How did the company which insiders affectionately call ‘The Firm’ and outsiders know as ‘McKnife ‘ come to be? This week we will explore McKinsey’s history and firm-specific application process (which include case interviews and the “PST“). Today, we start with its history.
McKinsey & Company was founded in Chicago in 1926 by James McKinsey as “James O. McKinsey and Company”. Previously, McKinsey served as an accounting professor. The firm had both an accounting practice and a management engineering practice. One of the first firms to provide executive management with strategic advice, which it called management engineering, it focused not only on inefficiencies and badly run companies but also helped healthy companies position themselves wisely.
In 1937 James O. McKinsey died unexpectedly of pneumonia, leaving the remaining partners in disagreement over how to run the firm. The management engineering practice was split into two affiliated firms: McKinsey & Company and McKinsey, Kearney & Company. McKinsey, Kearney & Company continued the Chicago office under guidance from Andrew Thomas Kearney, while Martin Bower continued McKinsey & Company from New York.
Under the guidance of Martin Bower, the first pillars of modern management consulting and ‘The Firm’ as we know it today became clear. Bower, now regarded as the ‘father’ of modern consulting, served as McKinsey’s managing director for 17 years, from 1950 until 1967, and continued to advise the firm long afterwards. In 1952, he bought the rights to the name McKinsey & Company and Kearney continued his firm as ATKearney & Associates, as it is known today.
McKinsey still sets the industry standard, even though it now faces competition from both The Boston Consulting Group and Bain & Company (the three of them collectively referred to as MBB). As the consulting giant, it has faced controversy as of late: it was held partly responsible for the collapse of Enron and two of its alumni now face charges on insider trading.
McKinsey is the largest strategic management consultant today, with 100+ offices in more than 45 countries and a staff of over 9000 consultants. Constantly looking for the best performers, it’s a top employer of MBA’s and grad students, but few survive the selection process. Want to be really well prepared for the case interview? Keep in touch for the articles on McKinsey’s PST and case interview methods due later this week.