The McKinsey Mystique

Here at the Drucker Exchange, we often find ourselves turning to the smart folks at McKinsey & Co. for their insights (as we did recently here, here and here).

But, of course, by tapping the consulting giant’s free publications, we avoid something that McKinsey’s real clients face: paying through the nose.

Whether the fees that McKinsey charges are worth it is a question being asked a lot these days, thanks to Duff McDonald’s new book, The Firm: The Story of McKinsey and Its Secret Influence on American Business. McDonald, as Stewart Pinkerton noted in The Wall Street Journal, “walks us through many McKinsey achievements,” but he also “doesn’t flinch from examining McKinsey’s missteps.”

“The book’s most wounding conclusion is that the consulting firm is essentially no more than a self-perpetuating fee machine,” Andrew Hill of the Financial Times, added.

Though we can’t directly speak to the quality of the services that McKinsey provides these days, we do know that Peter Drucker considered the firm an important innovator.

In Management Challenges for the 21st Century, Drucker noted that, in addition to devising the concept of “scientific management” in the late 1800s, Frederick Winslow Taylor “in all probability also coined the terms ‘Management’ and ‘Consultant’ in their present meaning.” In fact, on his calling card, Taylor “identified himself as ‘Consultant to Management’—and he explained that he had intentionally chosen these new and strange terms to shock potential clients into awareness of his offering something totally new.”

The innovation of James McKinsey (1889-1937) and the Englishman Lyndall F. Urwick (1891-1983) was, Drucker explained in Management: Tasks, Responsibilities, Practices, to offer “consulting no longer confined to technical problems, but dealing with fundamental management concerns such as business policy and management organization.”

Drucker offered his own consulting services, and they differed quite a bit in procedure and style from those of a behemoth like McKinsey. But in The Effective Executive he offered a few insights that apply to anyone in the field.

“First, a consultant who by definition has authority other than that of knowledge must himself be effective—or else he is nothing,” Drucker wrote. “Second, the most effective consultant depends on people within the client organization to get anything done. Their effectiveness therefore determines in the last analysis whether a consultant contributes and achieves results, or whether he is pure ‘cost center’ or at best a court jester.”

What do you think: Are firms like McKinsey worth the money they charge?