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Why Your CEO Hired McKinsey Consultants

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CEOs hire McKinsey consultants for their "enlightenment" and to avoid accountability, says Duff McDonald, Author of The Firm - The Story of McKinsey. Subscribe to TheStreetTV on YouTube: http://t.st/TheStreetTV For more content from TheStreet visit: http://thestreet.com Check out all our videos: http://youtube.com/user/TheStreetTV Follow TheStreet on Twitter: http://twitter.com/thestreet Like TheStreet on Facebook: http://facebook.com/TheStreet Follow TheStreet on LinkedIn: http://linkedin.com/company/theStreet Follow TheStreet on Google+: http://plus.google.com/+TheStreet
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Text Comments (40)
Manuelito Pascal (2 months ago)
The main benefits of hiring a consulting company is having a new fresh, unbiased set of eyes to approach a problem. Their knowledge networks are also second to none and I doubt company employees can allocate even 5 hours of their day to problem-solving while a consulting team can work from a.m. to a.m. trying to find a solution. Are they overpriced? Maybe. But people keep hiring them so they must be doing something right.
Tushar Prasad (2 months ago)
We hire them to tell us what we already know, and they tell us what we want to hear. It’s a win win for the company and McKinsey, not so much for the shareholders.
Khushi Lunkad (4 months ago)
He's got an extra set of eyebrows
Iris Doris (5 months ago)
Smug Smugly (5 months ago)
This MacKenzie, he's a bit of a nut. Someone told me he fired the last guy because his nose whistled when he breathed.
PVT Channel (11 months ago)
Very nice work, MY NEW friend .sub and like.thank you
Eevee (11 months ago)
How do they know which fresh grad actually know enough about business? A lot of them market themselves being great at what not when in reality they have pretty childish ideas. Or do they just sort out those who actually can and the rest will do the regular work 15 hours in a day trying to desperately succeed?
washfi (1 year ago)
these are assole
Vikas Kumar (1 year ago)
Why they hire consultants because they have provided services to clients from different domains and different geographies which gives them unique advantage of coming across so many different problems of different magnitudes. Strategies given by these consultants would never work in 100% cases but what CEOs really want is a strategy for solving their problems and issues. Then you have got board on top of it to decide whether to go with suggested strategy or not and as he mentioned these consultants have kept them very safe by not taking credit in success as in failures no will blame them . Over the years consulting firms especially MBB have realised that it's just not the suggestion which will work but rather then implementation will really help in longer term.
RUSHIL JOHAR (1 year ago)
This industry sounds doubtful. But They look at problems from different point of view .. which is great. I've never heard that consulting companies did this did that . Good deals etc etc. Where are their genius work.
_Gerard Irvine (1 year ago)
Consulting is basically hiring people to think for you. People within the business are too busy running it; to think strategic direction, management restructure, and a heap of other problems..
Derrick Landers (1 year ago)
RUSHIL JOHAR That's the whole point...they don't take credit for their solutions, so you'll never know if that company's restructuring was orchestrated in-house or not.
RUSHIL JOHAR (1 year ago)
Came here after Consulting 101
Heyward Dai (1 year ago)
see how he managed to talk for 4 minutes without saying anything?
symphoniez (7 months ago)
He said alot - I especially enjoyed his overarching point of talented minds entering a field which sole purpose is to advise rather than actually deliver value products (in the traditional sense).
Moses Gunn (1 year ago)
The reason companies tend to go with consultants ideas more than their own people is because they pay so much money for those ideas they feel it must be used or its just wasted money (Go figure). Even if the idea is nothing more than a regurgitation of your own people. Its sort of like your wife telling you to buy that shirt then you buy a high priced escort who says the exact same thing. You may tell your wife that you can pick out your own clothes but drool over everything that ho just said.
Momentum Marketing Tips (1 year ago)
Great video
Fu Fu (1 year ago)
Executive genius is bringing groups into alignment for desired results, why not extend that money-craft to management? Also, that is the path of least resistance, which all mankind is prone to follow.
Fu Fu (1 year ago)
Ultimately, it may well be more minds at work is better than one/ a few, even if they are inexperienced. Surely this has been studied to death. Also, it could be the blind leading the blind, for a CEO might be as unable to lead as they. Indeed, if an org is large enough it may be impossible for the "leader" to really understand it. This is very true in science or technology where CEOs, Military, Gov etc are "leading" projects they have no knowledge on at all. Also also also, responsibility and potential loss can lead to cold feet. blah blah blah
nTo (1 year ago)
I bought the book last year! *still have not finished it though
Yseson _ (1 year ago)
nTo you were conned it is (the book) just a way to generate extra revenue
Jordan F (1 year ago)
They hired a consultant because the current ownership group is selling the company and you are likely going to be fired.
اليقين بانتصار المسلمين (2 years ago)
يا حمران الخدود يا صفر العراقيب ما أدري وش تخرطون بس جاي عن طريق حمزة السالم
klsar1 (2 years ago)
Consultants are people who take your hand, point to your watch, and tell you what time it is. But they will need 100 powerpoint slides to tell you this, charging you 10 grand per slide.
vor zeig'ur (1 month ago)
They charged you. But you hired them. You are the fool.
Mohammed Aksu (1 year ago)
if you can't read a watch, then you deserve to pay 10 grand an hour who does know how to read it
Ngọc Tú Đinh (1 year ago)
And if you can't tell the time yourself even when you have the watch, what does it say about you?
J Ko (1 year ago)
klsar1 you got it, man. They share with you what you already know, but not dare to rock the boat.
Fu Fu (1 year ago)
Perhaps, but people like spending money, and don't trust themselves.
TheChuck624 (2 years ago)
They are young greedy assholes in summary.
Curtis I (3 years ago)
I don't understanding the consulting industry why would anyone pay thousands for a group of fresh grads with no finance experience to tell them things that they already know, most of them are already in the industry for like 20+ years. Yet listen to someone who just took a bunch of liberal arts classes in university with fancy powerpoints. The ones that are actually presenting to the clients, only use the findings and data from the analyst (basically a college guy). He/She is not speaking from their own experience
W Clark (1 year ago)
Bottom line is that at the end of the day the paradigm shifting upside synergies prioritize efficiencies incentivizing win-win upsides via organic multi-variate blue skying.
Li Yon (2 years ago)
Consultants basically help you look at things through the lens of a different perspective. Sometimes CEOs already know the answer to their problems, but before they do, they need a group of brain power to help them structure their thoughts, organize frameworks to tackle their challenges appropriately. Fresh eyes, 2nd opinion, insider information, etc.
Ronildo De Abreu (2 years ago)
Curtis I
Noah Kimmel (2 years ago)
the implication is that there is no value added thought. McKinsey, as pure strategy may be harder to justify relative to an IT consultant for instance, but nevertheless, consultants are helpful for a few things: 1) fresh eyes on a problem 2) short term staff augmentation - sometimes companies don't have the people to do the work and need help. Hiring is a long and expensive process, and firing people after a project isn't good for morale. In some cases, company location may make it impossible to find enough of the needed skillset in the local job market. 3) niche experience - while there may be experience on the client side, there is also experience on the consultancy side, either individually or in past project references. 4) implementation guidance or ownership - think a new software tool and the change management associated 5) shared accountability and "independent" thought
JudgeyJudgeyable (3 years ago)
when the author said that Mckinsey's business is mostly repeat business, it reminded me of the show House of Lies where every episode they would emphasize making repeat business
JudgeyJudgeyable (3 years ago)
when the author said that Mckinsey's business is mostly repeat business, it reminded me of the show House of Lies where every episode they would emphasize making repeat business
国际天龟 (4 years ago)
说得好。 我操
dbstube (5 years ago)
..."85% of their business is repeat business & they develop relationships with each individual client"-Wow, that really says alot for 'relationship selling' and retention in addition to the main point in the overview of his book.