McKinsey & Company history, profile and corporate video
McKinsey & Company has been provided strategic advice to corporations and other organizations since 1926, when James O. McKinsey, a University of Chicago professor, opened a consulting office in Chicago. Marvin Bower joined the firm in 1933 and became the firm’s head after McKinsey left to become chief of Marshall Field & Co. Bower established the firm’s core principles and created the practice of management consulting. McKinsey opened its first international office in London in 1959, and has expanded steadily since. It now has over 100 offices in over 50 countries, making it the biggest pure consulting firm in the world.“
“McKinsey & Company History
McKinsey & Company was founded in 1926 in Chicago under the name James O. McKinsey & Company by James McKinsey, a professor of accounting at the University of Chicago. The firm called itself a team of “management engineers” and started out giving consulting on using accounting principles to make management decisions.Mr. McKinsey’s first hires were partners Tom Kearney in 1929 and Marvin Bower in 1933. The firm’s second office was opened in New York City in 1932.
In 1935 Mr. McKinsey left the firm temporarily to serve as the Chairman and CEO of client Marshall Field’s as they implemented the restructuring plan created by James O. McKinsey & Company. McKinsey was merged with accounting firm Scovell, Wellington & Company that same year, creating McKinsey, Wellington & Co. A Wellington project that accounted for 55 percent of McKinsey, Wellington & Company’s billings was about to expire and Tom Kearney and Marvin Bower had disagreements about how to run the firm. Additionally, in 1937 James O. McKinsey passed away after catching pneumonia. This led to the division of McKinsey, Wellington & Company in 1939. The accounting practice returned to Scovell, Wellington & Company, while the management engineering practice was split into McKinsey & Company and McKinsey, Kearney & Company. Guy Crockett became the Managing Partner of the new McKinsey & Company, while Marvin Bower is credited with founding the firm’s principles and strategy as his deputy. The New York office purchased exclusive rights to the McKinsey name in 1946.
McKinsey & Company grew quickly in the 1940s and 50s, especially in Europe. It had 88 staff in 1951 and more than 200 by the 1960s, including 37 in London by 1966. It established an office in Australia in the early 1960s. By the end of the decade, more than one-third of the firm’s revenues were from six European offices. Guy Grockett stepped down as managing director in 1950, and Marvin Bower was elected in his place. McKinsey’s profit-sharing, executive and planning committees were formed in 1951. The organization’s client base expanded especially among governments, defense contractors, bluechip companies and military organizations in the post-World War IIera. After seven years of deliberation, McKinsey became a private corporation with shares exclusive to McKinsey employees in 1956. A plan for international expansion was developed and an office in London was established in 1959.
After Bower stepped down in 1967, the firm’s revenues declined. New competitors like the Boston Consulting Group and Bain & Company stiffened competition for McKinsey by marketing specific branded products, such as the Growth-Share Matrix, and by selling their industry expertise. In 1971 McKinsey created the Commission on Firm Aims and Goals, which found that McKinsey had become too focused on geographic expansion and lacked adequate industry knowledge. The commission advised that McKinsey slow its growth and develop industry specialties. In 1976, Ron Daniel was elected managing director, serving until 1988. Daniel and Fred Gluck helped shift the firm away from its generalist approach by developing 15 specialized working groups within McKinsey called Centers of Competence and by developing practice areas called Strategy, Operations and Organization. Daniel also began McKinsey’s knowledge management efforts in 1987. By the end of his tenure in 1988 the firm was growing again and had opened new offices in Rome, Helsinki, São Paulo and Minneapolis.
Fred Gluck served as McKinsey’s managing director from 1988 to 1994. The firm’s revenues doubled during his tenure. He organized McKinsey into 72 sectors, centers, working groups, and projects. Over two decades McKinsey & Company grew eightfold. In 1989 the firm attempted to make a talent acquisition in IT services through a $10 million purchase of the Information Consulting Group (ICG), but a culture clash caused 151 out of the 254 ICG staff members to leave by 1993.
The burst of the dot-com bubble led to a reduction in utilization rates of McKinsey’s consultants from 64 to 52 percent; although, McKinsey avoided dismissing any personnel following the decline. In 1994, Rajat Gupta became the first non-American-born partner to be elected as the firm’s managing director. By the end of his tenure, McKinsey had grown from 2,900 to 7,000 consultants. In the 1990s, McKinsey set up “accelerators,” where the firm accepted stock-based reimbursement to help internet startups. In 2001, McKinsey launched several practices that focused on the public and social sector. It took on many public sector or non profit clients on a pro bonobasis. By 2002 McKinsey had invested a $35.8 million budget on knowledge management, up from $8.3 million in 1999.
In 2003 Ian Davis, the head of the London, U.K. office, was elected to the position of managing director. Davis promised a return to the company’s core values, after a period in which the firm had expanded rapidly, a development that, according to some people related to McKinsey, was a departure from the company’s heritage.Also in 2003, the firm established a headquarters for the Asia-Pacific region in Shanghai, China. By 2004, more than 60 percent of McKinsey’s revenues were generated outside the U.S.”
*Information from Forbes.com and Wikipedia.org
**Video published on YouTube by “ McKinsey & Company“