McKinsey Reputation Management

If you've been following the news, Rajat Gupta, the former managing partner of McKinsey, has turned himself in, in response to allegations of insider trading.

What a black eye for the reputation of the firm. I'm sure there are a few hundred McKinsey partners who are absolutely livid about this.

It's one thing to say some "lone wolf" individual potentially did something really stupid and it's not reflective of the firm, but it's another when it's your firm's former CEO.

I'm 100% certain this news is hallway conversation in all the McKinsey offices globally. I'm also sure that BCG and Bain are both:

1) secretly a little thrilled at the news (though they would probably never admit it publicly) and

2) secretly wondering if any of their partners are doing the same (and taking actions to remind everyone of ethical and legal commitments).... though I think today's news will be a sufficient reminder.

Amongst the partners at MBB, their #1 collective fear is something that damages their firm's reputation.

There are really only three rules when it comes to reputation management:

1) Don't do anything that will damage the reputation of the firm.

2) Don't do anything that could even remotely be perceived as damaging to the reputation of the firm.

3) See rules #1 and #2.

That's it.

I don't know if Rajat Gupta is guilty of #1, but he sure is guilty of #2.

Should Rajat Gupta be convicted of breaking insider trading laws and get jail time, you can be sure there will be a collective groan amongst all McKinsey partners everywhere.

So how does this relate to you and the case interview?

Let me explain.

While doing something illegal or unethical is by far the worst possible way to damage a consulting firm's reputation, a much smaller (but more common) offense that consulting firm partners worry about is a new consultant saying somethingstupid.

In this context, a "stupid" comment = making an assertion that's not supported by the facts.

Granted this is a minor offense compared to insider trading, but it IS on the unfavorable side of the scale between perfect reputation vs. lousy reputation.

One of the reasons the top firms are so picky about your communication skills -- especially your synthesis skills -- is they don't want the firm's reputation to be damaged in the eyes of a single client.

When I was at McKinsey, I received an absurd amount of coaching around (get this) word choice. In fact, of all the feedback I got from managers and partners, half the feedback was on debating which words to use in a presentation or discussion.

Yes, they are that uptight about word choice... because the words one chooses ultimately impacts how the firm is perceived by a single client.

This is one of the reasons why in LOMS I'm so picky about how you should be phrasing your observations, hypotheses, and conclusion.

http://www.caseinterview.com/loms

I will often have the candidates in the recordings rephrase a synthesis four or five times until each word coveys the precise meaning intended.

I have gotten feedback from LOMS members that this seems like overkill.  Despite their hesitations, these same members follow my advice anyways, get offers and often get feedback from partners that they were the candidate with the strongest communication skills they've seen in years.

It's at that moment they realize why I'm so picky... because consulting firms really care about it!

And the reason why they care about it is because word choice directly translates into how clients perceive a consulting firm.

Word Choice = Reputation Management.

This is a useful point to keep in mind in your case prep.

Now let's get back to today's news. Given that so much care has been taken to avoid damaging the firm's reputation in the eyes of even a single individual client, you can start to imagine how upset McKinsey partners and associates  must be at today's news.

Nearly 100 years of extremely careful reputation management by over 100,000 consultants over the last century has all been permanently tarnished by today's news.

The late Marvin Bower, who was the defacto founder of McKinsey, is probably turning over in his grave right now.

While I don't think this will severely impact the McKinsey's market position, what it does do is tarnish the firm's nearly perfect image.

In addition, it forces every McKinsey partner and consultant to field questions from clients and recruits about McKinsey's integrity, confidentiality, etc... things that until recently were rarely, if ever, questioned.

In closing, I just wanted to highlight how much these firms worry about their reputation. Once you understand that underlying motivation, you can better understand why these firms critically evaluate your communication skills in the case interview.

While you might think a poorly justified conclusion is a minor offense compared to insider trading, prior to today, a poorly justified conclusion was considered a major offense.

Unfortunately, today's news will likely require a new scale to measure damage to McKinsey's reputation.

Additional Resources

If you found this post useful, I suggest becoming a registered member (it's free) to get access to the materials I used to pass 60 out of 61 case interviews, land 7 job offers, and end up working at McKinsey.

Members get access to 6 hours of video tutorials on case interviews, the actual frameworks I used to pass my interviews, and over 500 articles on case interviews.

To get access to these free resources, just fill out the form below:

First Name *
Email *

Note: All registrations require you to confirm your email address.
Please type your email address carefully, entering your email also subscribes you to my Case Secrets Email Newsletter.

mail
Facebookgoogle_pluslinkedin
2 comments… add one
  • Francisco Jul 30, 2012, 5:52 pm

    Dear Victor, recently I went to a business meeting with the directory of a local chamber of commerce in my country.
    My boss and I went with the purpose to sell the idea of Sub-franchises, as part of our business expantion.

    Right at the beginning of the meeting, some members of the directory requested for some data in regards to a marketing study. Of course, we did not have any study whatsoever, but a brief pull market survey supported with some extrapolate information about the historic demographics of the region, which I though it was going to be helpful to answer some questions, and sell the idea of sub-franchises.

    My boss, on his behalf, to keep the flow, did mentioned that indeed, we have conducted a brief “marketing study”, but he did not have any evidence of rought data. In my anxiety to back him up, I added to his statement that according to our “marketing study” we have calculated that the Americans baby-boomers living in the region are approximately 1000, and they CORRECT my data, by saying is 5000…….followed by sarcastic commentaries about our brief “marketing study”.

    How would you have manage the same situation as a first year consultant, and as engagement leader at Mckinsey?
    What could have been politically correct to say afterwards?
    Did I do wrong in my porpouse to backup my boss?

    Thans for any tips in advance

  • Victor Cheng Jul 30, 2012, 6:06 pm

    Francisco,

    The McK standard is don’t say anything you can not prove (unless you qualify it as a hypothesis worth investigating further or an opinion).

    If you mistakenly state something that later you find out you can not prove, you go back to the client and explain you misspoke earlier, and provide them with the correct facts and any conclusions stemming from the correct fact.

    -Victor

Leave a Comment