The McKinsey Mind: Understanding and Implementing the Problem-Solving Tools and Management Techniques of the World's Top Strategic Consulting Firm

The word McKinsey is almost synonymous with strategic and business consulting as it has established itself as one of the most successful business consulting firm in the world. What differentiates it further is that anybody trained in the McKinsey way is usually much sought after in the corporate world and it's alumni heads some of the biggest corporations in the world. As such, naturally I was drawn to learn from them and see what makes them tick. This book written by Ethan M. Rasiel and Paul N. Friga provides some insight into the management techniques employed by McKinsey. What I find really useful is on knowledge management especially for consulting business. As we know, consulting company don't have much (if any) hard assets and their business revolves around knowledge. As such, without a proper knowledge management system, a consulting company cannot be sustainable which explains why many consulting company fades away after its founder retires or is no longer around. As such, for consulting company, knowledge management is everything and the acid test is whether the company can last after its founder retires. Even for non-consulting company, knowledge management is very important in order to be ahead of its competitors. For example, Wal-Mart prides itself as having the most efficient supply chain management in the world by utilising the knowledge it gathers from its customers and adjusting their inventory based on the knowledge gathered. Similarly, I am sure Google fine tunes its search engine by continuously managing the feedback (knowledge) from its users.

For an example which I am familiar with, let's take property developer for instance. A good property developer should have a knowledge management system which continuously document best practices and lessons learnt in order to provide the best for its customers. This way, better time can be spent on improving their products rather than focusing on minimising mistakes. For example, a database on the following would be most useful:

a) Typical cost per square foot associated with different development, e.g. high-rise, commercial, office, etc.
b) Things to avoid which will affect buyers' decision such as "feng shui", e.g. facing direction of units, location of bath rooms, etc.
c) Optimum structural system for different development and what is the criteria for selection.
d) Optimum foundation system for different development and location of the site.
e) Things to avoid/risks associated with different ground conditions, e.g. soft ground, hillside, coastal areas, limestone, etc.
f) "Wow" factors for buyers.
g) Checklist for its consultants on its expectations.

And the list goes on. In addition, knowledge management does not mean managing documents. It is about creating a culture where knowledge can be freely shared inside the organisation. However, it is important to realise that a too rigid system may harm the company as a company does not want its personnel just to follow checklists without doing their own thinking. As such, it is important to strike a balance between providing enough guidance without restricting the creative and innovative juices of one's personnel. Who says it is easy to build a successful organisation? Everything is about the right balance. Happy reading and learning!

The following are some of the exerpts from the book which I will refer back from time to time in order to improve myself:

1) McKinsey concept of MECE (Mutually Exclusive, Collectively Exhaustive) in the context of problem solving means separating your problem into distinct, nonoverlapping issues while making sure that no issues relevant to your problem have been overlooked.

2) In the generic approach to framing the problem, McKinsey-ites put this concept into practice by breaking the problem before them into its component elements. (In my opinion, this is an important traits of a good leader, i.e. the ability to break the problem into its component elements. When this is done, the problem appears less overwhelming and can be tackled one by one. The last thing you need is to be overwhelmed by the problem because it seems too daunting to be solved).

3) For your brainstorming sessions to succeed, you should follow these rules:

a) First, there are no bad ideas.
b) Second, there are no dumb questions.
c) Third, be prepared to "kill your babies" (i.e. to see your ideas get shot down, and to pull the trigger yourself if necessary).
d) Fourth, know when to say when: don't let brainstorming drag past the point of diminishing returns.
e) Last and most important, get it down on paper.

4) On decision making: sooner or later every executive has to make a major decision based on gut instinct (This may sound trivial but in my opinion, it is one of the most difficult trait to master in order to become a good leader. A person who is afraid or lack the insight to make decision based on gut instinct usually will be paralysed by the lack of information. In fact, the French has a term for this quality - coup d'oeil - an intellect that, even in the darkest hour, retains some glimmerings of the inner light which lead to truth. Again, don't misunderstand this with making decisions recklessly which is different!).

5) When doing your research, you don't want to get as much information as possible, you want to get the most important information as quickly as possible.

6) Do you make any arguments without supporting facts? If so, this is a red flag.

7) Seven tips for successful interviews:

a) Have the interviewee's boss set up the meeting.
b) Interview in pairs.
c) Listen, don't lead.
d) Paraphrase, paraphrase, paraphrase.
e) Use the indirect approach.
f) Don't ask for too much.
g) Adopt the Columbo tactic. This is based on a TV character in the 1970s, Lieutenant Columbo played by Peter Falk. He would often finish questioning a suspect and then pause by the door to ask one more question - usually a zinger. This tactic succeeded because the suspects often dropped their guard and allowed the truth to come out. You can try this approach if you think an interviewee is holding out on you.

8) Effective managers spend a majority of their time listening.

9) Data are facts, observations about occurrences, and numbers. Information is a collection and some synthesis of data. Knowledge is the mix of information, experience, and context in a value-adding process.

10) Knowledge Management (KM) is the systematic process by which an organization maximises the value of the uncodified and codified knowledge in the firm.

11) McKinsey maintains two primary database. One called PD-Net, includes previous reports generated and cleansed for sharing among the Firm's consultants. You could think of it as the "know what" database. The other database is a directory of all the Firm's experts in various industries and practice areas; call it the "know who" database.

12) On KM implementation efforts:

a) Develop a rapid-response culture.
b) Acquire external knowledge.
c) Control the quality of your input: garbage in, garbage out.

13) Remember than an organization can only do so much at one time. Concentrate on the big wins first. (An important trait of a good leader - the ability to prioritize).

14) You must make sure the solution fits your client.

15) ..........even if the particular analysis you are doing necessitates gigabyte-sized models and complex mathematics, try to simplify the results of that analysis to a level than an educated outsider can understand.

16) On the subject of buy-in, McKinsey alumni have one principle inscribed on their hearts: prewire everything.

17) One obvious lesson from McKinsey is that managing the team is a separate, distinct and important task. This is not widely appreciated in other organizations. (This sounds simple but many organizations fail to appreciate it. For example, a technical manager in an engineering consulting firm usually concentrates on managing technical solutions for the client with virtually negligible time spent on managing his team. Companies usually emphasize the importance of team without allocating sufficient time and resources to manage the team. IBM's structure is good in this respect where they make distinct differences between technical manager, people manager, subject matter expert, etc.)

18) On selecting and recruiting team members:

a) Consider not just demonstrated ability, but potential ability.
b) Appreciate the value of diversity.
c) Apply structure to recruiting efforts.

19) ........learning by walking around - random meetings to connect with team members outside of scheduled meetings.

20) Performance assessment should meet three criteria. It should be objective, be based on expectations that were set in advance, and account only for events that were within the control of the person you are mentoring.

21) It is important to point out weaknesses and development opportunities but to avoid going overboard and making every comment a "suggestion for improvement".  (Don't make performance review demoralizing with too many negative comments).

22) Rather than sticking a foot in the door and barging in cold, build up a reputation and let it preceed you. (McKinsey approach to indirect selling).

23) On client service:

a) Engage the client in the process.
b) Always look over your shoulder.
c) Keep the client team on your side.
d) Learn to deal with liability client team members.
e) Pluck the low-hanging fruit.
f) Get buy-in throughout the organization.

24) ........the locus of problem solving: it is best done in the "client's backyard".

25) ........before you head off to the next problem, present a clear implementation plan that includes exactly what should be done, by whom, and when. This applies not only to consulting projects but also to internal projects that hinge on future activities for eventual value generation.

26) If you view your job as a challenge to help clients win, rather than focusing on how you win, good things will happen. (Important to remember this point especially for consulting business).

27) You can't do everything, so don't try.

28) In a modern organization, you can't last very long as a one-man band.

In summary, this book provides principles which have served McKinsey well. At the end of the day, management is about getting the best out of your team members in order to solve client's problems. The techniques offered by the book would certainly help and for me, the book is useful as a reminder when you get overwhelmed by daily deadlines (aren't we all). So, as a final word, while it is important to manage your team, I guess the most important person to manage is yourself. Have a good and healthy life!