and $4 million a year" when he takes over.
In the history of the Firm, two managing directors are credited with playing a crucial role: Ron Daniel and Marvin Bower. If Tom Peters is correct, Rajat Gupta may be the third CEO whose tenure could be a watershed in the history of the Firm.
'Rajat Is The Firm's Future' THAT the world's best-known management guru is a former McKinseyite shouldn't surprise you. Fifty-one-year-old Tom Peters is now an institution himself, but he used to work with McKinsey until 1981. In fact, it was a McKinsey project which led to the publication of the seminal best-seller, In Search of Excellence, which was written by Bob Waterman, another McKinseyite, and Peters himself.
On Gupta's election: To say that I was thrilled is an understatement. It came as a total surprise. I wrote Rajat a little note saying how delighted I was. He's the best thing to happen to McKinsey since Marvin Bower's days at the Firm.
On McKinsey's search for excellence: The project set out to answer one question: if we're so smart at generating great ideas, why are clients having problems implementing them? An informal core group of 15 to 20 people worked on the project between1977 and 1981. One of the best people in the core group was Rajat.
On McKinsey today: It's hard to criticise its effectiveness. It adds tremendous value for clients. It's still the best place to turn to.
On fixing McKinsey:McKinsey isn't showing the kind of intellectual leadership that it should. McKinsey always defined the business model. But no longer. Why is Microsoft defining the business model, and not McKinsey? Many of the best thinkers have moved on. There's a sense of predictableness. There's too much conservatism. Things aren't as wild, woolly, and wacky as they could be.
On Gupta and McKinsey: McKinsey could be a more exciting place than it is. Rajat can make it so. He's the future of the Firm. He has the ability to understand clients well and then give them creative solutions. But remember, I have a very strong bias!
McKinsey's Indian Connection
December 1993. Fort Aguada, Goa. A few hours before the conclusion of the first-ever annual retreat of McKinsey in India, an unassuming person, who had sat quietly at the back through the three-day meet, walked up to the dais at the invitation of McKinsey's India office managing director, Anupam P. "Tino" Puri.
For the next 45 minutes, Rajat Gupta, then head of McKinsey's Chicago office, spoke animatedly about his career path, the choices he had made, the values of the company that he holds dearly and, finally, McKinsey in India. Says Ashok Alexander, partner, McKinsey India: "At the end, there was no applause. We were too stunned." Explains Puri: "Rajat is sympathetic to India. He will do what is expected of a managing director. And McKinsey is truly committed to this country."
Indeed, McKinsey's India affair began equally passionately in 1988, when the Puri-Rajat duo came on a recce mission. Whirlwind meetings withbureaucrats, businessmen and cabinet ministers set the basis of a courtship that was formalised four years later, when the Firm set up itsIndia office. In the last two years, the Firm has grown from a fledging six-person bureau into a 40-strong team; 10 of whom are Indian repats.
As corporate India scrambles to restructure, McKinsey is targeting four kinds of clients: large Indian groups, smaller business houses,transnational corporations, and state governments. Says Puri: "These are unusual times, with most of our clients undergoing an unprecedented degree of turmoil." And the Firm's clients include the State Bank of India,Larsen & Toubro, RPG Enterprises, Hindustan Lever, Arvind Mills, HindustanMotors, Shriram Fibres, the Council for Leather Exports, Coca-Cola--Parle, and the State Industrial and Investment Corporation of Maharasthra.
In the next few months, the group plans to focus on transnational corporations for whom India is an integral part of the global market, and public sector units desperate to become competitive. But McKinsey India will well and truly pick up the gauntlet when it tries to rebuild at least a dozen companies into Indian transnationals. Says Puri: "We have plans totake about 10 to 12 companies in different sectors and make them world leaders. The idea is to build on the competitive advantage of Indian companies."
To effect these changes, McKinsey has already prescribed radical solutions, based on its organisational restructuring models. Clients trying to instil cultural changes and cost reduction exercises, for example, are asked to go beyond total quality management (TQM) and apply McKinsey's model of a transformational corporation. Similarly, the consultancy supremo advocates setting up horizontal companies, rather than flat organisations, for better and quicker results.
New offices are expected to come up soon in Madras and Calcutta, and McKinsey is in the market for quality personnel. Already, the consultancy faces a dilemma in finding the right kind of people and training them. In the last two years, to circumvent the scarcity of skilled people for specialised tasks, it has flown in at least 35 senior consultants from McKinsey overseas. Increasingly, the focus will be on developing local talent, which is a time-consuming mission. Points out Puri: "Consulting is like a craft. To major from a carpenter to a master craftsman takes time. Our size here is supply-constrained, not demand-constrained."
Manpower is important for the services company, since the Firm will need 70 to 100 staffers to gain critical mass. Until then, McKinsey plans to bring in consultants from outside the organisation to work on specific aspects of a project, or even work side by side with other consultancy organisations in the country.
Points out Alexander: "We do not think in terms of competition. If it makes sense to work with other consultants, then we will do it." Still, McKinsey must watch out for the competition. Global rivals Coopers & Lybrand set up local operations much before the Firm, while Booz Allen & Hamilton, A.T. Kearney, Arthur D. Little, the Boston Consulting Group and Bains & Co. are also testing the waters.
Says CEO-elect Gupta about McKinsey's India strategy: "We have no quantitative objectives of any kind. We want to build the practice one client at a time, one study at a time. We want to be a long-term partner to improve the performance of Indian institutions, as the country becomes more and more part of the global economy. We are there for the long run."
For his mentor "Tino" Puri, the implications are clear and simple: he will probably have less time in future for his wine collection, classical music, dance, and the game of golf that he loves to play.
'I'm A Product Of McKinsey'
IF YOU are a young man dressed in a business suit, visiting Chicago's First National Plaza for the first time, the chances are pretty high that the security guard there will ask you: "29th floor, right?" Right, but how did he know? "A lot of young men like you go there to be interviewed for a job." The 29th is one of the three floors occupied by the Chicago offices of one of the world's most influential and prestigious management consultancy companies, the $1.3-billion McKinsey & Co. It is also where Rajat Gupta, 45, who will take over as McKinsey's next managing director on the historic day, July 1, 1994, works.
Last fortnight, the receptionist at the CHO--as this office is called in McKinsey-speak--had a sign on her desk saying Congratulations, Rajat, On Becoming Firm Managing Director. Yes, plenty of eager young MBAs do come here to be interviewed.
Q. When former managing director Ron Daniel called to say that you had been elected, were you surprised?
A. Surprised is not the right word. I'd say I was very honoured. Obviously, I knew I was in the running, and there were two candidates in the final round. So, I wasn't so much surprised as honoured by my election as managing director.
Do you remember the thoughts that went through your mind at that very moment? I think the thoughts running through my mind had pretty much to do, frankly, with how terrific a place McKinsey is. I've never worked anywhere else in my life. So, whatever I am, I'm a product of McKinsey. I take all the congratulations as a great compliment to the Firm.
What role did your Indian-ness play in your election? What I feel about the Indian-ness is that it's a great tribute to McKinsey. I can safely say that this is one place which is truly a meritocracy. I don't think anybody would have considered for too long whether I was Indian or European or American or from anywhere else. That is characteristic of the fact that McKinsey, over the last few decades, has truly become a global institution. That's reflected in what we now see as priorities for the Firm. Although the US is still important, many of our priorities are outside the country. It's become a global institution, and in a sense, McKinsey is blind to the nationalities of its partners.
Is the fact that an Indian has become the head of such a huge American corporation the equivalent of the running of the four-minute mile? I wouldn't quite characterise it that way. I've never felt, throughout my 20 years here, that there was any issue about my nationality or the colour of my skin.
Tell me about your India days. I'll give you a quick snapshot. I was born in Maniktala in Calcutta, and lived there for the first five years of my life. My parents, Ashwini Kumar Gupta and Pran Kumari Gupta, had three other children. I have a sister a year older, another two years younger, and a brother 10 years younger than me. My father was a journalist with the Ananda Bazar Patrika Group. He was a prominent freedom fighter and had been to jail many times. My mother taught at a Montessori school. When I was five we moved to Delhi, where my father went to start Hindustan Standard, and I studied at Modern School on Barakhamba Road. My father died when I was 16. My mother died when I was 18.
What did you four brothers and sisters do then? We decided to live by ourselves. It was pretty unusual in those days. Normally, we would have been sent off to live with various relatives. Instead, we asked a spinster aunt to come and live with us. All of us were good students, so we all had scholarships. After Modern School, I went to the Indian Institute of Technology at Delhi (IIT-D) to study mechanical engineering.
What were your options after you graduated from IIT-D? Well, everybody was going into management; you either began as an management trainee or you went to B-school. I had got a wonderful job at ITC. I had also applied to B-schools, both in India and abroad. I was accepted at the Indian Institute of Management at Ahmedabad, but preferred Harvard, where I got financial aid. I told ITC then that I wasn't going to join them. They wouldn't believe me because nobody had turned them down. So, they actually paid my airfare to come and meet them in Calcutta to explain why I wasn't joining them. Ajit Haksar, who was then ITC's chairman, was among those whom I met. I explained to them that I was going to Harvard, and only then did they understand.
What was Harvard like? It was sort of classic. You always feel you're going to flunk in the first month. They give you so much to do that you say this is impossible. But once I got over that initial scared feeling, it was relatively easy.Because the IITs give you a wonderful education, better than you get anywhere, actually.
Were there many Indians at Harvard with you? There were a couple in my class. One was Praful Gupta, now with Reliance, who worked at Booz-Allen & Hamilton for 20 years. He's a very good friend of mine...
How difficult was it being an Indian student at Harvard? Well, people were surprised about how good your English was. Another thing is that Indians typically don't speak up that much, which you must at business school. I was very reticent in class.
Did your professors point that out? Yes, everybody would comment on that. Right after the first term, there were only two of us who got perfect grades. Most of my classmates were surprised that I got all excellents. I never said much, you know.
Why did you opt for a consulting job after school? The most practical reason was that there were precious few companies who would even want to talk to me since I was on a student visa. Second, consulting was the most sought-after job at B-school.
Why did you choose McKinsey? McKinsey was important, and willing to talk to me. We had two interviews, back to back, on campus. The second was conducted by Bill Clemens, who was then head of recruiting in McKinsey's New York office. He told me that my credentials were terrific. "And you're obviously very smart, but you need to go and work somewhere else for three or four years before we'll consider you." I was, obviously, not very happy with that. One of my professors, Walter Salmon, who was a classmate of Ron Daniel, who then ran McKinsey's New York office, wrote to him to reconsider the decision. Then, I was invited to a full day of interviews at the New York office and, eventually, offered a job.
Why have you stayed on at McKinsey for so long? I was never tempted to leave. I believe McKinsey is an absolutely unique institution.
Why? Its people and its culture. McKinsey is a collection of extraordinarily talented people, who are also very interesting in their diversity. What ultimately keeps you is the people.
Former managing director Daniel describes the CEO's job at McKinsey as trying to herd cats. How would you describe it? It isn't a classic CEO job. This is a sort of servant-leader job. We don't have one leader; we have at least 150, if not 400, leaders. So, you have all these highly talented leaders who--given the freedom--will do the right thing. What you need to do is figure out what their aspirations are, synthesise them, and distil them in the direction the Firm should take. Create the environment so that they can do what they think is right.
Only one in 10 associates at the Firm becomes a director. How did you make it? You need the basic skills of consulting: problem-solving, interpersonal skills, developing relationship, serving clients, and so on. Then, you have to constantly think about how you can make a difference to the Firm. About the leadership you can provide.
What are your special skills? The dimension I would pick is team building. The ability to build a real partnership.
Are there some areas you need to work on? I'm sure there are plenty. At times, I'm not tough enough or firm enough. Generally, I'm a soft person. I'm probably not as good in large public settings as I am in more intimate settings.
How will your life change when you become CEO? I suppose I'll have to do less of client work and more travel...
Will you move to New York? I'm not planning to move to New York. Only a fraction of our partners and principals are in New York. So, there's no particular reason to be in New York, or any particular place. There's no such thing as the Firm's headquarters. It doesn't exist.
What makes McKinsey so unique? It's a global partnership, which is almost impossible to build from scratch. We have an extraordinary internal value system that holds it together. The people are special. We attract the best and we hire the best. We have a unique way of developing them. We invest a lot in building competencies in various industries and functions.
Critics complain that McKinsey is simply too expensive. Do you agree?
We are very cogniscent of the fact that we are expensive. We are expensive because of what it takes to attract outstanding talent. While some of our clients may comment on that--I mean, who wouldn't?--they still come back and are very happy with what we do...
What about clients who have had problems? It is always easier to tell in hindsight. We hope that we can turn things around, but sometimes it just doesn't work...
What is your personal vision for McKinsey? We will continue in many ways the way we are. We'll simplify our structure a little bit. We may have become, because of size and growth, a little complex in our structure of governance...
Isn't there too much management by committee? You can take off a bunch of committees, I don't think all of them are essential. You can involve the director group in making more decisions directly. You can emphasise the value system, and manage more through values...
How practical are Marvin Bower's (McKinsey's guiding spirit) values these days, when the bottomline is everything? The bottomline isn't everything. I think professional values--the interests of the client come before the interests of the Firm--all hold true. If we do those things well, the financial rewards will follow. The financial rewards are a result, rather than an objective.
What criteria, then, do you use to judge performance? In order to be a real member of the Firm, you have to adhere to its values. And have a strong personal impact, radiating those values. We look at two dimensions: client impact, and firm impact. Client impact means: what difference are you making to the performance of our clients? Firm impact means: what is your contribution to building the institution?
How closely are you in touch with India? Very close. I go every year... I was involved in the opening of our India office. Of course, Tino Purie pretty much led our effort to establish ourselves there. I have very strong ties with India, and I would like to contribute as much as I can. I owe my success to the basic, underlying philosophy of India.
Which is? It goes back to the fundamental philosophy of the Gita, which is that you worship work and do it for its own sake and don't judge it by what results you achieve. Concentrate on doing your best in what you do.
What is your relationship with Tino Purie? Tino has meant more to me than anyone else at the Firm. He's been my big brother and my mentor for 20 years now. He was the senior-most Indian here when I joined. Whenever I need personal advice, I turn to him.
What are your plans for McKinsey's India office? We have no quantitative objectives of that kind. We want to build the practice one client at a time, one study at a time. We want to be a long-term partner, as India becomes more and more a part of the global economy. We are there for the long run.
Why didn't you go back to work in India? I have been extensively involved in the governance of the Firm in some form or another for about 10 years, and I feel that all the things I was doing would be difficult to do if I went to India. The other reason is that it would have been difficult for our children; they've all grown up here.
Tell me about your wife, Anita. First of all, let me make it clear that she is a lot smarter than me. She was a gold medalist at IIT. After doing her electrical engineering there, she studied at Columbia and worked at Bell Labs. We married after she finished IIT, and before I started at McKinsey. She stopped working after our second child. Now, our youngest is four years old.
You met at IIT? Yes, she was two years junior to me. We used to do plays together. I was quite active in dramatics, both in school and at IIT-D. I did 17 plays in those five years, Hindi and English, modern and classical.
Is there still life outside the Firm? Of course there is, in many different dimensions. Even though I work about 12 hours a day, I make it a point not to work weekends, unless I'm travelling. I've been involved with the Harvard Business School Club and the advisory board of Northwestern University's Kellogg Business School. I have also been involved with Bala Balachandran at Kellogg in helping him think through Indian projects. Beyond that, I have four daughters and they can keep you pretty busy.
Since you are only 45, you could serve five three-year terms until you retire at 60 as McKinsey's CEO. Is that how you see it? This is a very intense job. Like everything else we do here, it ought to be a rotating position. I don't know precisely, but somewhere between five and 10 years is more than enough.
New Avenues for Outsourcing
Contributed by-Rajat Agarwal, The Boston Consulting Group of India
A month back I asked Rajat, a close pal of me -whats the next ingridient for BPO? We heard enuf of Call center, transaction processing. His answer was spontaneous, lots and lots. My eye brows raised..really?
Of course like a good friend and a pure consultant he gathered his research and his thoughts, those i am mentioning here. Based on his template, with a few changes there in here i go:
PS: Rajat Agarwal is working with BCG since 2000. He is a BE from REC Durgapur and MBA (Finance) from IIM Ahmedabad.
New Areas in Outsourcing
Outsourcing is undergoing a radical transformation. Transparent geography is one Of the many emerging trends. Dramatic benefits such as cost savings and time to market reductions have been reported by its pioneers. New trends in outsourcing are defying speculators' predictions about a slowdown. Here are some of the new areas in outsourcing:
E-governance
E-governance or electronic governance may be defined as delivery of government services and information to the public using electronic means The private partner brings in specialized IT skills and other resources. Outsourcing helps the government, generally lacking in the knowledge of current and emerging IT technologies, to make the right choice of technology.
Project management skills in government are also quite poor and by outsourcing, services can be digitized with least penalty in time, cost and other resources. The private vendors would generally work more efficiently and effectively for faster development of projects at a lower cost. Day-to-day hassles of running, maintaining and managing the system can be left to the more specialized private partner. Outsourcing also allows mountains of inherent legacies of the government systems to be by-passed. Legacies reside in the organization, the hierarchy, the processes, decision-making and in the people involved. Dozens of approvals required in the sanction of projects result in huge delays in implementationof projects and, finally, poor quality of service delivery. The choice of outsourcing makes it possible to jump over these legacy systems in one go, bringing relief to the government IT-administrators, who need not then be
afraid of the auditors and their guillotines. The most important advantage of outsourcing lies in the fact that the government can concentrate on their core competencies. Productivity can thus
be enhanced.
Project management skills in government are also quite poor and by outsourcing, services can be digitized with least penalty in time, cost and other resources. The private vendors would generally work more efficiently and effectively for faster development of projects at a lower cost. Day-to-day hassles of running, maintaining and managing the system can be left to the more specialized private partner. Outsourcing also allows mountains of inherent legacies of the government systems to be by-passed. Legacies reside in the organization, the hierarchy, the processes, decision-making and in the people involved. Dozens of approvals required in the sanction of projects result in huge delays in implementationof projects and, finally, poor quality of service delivery. The choice of outsourcing makes it possible to jump over these legacy systems in one go, bringing relief to the government IT-administrators, who need not then be
afraid of the auditors and their guillotines. The most important advantage of outsourcing lies in the fact that the government can concentrate on their core competencies. Productivity can thus
be enhanced.
Retail Services Outsourcing
Geographic borders and time zones mean little for retail and manufacturing enterprises competing for mind share and market share in the global economy. With supply chains that span the globe, businesses are pushing to get their products to market and into the hands of their customers more quickly and more efficiently than ever before, little or no margin for error, they need experienced partners who can help them get the job done right, the first time. Major chains are expanding their presence across geographic regions and, in many cases, across national boundaries. Additionally, they are expanding into new markets that extend their brand to new product categories. Meanwhile, with the Internet has raised expectations for customer services.
Customers are expecting retailers to deliver a consistent experience, regardless of whether they are inside the store, phoning a call center, or at their computer. Outsourcing these services proves both cost effective and leads to increased productivity.
Customers are expecting retailers to deliver a consistent experience, regardless of whether they are inside the store, phoning a call center, or at their computer. Outsourcing these services proves both cost effective and leads to increased productivity.
Pharmaceutical research
From drug discovery to selling, the pharmaceutical industry needs new solutions. Utilizing information technology efficiently is a critical component for business success and gaining the competitive edge. Outsourcing provides the small pharmaceutical company the ability to take new drugs through clinical trials by avoid the investment in infrastructure which would normally be necessary. After InfoTech firms, it's the turn of biotech and pharma companies to look at
outsourcing from India. According to Proximare Inc, a consultant for pharma and related companies, over $200-million worth work is likely to be outsourced from India over the next 12 months in the field of biotechnology and pharmaceuticals. These companies are mostly looking at collaborative research outsourcing work to be done out of India. Collaborative research outsourcing (CRO) is likely to become the next big wave after contract research outsourcing
Financial Services
The role of outsourcing in financial services is undergoing fundamental, industry-wide changes. Financial services providers and vendors of IT products and services to the financial sector have long used outsourcing to meet their limited tactical goals. Enterprises are relying on outsourcing as part of their broader strategic sourcing plans. Their goal is to improve competitiveness while reducing costs. A recent study conducted by The Economist Intelligence Unit shows that
approximately 30 percent of the companies (in the study) outsource finance and accounting functions, with two-thirds of those (65 percent) characterizing the arrangement as successful (57 percent) or very successful (8 percent). While cost savings and increased productivity are key motivators for outsourcing, the study determined that finance and accounting outsourcing is increasingly being used as a catalyst for business transformation.
Healthcare
IT will provide healthcare organizations opportunities in 2004 to improve quality and reduce costs, while presenting challenges to the security and privacy of patient data. Healthcare's provider sector is opening its minds to the possibilities of business transformation through BPO. Rather than just focusing on the bottom line, they're realizing that savings from reduced operating costs can be redirected to investments in improving patient care quality, medical
facilities or equipment and salaries.
Along with these new areas in outsourcing there is also a shift in the reasons for outsourcing. Cost reduction is no longer the sole motivation as value addition with an improvement in productivity and quality is spurring people to explore India. The constantly growing BPO industry in the country is changing, incorporating new ideas and mindsets as well as opening up new possibilities for global companies.
Thursday, February 24, 2005
History of Consulting Unit-Towers Perrin
Source: Top Consulting Magazine
Towers and Perrin are known for their outstanding end to end solutions in three fields namely Human Resources, Re-insurance,Tillinghast.The rise of this firm since 1917 is described below:
In 1917, H. Walter Forster, founder develops the first private pension plan, for Union Carbide and Carbon Corporation.
The 30s: TPF&C becomes a reality
March 1, 1934 — Towers, Perrin, Forster & Crosby opens for business in Philadelphia with a Reinsurance Division and a Life Division. Employees number 26 and first-year income is less than $200,000.
Innovations: The Reinsurance division is instrumental in developing syndicates to provide additional capacity in London as a way of offsetting a worldwide reinsurance shortage.
The 40s:
1946 — The Life Division becomes the Pension Division. TPF&C opens its second office (Chicago).
1949 — TPF&C opens an office in New York City and firmwide employment reaches 120.
Innovations: The Pension Division publishes its first TPF&C Pension Tax Manual, which quickly becomes a standard U.S. Internal Revenue Service reference source on pension tax law.
Towers and Perrin informs informs clients of trends and regulations in the areas of pensions and benefits.
The 50s: Global expansion
1952 — The firm’s first communications consulting unit is formed. Total income reaches $2 million.
1956 — The first non-U.S. office opens in Montreal and the Pension Division becomes the Employee Benefit Plan Division as a first step toward marketing a broadening range of consulting services.
1959 — Firm income reaches $4 million.
Innovations:Towers and Perrin holds the credibility of producing the first personnel manual, which becomes the prototype for companies that want to develop formal benefits descriptions for their employees.
Tillinghast develops a prize-winning paper on discounted cash flow methodology that becomes an industry standard for pricing life insurance products and companies.
The 60s:
1962 — Introduce compensation and organization consulting services.
1965 — Brussels becomes the firm’s first office outside of North America.
1969 — The firm opens its first office in London. Income more than triples during the decade to $14 million and staff more than doubles to almost 500.
Innovations: Established a centralized, six-month training program for new consultants.
We begin a formalized research program to benefit our clients.
The consulting division focuses on expanding its services to clients, with an emphasis on direct and indirect compensation, the precursor to Total Rewards.
The 70s: Growth and prosperity continue
1974 — The firm’s first Latin America office opens in Caracas.
1979 — Opened first Far East office in Hong Kong. Total revenues reach $88.4 million — almost six times the 1970 level — and staff tops 1,300.
Innovations: The Human Resource Information Systems (HRIS) practice is established to support employers’ rapidly growing and increasingly complex HR needs.
Tillinghast suggests a practical approach for developing universal life products that is adopted by the industry. By 2003, universal life accounts for 30% of all life insurance products sold in the U.S.
The 80s:
1980 — Firmwide income surpasses $100 million.
1982 — The firm expands into Australia by acquiring Palmer Trahair Owen & Whittle, with offices in Brisbane, Melbourne and Sydney.
1983 — Merged with Cresap, McCormick and Paget, known for strategy, human resource and management processes consulting, creating a new general management services division.
1984 — The Tokyo office opens. Fifty years after founding, income surpasses $200 million.
1986 — The firm merges with Tillinghast, Nelson & Warren.
1987 — Towers Perrin is established as the umbrella name for the firm. Revenues surpass $500 million as staff grows to 4,000 and worldwide clients reach 8,500.
Innovations: Pioneer Point-of-Service plans to help employers control health care costs and improve quality of health care delivery.
Tillinghast recommends that people in need, including the elderly and those with severe illnesses, be allowed to cash in or borrow against their life insurance policies — a suggestion adopted by the industry.
Tillinghast publishes a paper on a performance measurement methodology that becomes the precursor to embedded value, now widely used in the life industry.
The 90s: Moving toward the millennium
1991 — Towers Perrin Administration Services (TPAS) is formed to handle the strain that benefit and vendor administration activities have placed on clients and quickly becomes one of Towers Perrin’s fastest growing businesses.
1995 — The firm acquires Kinsley Lord, a British change management consulting firm.
1996 — Income surpasses $1 billion.
Innovations: The '90s marked the opening and expansion of the National Employee Benefit Service Center (NEBC) to provide administrative outsourcing services.
Developed Retirement Financial Management, a coordinated approach to managing the benefit design, funding, investment and accounting of defined benefit plans.
Developed Total Rewards, a holistic way of looking at pay and benefits and using them to drive employee performance.
Tillinghast completes groundbreaking work in asbestos liability projections.
Created the Professional Development Institute to provide best-in-class benefit training to benefit and HR professionals.
Executive forums and learning centers bring clients and consultants together for two days of discussion and intensive planning around HR and business issues.
Tillinghast authors a pioneering paper on dynamic financial analysis for property/casualty reinsurers for the Casualty Actuarial Society.
2000 — Today: Acquisitions, partnerships and alliances
2000 — Acquired Pegasus, which designs innovative reinsurance products for clients around the world.
2001 — The firm formalizes strategic relationships with nine key organizations, including JP Morgan/American Century and MEDSTAT Group.
2002 — Shenzhen, China, joins the roster of Towers Perrin office locations.
2002 — Acquired Denis M. Clayton & Co., Ltd., a British insurance and reinsurance intermediary and consultancy, and acquired an 85% share of Classic Solutions, a financial modeling software company.
2003 — New strategic acquisitions include Delphi Consultants, a service provider specializing in implementing the SAP human resource module.
2003 —Launched Executive Compensation Resources, the data collection, analysis, research and information services unit of the Executive Compensation practice.
Today — the firm has:
$1.5 billion in gross revenues (2003)
79 offices in 24 countries
Towers and Perrin are known for their outstanding end to end solutions in three fields namely Human Resources, Re-insurance,Tillinghast.The rise of this firm since 1917 is described below:
In 1917, H. Walter Forster, founder develops the first private pension plan, for Union Carbide and Carbon Corporation.
The 30s: TPF&C becomes a reality
March 1, 1934 — Towers, Perrin, Forster & Crosby opens for business in Philadelphia with a Reinsurance Division and a Life Division. Employees number 26 and first-year income is less than $200,000.
Innovations: The Reinsurance division is instrumental in developing syndicates to provide additional capacity in London as a way of offsetting a worldwide reinsurance shortage.
The 40s:
1946 — The Life Division becomes the Pension Division. TPF&C opens its second office (Chicago).
1949 — TPF&C opens an office in New York City and firmwide employment reaches 120.
Innovations: The Pension Division publishes its first TPF&C Pension Tax Manual, which quickly becomes a standard U.S. Internal Revenue Service reference source on pension tax law.
Towers and Perrin informs informs clients of trends and regulations in the areas of pensions and benefits.
The 50s: Global expansion
1952 — The firm’s first communications consulting unit is formed. Total income reaches $2 million.
1956 — The first non-U.S. office opens in Montreal and the Pension Division becomes the Employee Benefit Plan Division as a first step toward marketing a broadening range of consulting services.
1959 — Firm income reaches $4 million.
Innovations:Towers and Perrin holds the credibility of producing the first personnel manual, which becomes the prototype for companies that want to develop formal benefits descriptions for their employees.
Tillinghast develops a prize-winning paper on discounted cash flow methodology that becomes an industry standard for pricing life insurance products and companies.
The 60s:
1962 — Introduce compensation and organization consulting services.
1965 — Brussels becomes the firm’s first office outside of North America.
1969 — The firm opens its first office in London. Income more than triples during the decade to $14 million and staff more than doubles to almost 500.
Innovations: Established a centralized, six-month training program for new consultants.
We begin a formalized research program to benefit our clients.
The consulting division focuses on expanding its services to clients, with an emphasis on direct and indirect compensation, the precursor to Total Rewards.
The 70s: Growth and prosperity continue
1974 — The firm’s first Latin America office opens in Caracas.
1979 — Opened first Far East office in Hong Kong. Total revenues reach $88.4 million — almost six times the 1970 level — and staff tops 1,300.
Innovations: The Human Resource Information Systems (HRIS) practice is established to support employers’ rapidly growing and increasingly complex HR needs.
Tillinghast suggests a practical approach for developing universal life products that is adopted by the industry. By 2003, universal life accounts for 30% of all life insurance products sold in the U.S.
The 80s:
1980 — Firmwide income surpasses $100 million.
1982 — The firm expands into Australia by acquiring Palmer Trahair Owen & Whittle, with offices in Brisbane, Melbourne and Sydney.
1983 — Merged with Cresap, McCormick and Paget, known for strategy, human resource and management processes consulting, creating a new general management services division.
1984 — The Tokyo office opens. Fifty years after founding, income surpasses $200 million.
1986 — The firm merges with Tillinghast, Nelson & Warren.
1987 — Towers Perrin is established as the umbrella name for the firm. Revenues surpass $500 million as staff grows to 4,000 and worldwide clients reach 8,500.
Innovations: Pioneer Point-of-Service plans to help employers control health care costs and improve quality of health care delivery.
Tillinghast recommends that people in need, including the elderly and those with severe illnesses, be allowed to cash in or borrow against their life insurance policies — a suggestion adopted by the industry.
Tillinghast publishes a paper on a performance measurement methodology that becomes the precursor to embedded value, now widely used in the life industry.
The 90s: Moving toward the millennium
1991 — Towers Perrin Administration Services (TPAS) is formed to handle the strain that benefit and vendor administration activities have placed on clients and quickly becomes one of Towers Perrin’s fastest growing businesses.
1995 — The firm acquires Kinsley Lord, a British change management consulting firm.
1996 — Income surpasses $1 billion.
Innovations: The '90s marked the opening and expansion of the National Employee Benefit Service Center (NEBC) to provide administrative outsourcing services.
Developed Retirement Financial Management, a coordinated approach to managing the benefit design, funding, investment and accounting of defined benefit plans.
Developed Total Rewards, a holistic way of looking at pay and benefits and using them to drive employee performance.
Tillinghast completes groundbreaking work in asbestos liability projections.
Created the Professional Development Institute to provide best-in-class benefit training to benefit and HR professionals.
Executive forums and learning centers bring clients and consultants together for two days of discussion and intensive planning around HR and business issues.
Tillinghast authors a pioneering paper on dynamic financial analysis for property/casualty reinsurers for the Casualty Actuarial Society.
2000 — Today: Acquisitions, partnerships and alliances
2000 — Acquired Pegasus, which designs innovative reinsurance products for clients around the world.
2001 — The firm formalizes strategic relationships with nine key organizations, including JP Morgan/American Century and MEDSTAT Group.
2002 — Shenzhen, China, joins the roster of Towers Perrin office locations.
2002 — Acquired Denis M. Clayton & Co., Ltd., a British insurance and reinsurance intermediary and consultancy, and acquired an 85% share of Classic Solutions, a financial modeling software company.
2003 — New strategic acquisitions include Delphi Consultants, a service provider specializing in implementing the SAP human resource module.
2003 —Launched Executive Compensation Resources, the data collection, analysis, research and information services unit of the Executive Compensation practice.
Today — the firm has:
$1.5 billion in gross revenues (2003)
79 offices in 24 countries
more than 8,000 employees.
Innovations: Tillinghast and Reinsurance consultants write a seminal paper on the effects of terrorism after 9/11.
Tillinghast analyzes market-consistent valuations and embedded value as methods for determining the true value of insurance companies.
Health & Welfare develops the first consumerist approach for managing health care costs.
Launhced the Work Experience Study, a new method for determining employees’ feelings about their jobs and the workplace.
Developed the Global Cost and Risk Management Channel, a Web-based system that generates daily valuations and forecasts of a postretirement benefit program’s financial conditions and annual cost.
Innovations: Tillinghast and Reinsurance consultants write a seminal paper on the effects of terrorism after 9/11.
Tillinghast analyzes market-consistent valuations and embedded value as methods for determining the true value of insurance companies.
Health & Welfare develops the first consumerist approach for managing health care costs.
Launhced the Work Experience Study, a new method for determining employees’ feelings about their jobs and the workplace.
Developed the Global Cost and Risk Management Channel, a Web-based system that generates daily valuations and forecasts of a postretirement benefit program’s financial conditions and annual cost.
Monthly Rankings, January2005-Vault
1. Mckinsey & Co.
2. The Boston Consulting Group
3. Bain and Company
4.Booz Allen Hamilton
5.Gartner
6.Monitor Group
7.Mercer Management Consulting
8.Deloitte
9.Mercer Oliver Wyman
10.Mercer Human Resource Consulting
11.A.T.Kearney
12.IBM BCS
13.Accenture
14.Towers Perrin
15.Roland Berger, Strategy Consultants
16.The Gallup Organisation
17.Parthenon Group
18.Marakon Associates
19.Bearing Point
20.L.E.K.Consulting
21.Capgemini
22.Hewitt Associates
23.Cambridge Associates
24.Watson Wyatt Worldwide
25.Stern Stewart
26.NERA Economic Consulting(Part of Mercer Group)
27.Arthur D. Little
28.The Advisory Board
29.Hay Group
30.Charles River Associates
31.ZS Associates
32.Mars and Company
33.Diamond Cluster Inernational
34.Putnam Associates
35.Corporate Executive Board
36.Kurt Salmon Associates
37.PRTM
38.PA Consulting
39.Navigant Consulting
40.Giuliani Consulting
41.First Consulting Group
42.Dean and Company
43.Katzenbach Partners
44.OC&C
45.First Manhattan Consuting Group
46.Aon Consulting
47.Greenwich Associates
48.Lexecon
49.Huron Consulting Group
50.Braun Consulting
2. The Boston Consulting Group
3. Bain and Company
4.Booz Allen Hamilton
5.Gartner
6.Monitor Group
7.Mercer Management Consulting
8.Deloitte
9.Mercer Oliver Wyman
10.Mercer Human Resource Consulting
11.A.T.Kearney
12.IBM BCS
13.Accenture
14.Towers Perrin
15.Roland Berger, Strategy Consultants
16.The Gallup Organisation
17.Parthenon Group
18.Marakon Associates
19.Bearing Point
20.L.E.K.Consulting
21.Capgemini
22.Hewitt Associates
23.Cambridge Associates
24.Watson Wyatt Worldwide
25.Stern Stewart
26.NERA Economic Consulting(Part of Mercer Group)
27.Arthur D. Little
28.The Advisory Board
29.Hay Group
30.Charles River Associates
31.ZS Associates
32.Mars and Company
33.Diamond Cluster Inernational
34.Putnam Associates
35.Corporate Executive Board
36.Kurt Salmon Associates
37.PRTM
38.PA Consulting
39.Navigant Consulting
40.Giuliani Consulting
41.First Consulting Group
42.Dean and Company
43.Katzenbach Partners
44.OC&C
45.First Manhattan Consuting Group
46.Aon Consulting
47.Greenwich Associates
48.Lexecon
49.Huron Consulting Group
50.Braun Consulting
Consultant's profile-The Legacy of Marvin Bower
Marvin Bower: Quality, Integrity and Principles
When Marvin Bower was born in 1903, consulting simply didn't exist. By the time he died on January 22, 2002 consulting was a major force in global business and the firm of McKinsey and Company was considered by many to be the premier management consulting firm on the planet. Marvin Bower could take credit for both.
Bower joined the firm of McKinsey and Company in 1933 and began work in McKinsey's New York office. By 1937 he was running the show there. That's the year that the company founder, James O. McKinsey died, at age 48 of pneumonia.
After McKinsey's death the firm split in two. The Chicago office became one firm, run by and later named for A. T. Kearney. Bower took over the New York office. He kept the name McKinsey and Company.
McKinsey's firm was made up of engineers and accountants. Like other "consulting" firms of the time it was rooted on the shop floor. They did time and motion studies. They were called efficiency experts and industrial engineers. It was not the kind of firm Marvin Bower wanted to build.
Before coming to McKinsey, Bower had worked at the prestigious Cleveland law firm of Jones, Day, Reavis and Pogue. That's where his work with bondholder committees for bankrupt companies convinced him that businesses needed advice on organization, management, marketing and distribution as much as they needed legal and accounting advice.
He wanted to build a firm that was professional like a law firm. But he wanted that firm to dispense advice on management issues.
Bower understood that being treated as a professional had as much to do with how you looked and talked and thought about yourself as it did with services rendered. Dress must be professional. Language mattered. McKinsey was a firm, just like a law firm. They had clients, not customers. The firm did not take jobs. Instead it had engagements.
Bower understood that it was important to define principles. McKinsey consultants were always to put the client's interests ahead of the firm's. That meant speaking the truth even when it might cost the firm an engagement. McKinsey would only do work that was necessary and that the firm could do well. That sometimes meant turning down work that was lucrative. Over the years those principles set McKinsey apart.
By the time Bower was done the old terms like "efficiency expert" and "industrial engineer" would be mostly historical relics. His term "management consultant" would be the term of choice. Consultants would work for firms. The firms would have engagements. But it didn't happen overnight.
When Bower signed on with McKinsey a little bit of insight went a long way. A consultant could look like a wizard simply by understanding a couple of basic mathematical formulas and business principles. That began to change rapidly during World War II.
When America went to war there was a need for all kinds of advice and insight. McKinsey helped major companies gear up for wartime production. The wartime effort was a national one and so McKinsey expanded to where the clients were, adding offices in Chicago, Los Angeles and San Francisco.
That was when Bower began talking about seeing the firm as a nationwide talent pool. The firm would pull together resources and people from several different offices to develop a team that would give the highest value to a client.
As business expanded after the war, so did McKinsey. Bower was convinced that the way to success was to hire the brightest people he could find, give them opportunities to perform and pay them well. He structured McKinsey as a meritocracy. Do well and you continued to rise to partner level. Start to under perform your peers and you'd be asked to leave.
He found the best and brightest at the nation's business schools. McKinsey set the pace for other firms by aggressively recruiting Masters of Business Administration and then throwing them into project teams working for what were now mostly giant clients.
McKinsey was beginning to emerge as the premier strategy consulting firm in the world. They worked with governments and nonprofits and a huge percentage of the world's largest businesses. In the sixties the firm worked hard to solidify its position. In 1964 they added a professional journal, the McKinsey Quarterly to gather articles by McKinsey consultants that showed off the best thinking on a variety of business issues.
In 1967 Marvin Bower surrendered the post of Managing Director, though he remained with the firm. The seventies became a time for McKinsey to take stock, to change and to develop resources.
In 1982 two McKinsey consultants, Tom Peters and Bob Waterman, wrote a book called In Search of Excellence. The book went to the top of the New York Times best seller list and stayed there. That was unheard of for a business book.
Books were great ads for the firm and the firm had lots of consultants who became authors. Richard Foster wrote Innovation and Kenichi Ohmae authored The Mind of the Strategist. Both books sold well. All the books by McKinsey consultants showed off the firm's expertise and gave it gobs of publicity. Ironically, though, this publication boom would set in motion changes in the consulting profession that made a mockery of Bower's basic principles.
By the time Marvin Bower retired for the last time in 1992 those changes were taking hold. It was the Age of the Guru. Best selling business books and best selling business book authors became necessary to consulting firm success.
Gurus, of course, produce Stupendous Ideas. Those ideas became management fads and the US became the fad capital of the management world. Firms that had stuck to their knitting moved quickly to re-engineer, then downsize and right size and on and on until by decade's end many were worn out and too tired to chase their cheese that someone else had moved.
What Marvin Bower had envisioned back in the thirties was a firm of professionals like a law firm, but one that gave advice on business management. He saw the route to success as delivering quality and maintaining professional standards. For Bower management consultants were professionals first.
In the nineties many firms saw things differently. Consulting firms went public. And the heads of those firms began to see themselves as businesspeople who were professionals. The shift in language is a distinction Marvin Bower must have appreciated. He would have known that when you're a businessperson first, profits take precedence over professional standards.
There's an ad running on TV now that shows two men talking. One says that he's found a "moral loophole." That was something Marvin Bower never looked for. Instead he just concentrated on doing the right things in the right way.
In his obituary Business Week magazine referred to Bower as an "ethicist." He wasn't that either. Instead he was a practitioner with principles that guided his practice and his life.
In the end the story of Marvin Bower is about building a consulting firm and setting the standard for a profession. It is about delivering quality and value while looking out for your client's welfare before you check the bottom line. It is about speaking the truth because that is more important than any particular engagement. It is a story that tells us that people and integrity matter.
That's a great model for building a consulting firm, or any kind of business, or even a life.
Marvin Bower was the author of two books. The first of those, The Will to Manage, was published in 1966 and is currently out of print. His later book, written in 1997, is The Will to Lead. This is an especially helpful book if you're managing a company of professionals. Bower calls it "Running a business with a network of leaders" but you'll find lots of good examples, stories and advice for you no matter what kind of business you have.
Ethan M. Rasiel has written two books about McKinsey on the basis of his three year stint at the firm. The first one was The McKinsey Way. There are several nuggets here that may help you manage better, but this book is mostly what you want if you want some insight into McKinsey in the post-Bower years. His second McKinsey book is called The McKinsey Mind with the subtitle "Understanding and Implementing the Problem-Solving Tools and Management Techniques of the World's Top Strategic Consulting Firm" This is an empty suit of a book.
Far better than either of the Rasiel books is The Witch Doctors by John Micklethwait and Adrian Wooldridge. These staff editors at the Economist will give you a well written and well researched tour of the big league consulting business. There's a lot here about McKinsey and about consulting, but there's also a lot about management theories and the practice of management on a global scale.
When Marvin Bower was born in 1903, consulting simply didn't exist. By the time he died on January 22, 2002 consulting was a major force in global business and the firm of McKinsey and Company was considered by many to be the premier management consulting firm on the planet. Marvin Bower could take credit for both.
Bower joined the firm of McKinsey and Company in 1933 and began work in McKinsey's New York office. By 1937 he was running the show there. That's the year that the company founder, James O. McKinsey died, at age 48 of pneumonia.
After McKinsey's death the firm split in two. The Chicago office became one firm, run by and later named for A. T. Kearney. Bower took over the New York office. He kept the name McKinsey and Company.
McKinsey's firm was made up of engineers and accountants. Like other "consulting" firms of the time it was rooted on the shop floor. They did time and motion studies. They were called efficiency experts and industrial engineers. It was not the kind of firm Marvin Bower wanted to build.
Before coming to McKinsey, Bower had worked at the prestigious Cleveland law firm of Jones, Day, Reavis and Pogue. That's where his work with bondholder committees for bankrupt companies convinced him that businesses needed advice on organization, management, marketing and distribution as much as they needed legal and accounting advice.
He wanted to build a firm that was professional like a law firm. But he wanted that firm to dispense advice on management issues.
Bower understood that being treated as a professional had as much to do with how you looked and talked and thought about yourself as it did with services rendered. Dress must be professional. Language mattered. McKinsey was a firm, just like a law firm. They had clients, not customers. The firm did not take jobs. Instead it had engagements.
Bower understood that it was important to define principles. McKinsey consultants were always to put the client's interests ahead of the firm's. That meant speaking the truth even when it might cost the firm an engagement. McKinsey would only do work that was necessary and that the firm could do well. That sometimes meant turning down work that was lucrative. Over the years those principles set McKinsey apart.
By the time Bower was done the old terms like "efficiency expert" and "industrial engineer" would be mostly historical relics. His term "management consultant" would be the term of choice. Consultants would work for firms. The firms would have engagements. But it didn't happen overnight.
When Bower signed on with McKinsey a little bit of insight went a long way. A consultant could look like a wizard simply by understanding a couple of basic mathematical formulas and business principles. That began to change rapidly during World War II.
When America went to war there was a need for all kinds of advice and insight. McKinsey helped major companies gear up for wartime production. The wartime effort was a national one and so McKinsey expanded to where the clients were, adding offices in Chicago, Los Angeles and San Francisco.
That was when Bower began talking about seeing the firm as a nationwide talent pool. The firm would pull together resources and people from several different offices to develop a team that would give the highest value to a client.
As business expanded after the war, so did McKinsey. Bower was convinced that the way to success was to hire the brightest people he could find, give them opportunities to perform and pay them well. He structured McKinsey as a meritocracy. Do well and you continued to rise to partner level. Start to under perform your peers and you'd be asked to leave.
He found the best and brightest at the nation's business schools. McKinsey set the pace for other firms by aggressively recruiting Masters of Business Administration and then throwing them into project teams working for what were now mostly giant clients.
McKinsey was beginning to emerge as the premier strategy consulting firm in the world. They worked with governments and nonprofits and a huge percentage of the world's largest businesses. In the sixties the firm worked hard to solidify its position. In 1964 they added a professional journal, the McKinsey Quarterly to gather articles by McKinsey consultants that showed off the best thinking on a variety of business issues.
In 1967 Marvin Bower surrendered the post of Managing Director, though he remained with the firm. The seventies became a time for McKinsey to take stock, to change and to develop resources.
In 1982 two McKinsey consultants, Tom Peters and Bob Waterman, wrote a book called In Search of Excellence. The book went to the top of the New York Times best seller list and stayed there. That was unheard of for a business book.
Books were great ads for the firm and the firm had lots of consultants who became authors. Richard Foster wrote Innovation and Kenichi Ohmae authored The Mind of the Strategist. Both books sold well. All the books by McKinsey consultants showed off the firm's expertise and gave it gobs of publicity. Ironically, though, this publication boom would set in motion changes in the consulting profession that made a mockery of Bower's basic principles.
By the time Marvin Bower retired for the last time in 1992 those changes were taking hold. It was the Age of the Guru. Best selling business books and best selling business book authors became necessary to consulting firm success.
Gurus, of course, produce Stupendous Ideas. Those ideas became management fads and the US became the fad capital of the management world. Firms that had stuck to their knitting moved quickly to re-engineer, then downsize and right size and on and on until by decade's end many were worn out and too tired to chase their cheese that someone else had moved.
What Marvin Bower had envisioned back in the thirties was a firm of professionals like a law firm, but one that gave advice on business management. He saw the route to success as delivering quality and maintaining professional standards. For Bower management consultants were professionals first.
In the nineties many firms saw things differently. Consulting firms went public. And the heads of those firms began to see themselves as businesspeople who were professionals. The shift in language is a distinction Marvin Bower must have appreciated. He would have known that when you're a businessperson first, profits take precedence over professional standards.
There's an ad running on TV now that shows two men talking. One says that he's found a "moral loophole." That was something Marvin Bower never looked for. Instead he just concentrated on doing the right things in the right way.
In his obituary Business Week magazine referred to Bower as an "ethicist." He wasn't that either. Instead he was a practitioner with principles that guided his practice and his life.
In the end the story of Marvin Bower is about building a consulting firm and setting the standard for a profession. It is about delivering quality and value while looking out for your client's welfare before you check the bottom line. It is about speaking the truth because that is more important than any particular engagement. It is a story that tells us that people and integrity matter.
That's a great model for building a consulting firm, or any kind of business, or even a life.
Marvin Bower was the author of two books. The first of those, The Will to Manage, was published in 1966 and is currently out of print. His later book, written in 1997, is The Will to Lead. This is an especially helpful book if you're managing a company of professionals. Bower calls it "Running a business with a network of leaders" but you'll find lots of good examples, stories and advice for you no matter what kind of business you have.
Ethan M. Rasiel has written two books about McKinsey on the basis of his three year stint at the firm. The first one was The McKinsey Way. There are several nuggets here that may help you manage better, but this book is mostly what you want if you want some insight into McKinsey in the post-Bower years. His second McKinsey book is called The McKinsey Mind with the subtitle "Understanding and Implementing the Problem-Solving Tools and Management Techniques of the World's Top Strategic Consulting Firm" This is an empty suit of a book.
Far better than either of the Rasiel books is The Witch Doctors by John Micklethwait and Adrian Wooldridge. These staff editors at the Economist will give you a well written and well researched tour of the big league consulting business. There's a lot here about McKinsey and about consulting, but there's also a lot about management theories and the practice of management on a global scale.
Together we stand Divided we fall
Initially i was apprehensive about naming the blog as parlour, something like beauty parlour, ice cream parlours etc. So how can brain storming be a parlour? Well...even we can discuss, share, generate consuting skills while we are roaming around, having, fun. After all common sense and observation are the most powerful consulting tools.
So time to embark on ideas, sheer imagination, market watch, studies, templates, anything you name. I beleive we can do wonders when we are together.
Nice time guys n gals!!
So time to embark on ideas, sheer imagination, market watch, studies, templates, anything you name. I beleive we can do wonders when we are together.
Nice time guys n gals!!
