McKinsey, this name evokes strong feelings among corporations, governments, and even other consulting firms, you either love them or loathe them, but there is never a middle ground. In the last 85 years of its existence, many consulting companies have come and gone, but McKinsey as a brand has been alive and going from strength to strength. It is also interesting to note that in the last 10 years, they have always been rated as the “numero uno” consulting company. Although the rating itself could be very subjective, what creates this strong perception about the company, and more importantly, why are the competitors not able to outpace the firm?
What is the competitive advantage of McKinsey? (MBA jargon that has often been used without discretion, so let me continue with the tradition, but to simplify for those folks who get confused, what makes McKinsey different from other firms). Is it the smart people they have? But so do many other consulting firms. Is it the problem-solving methodology? Not really, because there are other consulting firms, which match or even have a better methodology for problem-solving. Is it the knowledge that has been accumulated over years? maybe, but so do other firms including BCG, which has more than 50 years of knowledge, stacked up in their database. Is it the strong access to influential networks at the firm? Other firms have built this network as well. So what do they really have that distinguishes them from all others the simple answer is nothing. Isn’t it shocking that nothing differentiates the firm, yet they are number one, well here is the caveat that none of these ingredients as an individual entity provide an advantage to the firm, but when you sum all of them they have a strong concoction that differentiates them.
Now for the crazy question can you beat McKinsey at its game? (if one thing I learned in the last nine months is that I started asking the weirdest questions, if I were sensible I would stop once I realize that it is a weird question, but truth be told I have never been sensible) A typical consultant reply for the question will be yes because after all, every problem has a solution. Then the follow-up question is, how can you beat the firm in its own game? Well, this is quite tricky as most of the current consulting firms have all the capabilities that the Firm has, but what they do not have is the solution that ties in all this together to call it the McKinsey way. Some of you might complain at this point this is a theoretical framework-driven, high-level strategy, but isn’t what McKinsey has been selling for over 85 years and packaged as a solution to client problems. On top of that to topple McKinsey, other firms do not need to have a competitive strategy, rather what they need to do is to play their game at a high notch and watch for the changing culture at McKinsey. In other words, if McKinsey were to be toppled it will be from the inside rather than from the outside.
So people tend to expect an answer to the questions that are posed in an article? But as a consultant there is a cardinal rule, you always show the client direction towards the path, but you never lead them on that path, that is the duty of operational consulting and not strategy consulting. In other words, as a strategy consultant will say, I am overpriced to lead you all the way, so hire someone else.