Driving to work that day I was filled with excitement. It was not a feeling I had associated with work in the past.
As I drove into the parking garage, I still had that rush of excitement. I found myself walking faster than usual from the parking garage into the office building. As I climbed the stairs all I could think about was getting to my desk and jumping into the work I left the night before.
Everyone should be so lucky to be this excited to get to work.
Landing my dream job
When I arrived at McKinsey in 2008, I had no idea what I was getting into. It had merely been a dream hatched a couple years earlier to break into consulting. By some combination of preparation, luck and an unwillingness to give up — the top consulting firm in the world took a chance on me.
I worked there for two years and the experience transformed the way I thought about organizations, culture, values and the idea of “high-performance”.
It also altered the expectations of myself and made me realize that people are capable of more than they believe and that individual performance is a as much a result of environment as someone’s skills and capabilities.
Since leaving McKinsey and seeing many other companies and firms fail to grasp the underlying reasons behind a successful culture, I have been obsessed with trying to make sense and explain what McKinsey does differently.
This is my attempt.
Marving Bower & The McKinsey Persona
To understand McKinsey, you need to first understand Marvin Bower. Even though McKinsey was founded by James O. McKinsey, the firm’s soul and culture are a result of the passion of Marvin Bower.
After McKinsey passed away in 1937, Bower took over the New York arm of the firm and it was renamed McKinsey & Company in 1939. Over the next 24 years, when Bower turned 60, he would reshape the company into the powerful global brand it remains until this day.
Marvin Bower invented the McKinsey “persona” — this person was someone who would “be selfless, be prepared to sacrifice money and personal glory for the sake of building a stronger firm, never take public credit, and always be confident or discreet” (Quote from The Firm). Bower believed in professionalism, something he felt was a higher bar than acting ethically.
He also walked the walk. When he retired in 1963, he decided to sell his equity back to the company at book value, turning down guaranteed wealth if he had decided to take the firm public or sell to a larger company, something many companies did at the time.
As quoted in Duff McDonald’s book, “The Story of McKinsey and Its Secret Influence on American Business” Marvin’s son Bower was quoted as saying:
“Let me just say there was a shock on people’s faces when he told us that he was selling his shares back to McKinsey at book value,…It felt unbelievable, to tell you the truth. But that was Marvin for you.”
On your first day at McKinsey, you are given a copy of Perspective on McKinsey which is not available to public and is Bowers thoughtful explanation on everything the firm stands for.
While the book isn’t the most beautifully written book in the world, it is a clearly and powerfully communicated vision of what a lasting consulting firm might look like. 50 years after he retired I was able to connect the values, principles and stories from the book to the day to day actions I was seeing in my work at the firm.
Bower’s vision was for McKinsey to be a “lasting firm” and it would not surprise me if it was still thriving 100 years from now.
So what was special about McKinsey?
Besides equipping me with the slide-making skills to make this beautiful framework, what made McKinsey successful came down to three things:
Those Three things:
1.“Develop, excite & retain” exceptional people: Exciting great people, focusing on retaining them and compassionately firing the “wrong” people
- Teach the how instead of the what: How to solve problems vs. what to do
- Cultivate a learning culture where the people that truly embrace learning are celebrated
- Compassionately fire people: To keep people motivate show the high performers that you wont let people not cutting it stick around. But do so in a way that treats these people with respect
2. A “BS” Proof Values-Driven culture reinforced by two fundamental principles and an “x-factor”
- Powerful stories: Stories that reinforce the values and create context for how to operate within the culture
- Respect for People: Open and candid feedback, autonomy and a “caring meritocracy”
X-Factor – The BS Test: Do firm leaders actually behave in a way that is consistent with the values, stories & assumption. (no company is perfect, but most companies so aggressively violate this fact that McKinsey still seems special)
3. Long-term focus (some may say obsession) with being a “lasting firm”: McKinsey is driven by a purpose that is articulated in the values and reinforced continuously — to be a lasting firm that adds value for its clients. This purpose helps attract the people that buy-in to this purpose and lead to a virtuous cycle of great people that want to be part of a great firm. Given this long-term perspective and a partnership model, it leads to a shared focus on long-term survival and cultivating an institutional humility that allows the firm to adapt and try new things. I found that no matter how well the company was performing, there was always room for ideas that would help improve it further.
Lets explore each a little bit more…
#1 “Develop, excite and retain” exceptional people
Every company says that want to attract, hire and retain “top talent.” The problem is not that they can’t — its that they don’t have the environment to actually enable those people to thrive.
When people think about “top talent” they think about recruiting and how to attract, retain and hire those people. McKinsey did have one of the best recruiting organization I’ve seen, but it would be a mistake to think that was what enabled people to thrive at the company.
A clue for how McKinsey thinks about this can be found in its mission, which ends: “…build a great firm that attracts, develops, excites, and retains exceptional people.”
75% of that statement has nothing to do with the recruiting and attracting. So how does this play out within the firm?
A) Teaching the “how” instead of the “what”
McKinsey over-invests (compared to other companies) in training and development. In addition, the focus of the training was very different than other companies. At most other companies training focused on the “what” — how to follow orders and how to not mess up. The goal seems to be to get you to a good enough level as quick as possible.
McKinsey’s mission goes further: “We think that the best people will be drawn to the opportunity to work on the hardest problems. We build our firm around that belief”
The hardest problems mean creativity and innovative thinking. Thus, the focus of training at McKinsey is on a fundamental set of skills and way of thinking and communicating. By training people to interact, solve problems and communicate in similar ways, you avoid the countless hours that many organizations spend on negotiating the hundreds of styles of working and instead, focus on doing great work. By over-investing in a shared language and toolkit for approaching problems, McKinsey can deliver on “exciting” and “retaining” those exceptional people.
B) A learning culture
In addition, there is a deep respect for the learning & development process. There are many training programs you will participate in over the years and most of them are a full week where you are completely removed from your day to day environment. Teams respect the process and try not to bother people when they are at a training. In my experience, the high standards of the training in addition to being able to disconnect led to noticeable before and after transformations in my quality of work.
Continuous learning and feedback are a core part of the day to day work and you are able to make dramatic improvements in your own performance in a short time. It is this obsession with learning and development that enables McKinsey to hire such a diverse group of people — from art history majors to lawyers, medical doctors and MBA’s. Many people hire smart people from good schools, but fail to develop their skills or set them up to succeed within their specific environment. Due to McKinsey’s obsession with building a great firm around enabling people to work on the hardest problems, McKinsey was more robust to hiring “mistakes” — meaning McKinsey actually did not have to recruit the absolute best — than most other organizations would be.
C) Compassionately Firing People
This may seem counter-intuitive, but one of the biggest hacks to hiring the right people is ensuring you get rid of the wrong people quickly. Nothing forces you to lose credibility with your top performers faster than keeping people who slow them down. At McKinsey this is not taken lightly — it is done compassionately and treats people as humans first. In addition to being able to use the resources of the firm to look for a new job, all ex-employees are seen as valuable alums and members of the “family” forever.
#2 Values-driven culture
Most companies have their values proudly listed on the company website. Few resonate with the employee experience as well as they did at McKinsey.
From day 1, you hear over and over again about the values. In fact, there is a entire day devoted to the values every June aptly called “Values Day.” Think about that — over 10,000 employees spending a full day talking about the firm values and re-engaging in the mission and direction of the firm.
Would your firm ever do that?
The values-based culture worked because of two fundamental reasons — powerful stories and an underlying respect for people:
A) Powerful Stories
Running a company by values may sound far-fetched — especially in today’s data and planning obsessive business climate. However, it worked. The power of the values was that they were shared and reinforced through stories. On my first day, I watched a video of one of the most influential people in the firm’s early days, Marvin Bower. It was a 30-minute video where he just talked about the values and the type of place he was trying to build. It set the tone for what came next — many informal and formal conversations where colleagues would openly discuss the values and share stories to bring them alive. They all took a similar form: here is how we do it here, and this is why.
Many organizations have these values — you can find them on any company website:
“we hire the best”
“we obsess over our customer”
“we exceed expectations”
I could go on and on, but these values don’t actually tell you how to behave. The difference between these and a place like McKinsey is that the values at McKinsey were backed up with stories that told you what to do. For example, there was a value that stated “govern ourselves as a “one firm” partnership.” This story was translated to reality with my colleagues telling me “you can call anyone at any level and they will help you out.” On multiple occasions, I reached out to Partners who were experts on various topics and they made time to help me. The values resonated.
B) Respect for People
Respect for people is not typically what people think. Being nice does not always equate with respect — in many cases, not telling people the truth can be damaging to their potential growth.
At McKinsey, I learned that respect for people meant that you would push others to achieve their potential, but in a thoughtful way. This played out in a feedback approach that boiled down to five core elements:
- Start with Self-reflection: Tease out whether you want to actually help someone or you are just annoyed at their behavior
- Build a Foundation of Respect on Which to Offer Feedback: Show someone you care — and then help them improve.
- Timely: Deliver the feedback as close to the event as possible — otherwise let it go
- Be specific: Use actual examples of what you observed
- Offer to help: Offer an actionable next step and personally offer to be part of that growth
What gave this approach power was the fact that people really did care. Sometimes the feedback stung — but you knew it was from someone who really wanted you to be great and that they would offer to help you move in that direction. I still miss the quality of the feedback (but maybe not the quantity of it!).
C) Passing the “BS” Test
Humans are smart. I like to think that most people have a natural BS detector. At McKinsey, if there was an instance where the values did not hold true, it would have set off that BS detector and led to a lack of trust. Maintaining this trust is the key to building and maintaining a “high performance” culture.
For example, have you ever been in a situation where a company will keep a senior executive because they bring in a lot of money? If this hypothetical company had a value “be kind to others” the employees would be quick to call BS on any belief in firm values. This is a company run by profit not through values.
At McKinsey the values were reinforced and I had trust that the firm was very grounded in the values. For example, two of the specific values that I experienced over and over again was “be nonhierarchical and inclusive” and “uphold the obligation to dissent”:
=> Be nonhierarchical and inclusive
Evidence: I was not technically on the front line as a consultant, but was always treated as part of the broader team. While senior partners certainly commanded respect — it was more because of their insights and leadership than any formal rank. Equally, I always found that my ideas and contributions were on an equal playing field with anyone else in the firm.
=> Uphold the obligation to dissent
Evidence: In my first week a Partner asked me “what do you think?” I was not prepared as I had only been in very top-down corporate environments in the past. Over time I got used to this and always made sure I had a view of what I thought. What made this work was that more experienced experts and consultants had an intellectual humility — looking to be challenged and having the flexibility to change their thinking
#3 Long-term focus — a central purpose to be a lasting and enduring firm
In my time at McKinsey, I felt a deep institutional humility and a shared aspiration to be an enduring institution. Two of McKinsey’s three core values set this tone and leave no doubt that the aspiration is to be the best, not one of the best:
1. Adhere to the highest professional standards
2. Create an unrivaled environment for exceptional people
The execution of this vision can be traced to the bold vision of Marvin Bower — who understood that the way to build a “high performance” environment was through reinforcing the right behaviors. He makes this clear in the following quote:
“Convinced that behavior and conduct are every bit as important as skills and expertise, I sought to build the firm into an enduring, values-based institution” — Marvin Bower
Marvin Bower understood the secret of business. Business models change, industries appear and disappear — but values are forever.
There is no better continuous improvement mechanism than a values-based culture. By reinforcing the values and relentlessly protecting them through stories, you can attract great people who continuously protect and maintain those values.
As I said before, McKinsey changed the way I look at the business world and made me believe that high-performance is indeed possible.
If I had to bet on an institution to be alive in 100 years, my money would be on McKinsey.
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