Review of The Firm by Duff McDonald

Published on 2021-05-03 by John Collins.

I have always been fascinated with the mysterious allure of McKinsey and Company, that firm of MBA consultants that seem to be deployed in any large organization in the World you can think of, and yet deliberately maintain a low profile.

I wanted to learn more, so went searching for the best book on McKinsey I could find, and settled on “The Firm: The Story of McKinsey and Its Secret Influence on American Business” by Duff McDonald after reading some great reviews. So I bought the second-hand hard-cover edition from eBay you see photographed here, and dived into the history of this influential firm.

One great aspect of this book is that it is not only teaching you about the history of McKinsey from its founding in 1926 by James O. McKinsey, but as McKinsey have been involved in so many companies in the years since then, it is also giving the history of business trends more globally.

Duff McDonald has done an amazing job on this book: its dense with names, dates, and facts that are thoroughly referenced throughout. The reader can easily tell this book is the result of intense research into a complex firm, one that deliberately maintains a low profile that makes it difficult to research and define. I get the feeling this was a monumental task for the author.

The Firm is probably the best researched business book I have ever read, and I have read many over the years.

For example, the coverage of the Enron scandal that the author gives in a single chapter is as detailed as full books I have read on Enron, and I really enjoyed a fresh McKinsey perspective given to an otherwise familiar event for me.

I learned many interesting insights into McKinsey and its approach to business consulting from this book. For example, McKinsey targets the C-suite of its client firms, usually the CEO, rather than the middle-management layers. That gives them access to key decision makers, and allows them to influence strategies rather than tactics.

McKinsey are not interested in competing with other vendors for providing services such as accountancy or IT, in fact it does not see itself as a vendor at all: instead, McKinsey wants to sit on the client-side of the table, helping that client to choose a vendor. It is all about positioning, and they have positioned themselves right at the top of multiple organizations, consistently every time, for decades.

Another clever approach that McKinsey takes is they never take credit for the decisions that their clients make, even though they influence them in private via their very expensive consultation services. The benefit of that is two fold for them:

  1. If the client decision goes badly, McKinsey cannot be blamed.
  2. If the decision goes well, the mere fact that McKinsey is involved in the background creates a rumour that they were behind it.

It is that exact mystic that they live off, their reputation enables them to consistently charge much more than their competition for the same services.

It is not all positive however, firstly there is a detailed account within of the Rajat Gupta insider trading scandal which really embarrassed the firm. In more recent years, MBA students are now applying for McKinsey in smaller numbers, as they choose instead careers in big Silicon Valley corporations, or even choosing to do their own start-ups given the glut of VC cash floating in the Valley.

If like me, you are interested to learn about McKinsey in detail, this is the book for you. Thoroughly recommended.