Emerging Markets, Consulting Depth and Deeper Business-Society-Government Links
In a year of strategy-firm milestones (BCG turns 50; Bain: 40), the grandfather of them all celebrates its 87th birthday. James O. McKinsey founded his eponymous firm to provide finance and budgeting services to companies and soon discovered that clients wanted he, and his growing team, to help them solve their thorniest and most important business problems. David Court, a Senior Partner in McKinsey's Dallas office and leader of the firm's functional practices, confirms that his firm remains committed to solving big, thorny problems even as the nature of those problems, and the ways the firm addresses them, continue to evolve.
Consulting: What are some of the most important conditions and situations that define the state of strategy consulting today?
Court: The economic crisis created new and sustained challenges for businesses around the world. Today, there is continuing volatility, uncertainty and complexity that we and our clients are facing. In many countries, the government took on an increased role in the local and global economy. We have also seen disruptions in global economic growth and continue to witness the move of the world's economic center of gravity away from the Western economies. The growth of the consuming class in emerging markets is one of the biggest economic shifts ever and it will require companies to change their ways of doing business. By 2025, more than half of the world's population will have joined the consuming classes, driving annual consumption in emerging markets to $30 trillion. Yet the largest companies headquartered in developed economies derive only 17 percent of their revenues from emerging markets, even though these markets represent 36 percent of global GDP. This is just one example of the types of complex and always changing challenges that our clients face.
Consulting: What are some of the most notable ways strategy consulting has changed or evolved in the past decade? (i.e., how does strategy consulting operate in 2013, compared to how it existed in 2003 or even 1993?)
Court: McKinsey has been much broader than strategy for a while. We advise leading organizations across the public, private and non-profit sectors, on all the functional topics leaders care about – not just strategy. For many years, a growing share of our work had been around operational effectiveness and organizational redesign, reflecting the changing needs of our clients. Strategy engagements represented about 30 percent of our firm in recent years, while engagements in operations and organization represented about 25 percent and about 10 percent respectively. The strategy work we do has also changed to become more global and based more on interaction between industries, and the interlinkage between business, society and government. We believe we have the scope, scale and capability to create lasting impact for the world's largest, most complex institutions. McKinsey is truly global. Not just in our office footprint but in our population and in our diverse global collaboration model.
Consulting: How have the skill sets and leadership capabilities that define successful strategy consultants changed in recent years?
Court: For more than two decades, we've been shifting away from recruiting mostly MBAs. All other degrees combined (PhDs, JDs, MDs, and other advanced degrees) represent a bigger share of the incoming class than MBAs. About 25 percent of our recruits have functional expertise. We also recruit a growing share of experienced hires and we expect this trend to continue in the coming years. What we look for in candidates has remained quite consistent throughout the years. While our colleagues have very diverse backgrounds and experiences, what they have in common is excellence in four main areas: the ability to help leaders solve their toughest and most urgent problems; the drive, determination, and judgment to deliver distinctive and lasting client impact; strong communication skills and the ability to build lasting relationships with clients; and outstanding leadership skills to bring people together and drive positive change within organizations.
Consulting: What are some of the most noteworthy opportunities for strategy firms/practices right now?
Court: The challenges that our clients face in an increasingly complex world create opportunities for firms like ours. Our clients look for deep expertise and experience to navigate the new and evolving conditions that they face. This includes the shifting center of economic activity toward the east, more active involvement of governments in local and global economies, as well as the need to understand and act upon the exploding volume of data that companies are able to collect these days.
Consulting: How are strategy firms responding to these opportunities and challenges?
Court: In today's complex world, we are constantly innovating to help our clients be more successful, while staying true to our mission, values and 87-year history. We are renewing our consulting model in response to changing client demands. We have developed new ways of serving our clients, in addition to our traditional consulting model. We hear from clients that they need even more expertise and expect different types of services and advice. We are well positioned to respond to this need, as we are always expanding and deepening our expertise and capabilities, and the way we are working is evolving constantly. We think today's leading companies are looking for access to unequalled expertise and insights, a deep commitment to their success, and the ability to shape direction and make change happen.
We address this need for unequalled expertise and insights with a firm that mirrors the global economy: we have more than 100 offices in 58 countries, and our consultants come from more than 110 countries and speak more than 120 languages. We are opening offices to be close to clients expanding in high-growth regions: recently, we opened offices in Salvador (3rd office in Brazil), Perth (Australia), Hanoi and Luanda. We are continually expanding and deepening our knowledge and proprietary data, tools and analytics: we invest substantial resources in knowledge yearly to be relevant at the macro level (e.g., McKinsey Global Institute research on financial globalization, recent research on education to employment from the McKinsey Center for Government) and micro level (e.g., Cityscope, a database of 2,600 cities now available through an app on the app store).
We work closely with our clients throughout their organization to help them succeed in fulfilling their objectives. We offer flexible team size and project duration, for example for long-term implementation projects. In our engagements, we also tend to involve more professionals with deep expertise in a specific industry or functional topic. We have developed new client services in areas, such as Advanced Analytics or Restructuring. McKinsey Solutions is also a great example of this: it brings our data and analytics to clients through software solutions, equipping them with the tools they need to constantly make better decisions at the speed required in a "big data" world.
By working closely with our clients, we have the ability to shape direction and make change happen in their organizations. We bridge the gap between strategy and implementation by providing flexible and hands-on support to our clients. We also help clients build their own employees' capabilities so that they can effectively implement change. But some things don't change, especially our values. We remain independent in our approach, values-based, and driven by the desire to serve clients, solve problems and achieve impact.
Consulting: How do you expect strategy consulting to evolve over the next five to 10 years?
Court: We won't presume to predict the future but significant change will continue to occur. We will continue to evolve constantly to help our clients face new and changing conditions, including an increasingly global and complex business environment, severe constraints on resources, and the opportunities and challenges that come with more than one billion people who will join the consuming class in the next decade or so.
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