McKinsey is not a conventional organisation. Those are the management consultancy’s own words. Once referred to as the Jesuits of capitalism, it has nearly 30,000 employees and revenues of $8.8bn, yet it remains entirely owned and managed by its elite partners.
Guiding – rather than leading – them is Managing Partner Dominic Barton, but he’s due to step down in early 2018 after nine years. So begins an archaic succession process that looks like it belongs in an ancient university, or perhaps a Dan Brown novel.
First, the consultancy’s 500 or so senior partners gather behind closed doors to nominate candidates – this took place in London’s Grosvenor House hotel a week or so ago. Maintaining the shadow of secrecy, they deliberate over several months, without any formal campaigning or even explicit self-promotion from the candidates, before picking from the final two contenders, again behind closed doors.
It’s a triumph of networking over pulpit-thumping bombast, of the exercise of influence rather than power, and as such it’s entirely appropriate for a firm of advisers. Still, it’s hardly a surprise to find this particular method of succession planning absent from the advice McKinsey gives the rest of the world on the subject.
Whoever McKinsey picks will have their hands full, with the continued fall-out of The Firm’s involvement in South Africa’s political scandal, and questions over the need to diversify away from core consultancy, which is facing imminent disruption if you believe Clayton Christensen.
Barton’s successor will also have to fill the biggest shoes in the room – the Canadian’s tenure has widely been viewed as a great success. To give you an idea of how he got where he is and what he learned along the way, here’s Matthew Gwyther's long-read interview with Barton from July 2013.
Dominic Barton enters the room. He's tall, polite, Canadian and concerned. Frequently concerned. During the interview he uses the expression 'I worry about ...' many times. On the desk, I've placed the latest edition of the Economist, open at a glowing feature about the global consulting industry.
Things are, it seems, going gangbusters at the moment, with double-digit growth amid the economic gloom.
More than keeping its end up against deadly rivals Bain and BCG, McKinsey's turnover was up 12.4% to an estimated $5.3bn in 2011. The headline reads 'To the brainy, the spoils - As the world grows more confusing, demand for clever consultants is booming'.
He winces. 'No. No! We don't dominate the brain pool. Our clients are talented, brilliant people and we're there to enable them to do what they want to do. We help them be better.'
Surely he protests too much. McKinsey is hardly Special Needs. It prides itself on providing the most prestigious, and probably the most expensive, advice that top corporates and governments can buy.
One McKinsey ex-director described his colleagues as 'a band of insecure, deeply left-brain, hyper-intellectual, OCD overachievers'.
OK, maybe they could sometimes do with a little help on the emotional intelligence front, but McKinsey gets the cream of the cleverest kids from college and business school: 201,000 applied last year for 2,200 places.
Even better, since 2007-08 one suspects that fewer of them, given a choice between The Firm, as it's known to insiders, and Goldman Sachs, will have chosen the latter.
McKinsey's acceptance rate for job offers is currently at a 15-year high. If you go and work for it at its UK HQ on London's Jermyn Street, you may even be tasked with something as worthy and noble as helping to save the NHS. What did Goldman ever do for the NHS?
But Barton doesn't like raw brain talk. That's far too '80s/90s. He's keener to discuss diversity than neurone power and how the sort of talent his firm seeks out has changed.
'In the past, we believed any problem could be cracked by analytics. You know: get the smartest people together, throw them a piece of meat and things will happen. It's not just the sharp and bright that we look for. At McKinsey, you need to be practical, patient and able to build trust. You've got to be able to convince and persuade. You've got to work out how to influence without having power. It's what my predecessor Ian Davis called RQ, the Relationship Quotient.'
He points out that in the old pre-JFK days - and McKinsey goes back to 1926 Chicago, when it was founded as a band of 'management engineers' - the firm would hire men in their 40s with many miles of business experience on the clock, healing the ailing in Arkansas and the underperforming in Utah.
'These days,' he says, 'our test is asking whether you'd like to sit next to this individual for four or five hours on a plane or throw them out of the window.' So, it has been hiring doctors, lawyers, even a couple of poets.
It's all very well trying to get away from the Smartest Guys in the Room stuff but Enron was a big McKinsey client and the firm donated Jeff Skilling, currently doing 14 years, to the company in return. Its own metrics suggest that McKinsey people are wildly successful, however.
One of the stats of which Barton is most proud is that there are 359 ex-McKinsey supermen and women across the planet running $1bn-plus companies. No other organisation's alumni come close to this.
He prefers McKinsey to be seen as 'a leadership factory'. And look at the output list: Vittorio Colao of Vodafone, Sheryl Sandberg of Facebook, Tidjane Thiam from the Pru, the multipurpose Adair Turner, Tom Peters, former HSBC chairman Stephen Green, Howard Davies of this parish... Even William Hague and Chelsea Clinton.
McKinsey people are famous for their Jesuitical self-discipline and hard work. When the US taxpayer coughs up $164,165 for a week's worth of one McKinsey engagement manager plus three associates, the deal is they graft like stink.
However, Barton accepts that, nowadays, the top talent doesn't necessarily want to work all the hours God sends. Women now form 28% of the intake and the partners are mad keen to get mothers returning to work back at the firm on 60% time. 'You can take four to six weeks off unpaid to play music or go to Afghanistan,' encourages Barton in full sales mode.
Yet Barton's own work/life balance looks precarious. Based in London, he meets two CEOs each day 'no matter what', and for 240 days a year he's on a plane.
His well-tapped phone app 'Track My Life' reveals he has recently been in Perth, Peru and North America. His wife has just completed a degree in Shanghai and he sometimes sees his kids, who are at university in London, when they return to do their laundry at the weekend.
Barton himself does not come across as a know-it-all. He's more like an earnest, greying consultant gastroenterologist giving a diagnosis about a company's irritable bowel to an anxious CEO and suggesting treatment.
Even minions call him 'Dom' to his face. He was brought up in Canada and Africa, attending college in British Columbia and then Oxford as a Rhodes scholar.
Barton's election by his fellow partners to the top job in 2009 was not without effort on his part. McKinsey is famed for its brutal up-or-out system, and if you haven't made partner within five or six years it's goodbye (25% of the staff turn over annually).
Our amiable Canadian was nearly shown the door before he got started. He'd begun in the Toronto office in 1986 after a brief spell as a currency analyst at Rothschild in London. 'It wasn't just a no,' said Barton when asked a few years back about the experience of applying for partnership, 'it was the sense that "he doesn't have a chance".'
He was told that there were issues with his problem-solving. This was, as others have noted, like telling a mathematician that he has problems with his arithmetic.
Undaunted, he forged on and gave partner another crack later. It was a 'thanks, but no thanks' again. During the phone conversation that gave him the news he slammed down the receiver. It was a complete humiliation and his wife, Sheila, a Labatt from the brewing dynasty, told him to look for something else. He refused and the obsession with achieving his goal grew. He made partner at the third attempt. 'I'm sure there were splinters on my back going across the bar, because that was close,' he has noted.
Being an Average Joe in McKinsey is no fun. He didn't make serious progress until he decided to go east. 'I was flattening out and not growing,' he says. 'I needed to get out and develop my own relationships.'
In 1997 he took his reluctant wife and two young children off to Seoul, then little more promising than Palookaville. A new vista opened up for Barton. Within three months, the Asian financial crisis hit and the phone started ringing off the hook. Before long, he was the top banking adviser in the country and giving it to clients straight, in unflinching McKinsey style.
South Korea had 34 banks and Barton reckoned all but four were bankrupt. The nation's banking system needed rebuilding from the vaults up and Barton was in the thick of it, merging companies and creating new regulators.
He retains the close confidence of the South Korean president and continues to admire his people for their aggressive ambition, their paranoia about competition and their scrappiness. He went on to Shanghai, filling his contacts book with the rich and powerful and judiciously milking an economy that was growing like topsy.
He became a true McKinsey player and was one of several contenders when the top job came up in the late 1990s, but he was beaten by the legendary incumbent, Rajat Gupta, of whom more later.
How does he view China's future now? Is that sort of growth sustainable with the political lid so firmly on?
'You cannot manage a $15trn economy. They will have to release control more and more if they really want innovation. My Chinese friends ask why they receive no Nobel prizes. Well, I'm a capitalist at heart. They have wonderful stories and culture but they are never, for example, going to produce a Disney from that constrained model.
'However, they are well aware of their problems and they study hard. They do not want the Russian example to play out. I suppose the question is whether that process will be gradual or sudden. Pollution, energy and water are urgent problems.'
Barton in a minute
1962: Born in Uganda, where his father was a missionary
1980: Studies economics at the University of British Columbia in Vancouver and then wins a Rhodes Scholarship to Oxford University
1986: Joins McKinsey office in Toronto
1997: Moves to McKinsey job in Seoul
2004: Made chairman of McKinsey's Asia division
2009: Elected worldwide managing director and re-elected in 2012
Taking the top job in 2009 just as the financial crisis was exacting its toll meant that the work had transformed into gruesome cost reduction and hunts for cash wherever it could be found inside a client's organisation.
And McKinsey, the physician, also needed to heal itself.
'We've always been very bad at taking our own medicine,' he says. 'We had far too many support services in high-cost locations like Manhattan. We thought hard about how much we travelled and now every partner has a high-quality video link on his or her desk. The partners took a hit. You should never waste a crisis.'
Nothing, though, can have prepared him for the shock that hit months after he won his dream to be global managing director - watching one of his colleagues, Anil Kumar, doing the perp walk in handcuffs.
The now notorious 'Galleon scandal' was a reputational nightmare, as it emerged that Kumar had been using privileged client information to facilitate insider dealing. The nature of the misdemeanours could not have been worse: they went against McKinsey's core value - that the client is at the centre of everything.
What seemed to be at the centre of these McKinseyites was a hunger for easy, illicit money. They were suffering from billionaire envy. Not content with being hired consigliere, they wanted to be the dons.
Kumar confessed to passing information to Galleon hedge fund manager Raj Rajaratnam on the acquisition of ATI Technologies by Advanced Micro Devices. Raj made a fast $20m on the information and Kumar received a modest million for the hot stock tip. Kumar put his hands up and co-operated with the authorities.
Indeed, such was his McKinseyite zeal to assist the prosecution that he was later praised as the most effective criminal-turned-witness they'd ever used. Kumar got two years' probation and was also ordered to forfeit $2.26m as part of his sentence.
Although Gupta was no longer working at McKinsey when he was fingered by the Feds, the scandal surrounding him was catastrophic for the firm.
Gupta had worked his way up from humble beginnings to become McKinsey's first non-American leader. His father was an Indian revolutionary jailed by the British. Gupta got to Harvard, was in the vanguard of India's modernisation and had endowed the country's leading business school.
Through McKinsey, he had ascended to the boards of Goldman and Procter & Gamble.
The evidence presented at the trial in 2012 was damning. On 23 September, 2008, Gupta had rung Rajaratnam to tell him that Warren Buffett had made a $5bn (£3.1bn) investment in Goldman Sachs, 16 seconds after learning about it at a Goldman board meeting - to which he had dialled in by phone.
Rajaratnam used the information to make an $840,000 profit in trading Goldman shares. Convicted, Rajaratnam was shown the customary lack of US mercy for white-collar criminals, receiving an 11-year sentence. Gupta got two years but is free on bail pending the outcome of his appeal.
'The most disturbing thing about this case is what it says about business ethics,' observed Gupta's judge, Jed Rakoff. 'It's not a case of one bad apple, but a bushelful.' McKinsey was being lumped in with all the bankers, hedge funds and assorted chancers with their loose morals, spivvy opportunism and greed.
Galleon caused McKinsey huge reputational hurt and Barton has said that the wound was so grave that they won't know for decades what the sum total of the damage done will be. He likens it to a mortal sin for a Catholic. So the Hail Marys have been lengthy and all McKinsey's rules and processes around stockholding and trading in client companies have been tightened.
Galleon highlighted another problem that affects all high-end strategic consultancy - the grey area surrounding confidential information. Being in and out of many of the biggest companies, McKinsey is privy to highly sensitive commercial information.
Client companies know this well and accept that McKinsey will carry information both in and out. They need to know what their competitors are up to. Secrets become best practice.
As Felix Salmon has written: 'A management consultant is a bit like an art dealer, or anybody else who traffics in valuable information asymmetries ... If the client wants access to that knowledge, he has to open his own kimono to get it.'
Insider dealing and kimono-flashing aside, McKinsey busies itself below the radar and out of public sight. But in the past year the firm has taken a battering in Britain over its work for the NHS. The Mail on Sunday ran a sustained attack under the headline 'The firm that hijacked the NHS', accusing it of cronyist opportunism.
There are many within the UK public sector who loathe McKinsey: it is seen as a neo-liberal stooge promoting a market-oriented public sector into which its private clients might be helped to win lucrative contracts.
McKinsey hates this sort of media stuff, even if the publicity is positive - it fought hard to keep its consultants out of MT's 35 Women Under 35 list, for example - and sulks silently when the brickbats fly in its direction.
Strict on client confidentiality, the firm finds it hard to put its side of the argument - transparency is not its cup of tea. So when its work becomes political - which it often does - it gets caught mute in the crossfire.
The NHS is a large and highly complex organisation with serious problems. The largest employer in Europe with a budget of well over £100bn is ideal material for the McKinsey examination, not least because it is now increasingly clear that a) it is rapidly becoming unaffordable in its current form, and b) that management within the health service is sometimes of low calibre.
McKinsey insiders express disbelief that some NHS sections it has encountered cannot even run a meeting properly.
This is a tricky political area and Barton enters the minefield with care. 'We look through the keyhole at public services,' says Barton, 'and we can deliver results and change things in a very positive way. Reform in government is critical.'
While conceding that he personally believes a private system would be more efficient, he says: 'What I do know is that it's not just about costs, it's about outcomes. We serve clients and we're not a think-tank. We're really not very good about public debate and what worries me is not that we'll get our heads kicked but that we cannot be policy-makers. We present the facts - you guys need to decide.'
He adds: 'There is a political philosophy in the UK that everyone has equal access to health. We cannot even debate that. How dare we? We're not elected. However, much can be done irrespective of political regime, and we know there's no perfect system in health.'
McKinsey people point out that they don't do just the broad-brush national policy stuff but have also hugely improved stroke care in London and primary care in poor boroughs such as Tower Hamlets.
It's widely assumed that many of the controversial reforms of the NHS contained within the current Health and Social Care Bill are McKinsey's work or at least influenced by it. This, it seems, isn't the case, and there's much in Jeremy Hunt's bill that The Firm believes is misguided.
That Barton has held on through all these troubles is testament to his grit. His is not the easiest of organisations to manage.
The hordes of bickering, big-brained egos see to that. As the economy in Europe is stalled and the US gets back on its feet, Barton observes a three-speed world. The developing world is properly in gear: he talks with enthusiasm about 'land grab in the diaper business in Nigeria'. (He's very keen on diapers, big and small - 'Did you know there are 700,000 people over the age of 100 in Japan?')
McKinsey has recently opened offices in Addis Ababa, Nairobi, Luanda, Lagos, Astana (Kazakhstan), Salvador (Brazil), Karachi and Hanoi. In India, it now has six offices. This is very enterprising and it's sensible to be where the work is, but it will mean potential problems.
An ex-McKinseysite explains why. 'Barton's biggest task is trying to manage this global network while maintaining scale and quality control. The days when everybody knew everybody are long gone, and all that modern cultural stuff could well come and bite them. The cats are going to be even more difficult to herd in future.' And another Galleon-style scandal in the developing world would be massively damaging.
As businesses grow in the developing world, they encounter the same pains as IBM and General Motors once did. They still require large numbers of good managers - one Asian oil company client of Barton's had 600 senior management positions it was unable to fill.
McKinsey's services are eye-wateringly expensive, but within the dozens of billion-dollar acquisitions that occur each month globally, it's still no problem to hide the McKinsey invoice for a couple of million and, indeed, far more.
If you need to ask the price, then the firm probably isn't for you. Barton could go on for hours but is now being almost dragged from the room by his PR minder. He needs to depart to deliver a speech in the City about the future of capitalism. By tomorrow he'll be thousands of miles away.
So, finally, he doesn't by any chance happen to know his fellow countryman, the recently appointed Governor of the Bank of England, Mark Carney?
'Yes! He's a great guy. A tri-sector athlete - public sector, private sector and government. He's fully rounded, gets into debate. A great signal that UK gets talented people in from abroad. London's global nature is one of greatest assets.'
And off he sprints, ready to wield his metaphorical endoscope - with concern - wherever he is needed.
Four challenges facing Barton