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&lt;p&gt;For as long as it has existed, the consulting industry has been plagued by one major question: does it—and by extension the consultants it employs—actually create any value for its clients?&#160;&lt;/p&gt;&lt;p&gt;That question is at the core of &lt;em&gt;The Firm&lt;/em&gt;, a new book by journalist Duff McDonald, which examines, as its subtitle proclaims, &quot;the story of McKinsey and its secret influence on American business.&quot;&lt;/p&gt;&lt;p&gt;While the title tends towards the dramatic, the book does make a strong case for the argument that the world as we know it today has been shaped by the management consulting profession and, as the leading light of that profession almost since its inception, therefore by McKinsey.&lt;/p&gt;&lt;p&gt;With that point in mind, it&#39;s not much of a stretch to read the ebb and flow of McKinsey&#39;s fortunes as presented in &lt;em&gt;&lt;a href=&quot;http://www.amazon.com/The-Firm-McKinsey-Influence-American/dp/1439190976&quot; target=&quot;_blank&quot;&gt;The Firm&lt;/a&gt;&lt;/em&gt; as a synecdoche for many of the issues in the wider economy—from the increasing pay gap between executives and the rest of the workforce (a trend that, according to the book, McKinsey played a large role in creating) to the move away from long-term client relationships and strategic focus towards a worldview centered around short-term profits and results in the years leading up to the financial crisis.&#160;&lt;/p&gt;&lt;p&gt;&lt;strong&gt;Shifting values&lt;/strong&gt;&lt;strong&gt;&#160;&lt;/strong&gt;&lt;/p&gt;&lt;p&gt;Among several threads that &lt;em&gt;The Firm&lt;/em&gt; tracks over the decades and generations, perhaps the most interesting is the evolution of McKinsey&#39;s corporate ethos—the questions of &quot;who are we&quot; and &quot;what do we do&quot;—under its different leaders. For example, under McKinsey legend Marvin Bower&#39;s tenure (1950 to 1967, although Bower remained a McKinsey director until the 1990s), the firm established a policy of only working for CEOs, of only tackling those CEOs&#39; most vexing questions, of being willing to start relationships with clients even if they were unlikely to be profitable in the short term, and of being prepared to turn down work where the firm felt that it was either unable to make a difference, or where the client was unlikely to implement the advice. In short: Bower&#39;s McKinsey comes across in McDonald&#39;s telling as a firm with a &lt;em&gt;mission&lt;/em&gt;—to make the world of business a better, more efficient place.&#160;&lt;/p&gt;&lt;p&gt;In contrast with that is the picture McDonald paints of the firm under disgraced ex-managing director Rajat Gupta, whose tenure ran from 1994-2003. That period saw the firm experience rapid growth even as it stripped away many of the core tenets of the business put in place by Bower: things like taking equity in clients in lieu of payment and linking pay to client performance—both moves that incentivize short-term initiatives to boost a client&#39;s stock price. Additionally, according to McDonald, the firm became a lot less picky about its client list under Gupta, a move that led to massive revenue growth during the dot-com bubble, but also left the firm heavily exposed when it popped. The essential difference between the two tenures is best summed up by this passage from the book:&#160;&lt;/p&gt;&lt;blockquote&gt;&lt;em&gt;&quot;Bower had turned consulting from a business into a profession, and McKinsey into its standard-bearer. His final reward? He got to see Rajat Gupta and Gupta&#39;s cohort turn it back into a business. The institution survived, but the cherished values fell by the wayside. Gupta&#39;s McKinsey was a business—not a profession—and that&#39;s all there was to it. It was, of course, a remarkably successful business, and the charitable view of Gupta&#39;s tenure can hardly ignore the firm&#39;s continued growth and deepening influence across the globe, as well as the exponential change in the partnership&#39;s wealth.&quot;&lt;/em&gt;&lt;/blockquote&gt;&lt;p&gt;&lt;strong&gt;Everything old is new again&lt;/strong&gt;&#160;&lt;/p&gt;&lt;p&gt;Of course, it&#39;s now a decade since the Gupta regime ended at McKinsey—although his deleterious effects on the firm&#39;s reputation lasted through the Galleon Group insider trading case—which raises the question of where the firm is now, in terms of its ongoing evolution.&#160;&lt;em&gt;The Firm &lt;/em&gt;provides interesting insight into the McKinsey psyche over this period, detailing McKinsey&#39;s response first to the excesses of Gupta&#39;s regime, and then to the later revelations of his involvement in the Galleon scandal. Essentially, McDonald makes the case that, under both Ian Davis (2003-2009) and his successor, current managing director Dominic Barton, the firm has re-oriented itself around the values that made it such a powerhouse in the first place. Chief among them: McKinsey&#39;s ability to produce and disseminate key insights to clients (and would-be clients), coupled with a renewed willingness to stay out of the public eye and focus on the long term. That focus has only gathered pace since Dominic Barton&#39;s election in 2009. As McDonald puts it: &#160;&lt;/p&gt;&lt;blockquote&gt;&lt;em&gt;&quot;[T]he selection of Dominic Barton showed that, like the rest of the world, McKinsey was turning its attention to the Far East, a source not just of both clients and consultants, but of idea about business itself. McKinsey was taking the long view again.&quot;&lt;/em&gt;&#160;&lt;/blockquote&gt;&lt;p&gt;As evidence, McDonald cites a paper that Barton wrote in the aftermath of the financial crisis titled &#39;&lt;a href=&quot;http://hbr.org/2011/03/capitalism-for-the-long-term&quot; target=&quot;_blank&quot;&gt;Capitalism for the Long Term&lt;/a&gt;&#39;, which served as both a wake-up call for the capitalist system at large, and something of a manifesto for McKinsey&#39;s future. As McDonald notes, in the paper, Barton &quot;espoused a move from what he called &#39;quarterly capitalism&#39; to &#39;long-term capitalism.&#39;&quot; It&#39;s an open question as to whether that call has been heeded in the global economy, but there&#39;s plenty of evidence, both in &lt;em&gt;The Firm&lt;/em&gt; and elsewhere, that McKinsey is seeking to live up to it. (Barton was also refreshingly honest about the challenges and damage that the Galleon case presented McKinsey—something I covered &lt;a href=&quot;/blog/consult-this-consulting-careers-news-and-views/mckinseys-dominic-barton-on-his-road-to-the-top/&quot;&gt;here&lt;/a&gt;.)&#160;&lt;/p&gt;&lt;p&gt;&lt;strong&gt;The Verdict&lt;/strong&gt;&lt;/p&gt;&lt;p&gt;The other major thread that runs through the guide is the question raised in the opening paragraph: are consultants worth the money? It&#39;s a question that McDonald seems conflicted about throughout &lt;em&gt;The Firm&lt;/em&gt;, and it&#39;s one that, ultimately, he provides three separate answers to: Yes; No; and It Depends.&#160;&lt;/p&gt;&lt;p&gt;As frustrating as that might seem on the surface, it&#39;s an approach that turns out to be entirely justified: McDonald marshals plenty of evidence to build credible cases for both the Yes camp (successful projects in post-war Europe, the plan for the revitalization of the city of Glasgow in the 1980s, and more) and the No camp (the firm advised Enron, and was blindsided by both the tech bubble and the financial crisis—and played a role in advising financial industry clients to increase leverage prior to the crash). As for the fence-sitters&#39; category: the book makes the perfectly reasonable case that different people and organizations are looking for different outcomes when they hire a consulting firm. While some CEOs may want political cover for difficult decisions or to have a confidant and advisor who isn&#39;t a subordinate (and therefore a job threat), others might bring the firm in for anything from a specific, short-term project to a years-long, vaguely defined relationship.&lt;/p&gt;&lt;p&gt;With so many items in each of the columns, it&#39;s possible for anyone reading &lt;em&gt;The Firm&lt;/em&gt; to make whatever case they&#39;d like. (Case in point: the cover blurbs include a quote from JP Morgan CEO Jamie Dimon praising the book for &quot;demystify[ing] the secret behind McKinsey&#39;s successes&quot;, and another from Reuters finance blogger Felix Salmon citing it as a &quot;heartbreaking tale of wasted talent.&quot;)&#160;&lt;/p&gt;&lt;p&gt;Accordingly, McDonald doesn&#39;t come out strongly on one side or the other—a fact that results in a well-balanced portrayal of the firm and its place in the global business community, and what seems on its face to be an honest appraisal of both McKinsey&#39;s past, and the challenges and opportunities it faces in future.&lt;/p&gt;&lt;p&gt;For all of those reasons, &lt;em&gt;The Firm&lt;/em&gt; will not only appeal to those who are hoping to learn more about McKinsey and/or the consulting industry, but to anyone who is interested in the forces that shape our corporate and governmental landscapes and, hence, the world as we know it.&lt;/p&gt;

Phil Stott

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