James McKinsey, the Professor of Chicago University founded the firm of “Accounting and Engineering Advisors” in 1926 which later rapidly grew as McKinsey & Company. Then he recruited talented and experienced executives, and motivated them through some extraordinary consultant programs in order to carry out the operations of the company efficiently. McKinsey recruited the young lawyer Marvin Bower in 1932 and assigned him the responsibility of the new office opened in New York. It was the turning point of the venture, McKinsey & Company. Bower is a man with great innovative conceptions and a wonderful power of imagination which led the company to the top of business empire.
The company’s vision was to ‘adhere to the highest standards of integrity, professional ethics, and technical excellence’ (2). They always provided opportunity to young men of outstanding qualifications which helped the firm to improve its stature. In early 1960s company’s accelerated rate of expansion resulted in the opening of offices in London, Geneva, Amsterdam, Dusseldorf, and Paris. Even though their growth had indicated a supersonic aircraft, they faced some problems in early 1970s.
The following part illustrates the problem they faced; and includes some suggestions or practical remedies to those problems. The diminution of McKinsey & Company could be attributed to the strategic failure of its lawyer, Marvin Bower. Bowler brought a series of modifications in the organizational concepts and structures with the support of his partners and associates. Even though he performed it with an entrepreneurial spirit, it had some sever impacts on the organization. For instance, due to the strategic transformation, the company became unable to meet customer demand for its services.
According to Commission on Firm Aims and Goals (1971) McKinsey’s insatiable run to expand the geographical area and to develop market potential caused them neglect the significance of technical and professional skills (cited in McKinsey & Company: Managing Knowledge and Learning, 2). In addition to this economic uncertainty due to oil crisis, slow rate of divisionalization process, the growing sophistication of client management, and the emergence of new competitors intensified the of the situation.
The huge geographical coverage pulled back the company from forming appropriate strategies from time to time. Moreover they had no idea about the current economical status of the company. Similarly the company had no disinclination in receiving routine assignments from unqualified persons which often reduced the quality of the work and thereby diminished McKinsey’s efficiency in strategic development. Even though company’s consultants were intelligent, they did not attempt to research into the organizational aspects in order to bring out internal problems of the firm. Similarly the McKinsey & Company could not exercise proper control over employees and it adversely affected their codes of conduct.
Moreover, the absence of a good management information system and an internal control system deteriorated the situation. All this destroyed their self confidence and desire to achieve more. It led to an ideological disorder in the organizational atmosphere; and there aroused a predicament of self criticism. Some different but systematic strategy has to be adopted in order to get rid of the current difficulties; and to bring back the firm to the normal track of sustainable business operation.
The major problem is that they cannot meet the demand of their customers properly. Since customer is the king of market who determines the market demand, modern market gives more emphasis on customer’s preferences. So the McKinsey & Company must make necessary modifications in their strategic notions as well as on its organizational structure. It should be noted that retention of the current market demand is more important than the discovery of new market opportunities. The company must not sacrifice its reputation in order to diffuse the business across the world.
Since compartmentalization of business activities may lead to unhealthy relationship between employees, the management must try to achieve organizational goals by collaborated efforts. Similarly fluctuation in market conditions also causes the growth retardation which can be avoided to a large extent through an efficient market forecast. The application of some internal check programs is also essential to get the up to date information about employees, which would help the management to improve their performance. In my opinion, consultants’ insincerity and misbehavior is the most embarrassing crisis of the McKinsey & Company.
If the consultants are vigilant and innovative, they can easily solve various organizational as well as strategic flaws before they get rooted. For this purpose, the managerial consultants have to delve into the soul of day to day business operations and market changes. Similarly an establishment of Human Resource Management system can do a lot for the well-being of the organization. It will be better for the company to initiate some social responsibility programs in order to bring back the customer attention to firm’s services.
Similarly a customer monitoring system must be employed in order to get the customer feedback. Finally, the company should discourage individual strategic decision as it may not always be efficient. Works Cited “McKinsey & Company: Managing Knowledge & Learning”. Harvard University. (n. d.)