The McKinsey Way

The McKinsey Way
Using the Techniques of the World’s Top Strategic
Consultants to Help You and Your Business
by Ethan M. Rasiel
© 1999 McGraw-Hill
187 pages
Focus
Leadership
Strategy
Sales & Marketing
Corporate Finance
Human Resources
Technology
Production & Logistics
Small Business
Economics & Politics
Industries & Regions
Career Development
Personal Finance
Self Improvement
Ideas & Trends
Take-Aways
• The McKinsey & Co. consulting firm promotes clarity of thought and expression. Every
document has to follow the MECE rule: mutually exclusive and collectively exhaustive.
• When tackling a problem, write an initial hypothesis.
• A wonderful business solution is useless if the company lacks the resources to
follow the advice.
• Eighty percent of the people in a company account for twenty percent of its productivity.
• Be consistent and be a team player; hit singles, not home runs.
• Managers build team spirit by treating employees with respect, particularly by realizing
that employees have lives outside the offi ce.
• The fi rst rule of success in a hierarchy is “make your boss look good.”
• Consultants know that with research, they will fi nd that plenty of background work
has already been done for them.
Rating (10 is best)
Overall Applicability Innovation Style
7 8 7 5
Visit our website at www.getAbstract.com to purchase individual abstracts, personal subscriptions or corporate solutions.
getAbstract is an Internet based knowledge rating service and publisher of book abstracts. Every week, subscribers are e-mailed a short abstract of a different
business book. Each abstract contains an overview of essential ideas from the entire book. Excerpts from this book are reprinted here with the permission
of the publisher. The respective copyrights of authors and publishers are acknowledged. All rights reserved. No part of this abstract may be reproduced
or transmitted in any form or by any means, electronic, photocopying, or otherwise, without prior written permission of getAbstract.com Ltd (Switzerland).
This summary is restricted to the personal use of Guillermo Gonzalez Muñoz de Morales (lapinilla@gmail.com)

Review
The McKinsey Way
Ethan M. Rasiel describes the problem-solving process used by McKinsey & Company,
a well-known corporate consulting firm. The book offers easily digested tips.
The insightful section on conducting interviews and the tips on building teamwork
are particularly useful. However, because the author and other McKinsey consultants
are prohibited by confidentiality agreements from discussing the specifics of their
cases, the book lacks real-world examples of the firm’s problem-solving approaches.
getAbstract.com recommends this book to managers seeking useful information and
problem solving techniques.
Abstract
“You must not
fear the facts.
Hunt for them,
use them, but
don’t fear them.”
“The only way to
figure out if the
problem you have
been given is the
real problem is to
dig deeper. Get
facts. Ask
questions. Poke
around.”
“Most business
problems resemble
each other
more than they
differ. This means
that with a small
number of problem-solving
techniques,
you can
answer a broad
range of questions.”
Thinking Like a Consultant
Companies worldwide hire McKinsey & Company, a well-known corporate consulting
firm, for its problem-solving expertise. McKinsey experts credit the firm’s success to the
use of its proven guidelines for problem solving. Those guidelines include techniques
you can use, including standard ways to think about problems, gather information, and
present findings to clients.
The first rule of McKinsey’s approach is to embrace facts. Facts are the foundation
of McKinsey’s advice, partly because the company’s consultants aren’t experts in any
specific industrial field. Therefore, they don’t rely on intuition to guide their recommendations.
Facts create credibility, a big issue to young consultants who are making
presentations to skeptical executives. McKinsey’s entry-level consultants typically finish
near the top of their college classes, spend a couple years at a large company, and then
earn an MBA from a top university. The entry-level consultants are in their twenties, so
they’re vulnerable to being easily dismissed when they make presentations to top executives
of huge companies. However, they find they can build effective cases when they
have a strong command of the facts.
McKinsey promotes clear expression by demanding that every piece of communication
follows the MECE rule, short for mutually exclusive and collectively exhaustive. “Mutually
exclusive” means that each component – or issue – which makes up a problem is considered
distinctly and separately. “Collectively exhaustive” means that the list of items
covered thoroughly addresses the problem. Every part of a problem fits within one, and
only one, of those issues. Ignoring the MECE rule leads to confused thinking.
Problem Solving Techniques
When McKinsey consultants tackle a new problem, they define an initial hypothesis. In
other words, they come up with a solution before researching the problem. This may
sound backward, but the initial hypothesis lays out a map for solving the problem. The
initial hypothesis isn’t the final answer, merely an educated guess that will be proven
true or false during the course of the research. Using this approach, it is critical that
you don’t make the facts fit your predetermined conclusion. Be willing to accept that the
initial hypothesis isn’t always accurate.
The McKinsey Way © Copyright 2000 getAbstract.com 2 of 5

“Honesty includes
recognizing when
you haven’t got a
clue. Admitting
that is a lot less
costly than bluffing.”
“At McKinsey, we
found that clients
were often no
better at
diagnosing themselves
than a
doctor’s patients.
Sometimes, problems
would come
to us in extremely
vague formulations.”
“If all you have
is a hammer, then
every problem
looks like a nail.
Critics of McKinsey
(and management
consulting
in general) say
that the Firm
bases its solutions
on the most
current management
fad – the
favorite tool in its
intellectual toolbox.”
“Unfortunately,
when academic
ideals meet business
realities,
business realities
usually win. Businesses
are full of
real people, with
real strengths and
weaknesses and
limitations.”
McKinsey consultants demonstrate other lessons that are useful in solving business
quandaries. Remember, just because a problem is presented to you as the core issue,
don’t accept that it’s the real problem. McKinsey consultants once spent several weeks
working on a manufacturing company’s proposed expansion before realizing that expansion
wasn’t the right answer for the company. Instead, the division in question needed to
be closed or sold.
Many business problems are similar enough that the same thought process can be
applied to many different issues. However, that doesn’t mean that the same solution
always works. For example, one McKinsey consultant says that in eighty percent of pricing
problems, the solution is to raise prices. But in the other twenty percent of cases, the
solution is to lower prices. Therefore, when you are solving problems, do your homework
and analyze the facts before reaching a recommendation.
McKinsey believes in the eighty/twenty rule, which says that eighty percent of the
people in a company account for twenty percent of its productivity. For example, eighty
percent of a company’s sales will come from twenty percent of its salesmen, while
twenty percent of an employee’s job duties will occupy eighty percent of his time. McKinsey
has used the eighty/twenty rule to help firms boost sales. For instance, a brokerage
firm found that eighty percent of its sales came from twenty percent of its brokers. The
top-producing brokers handled the biggest accounts. By putting more brokers on the big
accounts, McKinsey helped to boost total sales from the accounts.
Keep in mind that solutions must be realistic. A wonderful solution is useless if a business
lacks the resources to follow recommendations. Politics also can pose a roadblock
to solutions. Addressing a business problem often means changing the status quo, and
those changes usually involve internal politics. If a problem is too intractable to solve,
try to redefine it so you can begin by addressing something more easily changed.
McKinsey also avoids analyzing too much. Once its consultants collect enough information
to support a hypothesis, they stop. This means that to work more efficiently, you
should focus on the so-called “key drivers” – the most important factors that affect a
business problem. Concentrating on the key drivers helps you narrow in on the meat of
the problem.
Solutions must be boiled down to a thirty-second sound bite, a tactic known as the
elevator test. If you can thoroughly explain a product or solution in a thirty-second
elevator ride, then you understand it clearly enough to sell it to your audience. For
instance, the publisher of Field & Stream magazine told his sales force that they must
be able to explain the publication to potential advertisers in thirty seconds. Ad sales
grew as a result.
McKinsey also believes in seizing small victories. If, on the way to a larger solution, you
find the chance to make a simple recommendation or small improvement, do it. Such
easy targets help build morale and appease clients who might otherwise grow impatient.
Keep track of the things you learn during the problem-solving process by making a
chart every day. This helps clarify your thinking and record your progress. As a problem
solver, try to “hit singles.” In baseball terms, this means going for the consistent, effective
solution, rather than trying to belt a home run. This approach instills teamwork,
acknowledging that you can’t do everything yourself. One cautionary note: hitting a
The McKinsey Way © Copyright 2000 getAbstract.com 3 of 5

home run can be dangerous if it gives your boss unreachable expectations about your
future performance.
“When you look
at the boxes on
an organization
chart, you are
really looking at
people. When you
move those boxes
around, you
change someone’s
life.”
“There’s a lot of
data out there
relating to your
problem, and a lot
of analyses you
could do. Ignore
most of them.”
“Be selective;
figure out the priorities
of what you
are doing. Know
when you have
done enough,
then stop.”
“It’s OK for Mark
McGwire to strike
out a lot, as long
as he keeps hitting
those home
runs. In the
business world,
though, you’re
much better off
hitting singles.”
Another McKinsey rule is, look at the big picture. It’s difficult to keep your perspective
when you’re bogged down in the details of a problem, but taking a break to re-evaluate
can help you work more efficiently. Be willing to admit that you don’t know something.
This honesty will do more for your credibility than bluffing.
Market, Don’t Sell
McKinsey prides itself on not having to sell its services. Instead of making cold calls, the
company prefers to make itself known to potential clients through marketing and being
available to those clients when needed. McKinsey boosts its name recognition by encouraging
partners to become active in charities and cultural organizations. You can increase
your profile as they do. Their consultants speak at industry conventions, attend trade
shows, socialize with potential clients, and write for trade publications, which often are
willing to run guest columns from people in their industries. McKinsey consultants also
are careful not to promise too much. They divide problems into manageable chunks.
Building Teams
McKinsey assigns teams of consultants to client problems. The team approach provides
more people to gather and analyze facts. Team-building activities are fine, if kept to
a minimum. While a group dinner or ball game might help build morale, most team
building happens as people work together. If you are a team leader, constantly gauge the
satisfaction of your team. Offer consistent decision making, because frequent changes in
direction are demoralizing and confusing. Make team members feel that their contributions
are valuable and treat them respectfully. Be polite, realize employees have lives
outside the office, and don’t ask them to do things you wouldn’t do yourself. To help build
team spirit, get to know your team members’ interests and hobbies.
Navigating Hierarchies
The first rule of success in a hierarchy is: make your boss look good. To please your
boss, do your job well. Keep your boss informed, but not overloaded with information.
Considering yourself the boss’ equal is an aggressive approach to success in a hierarchy.
One McKinsey consultant, a new employee, did this by savaging a rough draft of a boss’s
book. He had a successful career at the company in spite of the risky tactic. In a meritocratic
organization, such an approach can work. In a more hierarchical company, asserting
equality is riskier.
Doing Research
Consultants know that plenty of work already has been done for them, which they can
find through efficient research. To learn about a company, they begin with its annual
report, and add magazine articles and scholarly papers. With computer research, consultants
seek “outliers,” facts that are especially good or bad. For instance, they identify the
highest and lowest sales numbers for further investigation.
Conducting Interviews
Interviews are essential for collecting information. Before doing an interview, prepare
an interview guide with your questions and a checklist of information you’d like to glean.
Start with general, innocuous questions and move toward specific or sensitive questions.
The McKinsey Way © Copyright 2000 getAbstract.com 4 of 5

This helps build rapport and makes the subject more comfortable. Ask a couple of questions
to which you already know the answer, so you can determine the subject’s honesty.
“In the face of
complexity, many
hands don’t just
make light work;
they make for a
better result.”
“If you make your
boss look good,
your boss will
make you look
good. That’s the
quid pro quo of
hierarchy.”
Take notes and don’t talk very much. Show attentiveness by nodding or offering verbal
encouragement. Ask your question and then let the subject talk. If the subject rambles,
redirect the conversation. To encourage someone to talk, stay silent – an awkward
silence encourages people to talk. Take an interview partner to help if you’re too busy
taking notes to ask follow-up questions, or if you miss verbal or physical cues. Ask openended
questions, rather than queries that require only a simple “yes” or “no.” Paraphrase
the subject’s answer to make sure you understood the response. Don’t be openly hostile
or make the interview seem like an interrogation.
Try the tactic favored by TV detective Columbo: after the interview, just before you
leave, ask an important question. The subject will be more relaxed and more likely to
offer helpful information. Ask if there’s anything you forgot to ask or anything the subject
would like to add. Remember that an interview can be traumatic. If the subject is
nervous, don’t push too hard. If a subject is hostile, inaccurate, or uncooperative, you
can appeal to the person’s boss or challenge that behavior. However, if the person is
a “sandbagger,” someone who rambles nonstop without regard to the interviewer’s mission,
almost no strategy will help. Finally, write a thank you note to the subject of the
interview. It will help smooth the way for future interviews.
Presenting Ideas
For a consultant, as for most managers, making a presentation is often the culmination
of months of work. A good presentation is clear and logical. Fight the urge to keep working
on your presentation until the last minute; perfectionism adds unnecessary stress.
To avoid counterproductive objections during a presentation, tell the key players what
your presentation will say in advance. This helps defuse loud protests from the audience.
Finally, tell your story with simple, attractive, easy-to-understand charts. Computer
graphics have made fancy, complex charts possible, but such charts are often overkill.
About The Author
Ethan M. Rasiel worked for McKinsey & Company from 1989 to 1992. His clients
at McKinsey included major financial, telecommunications, technology, and consumer
goods companies. He has a bachelor’s degree from Princeton and a master’s of business
administration from Wharton. He lives in Chapel Hill, North Carolina.
Buzz-Words
Brainstorming / Columbo tactic / Eighty-Twenty rule / Elevator test / Initial hypothesis
/ Key driver / MECE / Outliers / Sandbagger
The McKinsey Way © Copyright 2000 getAbstract.com 5 of 5