{"id":6606,"date":"2015-12-09T21:58:28","date_gmt":"2015-12-10T02:58:28","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/mckinsey-company-an-operating-model-perfected-through-decades-of-refining\/"},"modified":"2015-12-09T21:58:28","modified_gmt":"2015-12-10T02:58:28","slug":"mckinsey-company-an-operating-model-perfected-through-decades-of-refining","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mckinsey-company-an-operating-model-perfected-through-decades-of-refining\/","title":{"rendered":"McKinsey & Company – an operating model perfected through decades of refining"},"content":{"rendered":"

1. Brief description: A leading strategy consulting Firm with its people as its largest assets
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McKinsey & Company is a global management consulting firm that serves leading businesses, governments, non governmental organizations, and not-for-profits. McKinsey helps clients make sustainable improvements to their performance and realize their most important goals. They’ve been operating for almost a century (89 years to be accurate). (1) Given the industry, McKinsey’s core assets is its people.<\/p>\n

2. McKinsey creates sustainable value for clients of which it extracts fixed fee or % of monetary value <\/strong><\/p>\n

McKinsey has a dual mission: “help clients make distinctive, lasting, and substantial improvements in their performance and to build a great firm that attracts, develops, excites, and retains exceptional people.” (2) For the purposes of this discussion we will focus on the first, but it is clear that number 2 is essential given McKinsey’s biggest assets being its employees. So what kind of “improvements” does McKinsey help make? The answer depends on the function (e.g. whether McKinsey is supporting clients do: a) strategy refresh, b) operational improvements, c) organization re-design, d) transformations, etc… However, McKinsey’s customer promise is a positive change that is:<\/p>\n

a. Substantial and relevant:<\/strong> The change must be relevant at a company-level, ideally, one of the top priorities of the CEO. McKinsey basically helps takes a CEO approach to Problem Solving and looks at the organization from the point of view of the CEO<\/p>\n

b. Measurable<\/strong>: The effects of the change must be measurable, ideally quantitatively. It is critical for the McKinsey team and the client team to align on key metrics that should be measured. This is specifically relevant when the fee is a % of monetary value created<\/p>\n

c. Sustainable<\/strong>: The boost to a company’s performance should be sustainable over several years after the McKinsey team leaves.<\/p>\n

McKinsey then captures part of this value created through its fixed fees per project or a % share of the monetary value created for the client over a certain period of time (e.g. extra Net profit for then next 3 years) or through fixed fees conditioned on the actual achievement of the performance management. In addition to direct monetary gains, McKinsey sought to build and sustain relationships with its clients.<\/p>\n

3. McKinsey’s continuously evolving Operating Model is designed around its Business Model<\/strong><\/p>\n

McKinsey designs and continuously refines its Operating model using 3 pillars of lean, centered around customer-centricity:<\/p>\n

a. Technical System<\/p>\n

b. Management Infrastructure<\/p>\n

c. Mindsets and behaviors<\/p>\n

The framework is depicted below. (3) Each pillar is tightly linked to the Core value proposition<\/p>\n

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a. Technical System<\/strong><\/em><\/p>\n

Technical System is in a way the hardware of the company: How are resources allocated to the projects? McKinsey’s solution is simple: a relationship-manager partner and a small dedicated teams supported by a wide expert network and a research arm (with a budget larger than the top 10 B-schools combined – don’t quote me on this). This ensures that the changes are substantial and relevant as follows:<\/p>\n