Most people know McKinsey — the storied global consulting firm. Fewer people know that James Oscar McKinsey, the firm's founder, was a mathematical prodigy born and raised in a small farmhouse. So how did a farmer’s son end up starting one of the most influential, most powerful consulting firms in the world?
I made this for a social post for this case, and I wanted to inflict this on you:
The board adopted the strategy and requested James McKinsey to implement the cuts himself. He agreed. McKinsey became the chairman of Marshall Field & Company and proceeded to implement his own advice. He fired 1,200 employees in one fell swoop — a move that came to be known as McKinsey’s Purge. The work left him physically run down. He told a colleague: “Never in my whole life before did I know how much more difficult it is to make business decisions myself than merely advising others what to do”. The Marshall Field engagement had damaged his reputation and the stress led to the pneumonia that caused his death. James McKinsey died in November 1937 at age 48.
I found this somewhat ironic, given the reputation McKinsey would have over layoffs in the subsequent decades. So …
On a more serious note …
I think the next case on scaling McKinsey is more interesting, but what I found truly remarkable with this one is that McKinsey invented budgeting. He took bookkeeping — this very unsexy, backwards-looking exercise — and transformed it into a forward-looking management tool, a control system mechanism that is still used today. (Though of course we now know this leads to all sorts of problems, hence the Lean Manufacturing stuff).
