McKinsey & Company

Company information

• Date founded: 1926
• Industry: Business services
• Corporate headquarters: New York, New York
• Type: Private

Overview

McKinsey & Company, colloquially known as McKinsey, is an international management consulting firm headquartered in New York City, New York. McKinsey is a private corporation owned by high-level employees. It is considered one of the “big three” management consulting firms and the first firms to offer such services. As a management consulting firm, McKinsey advises other companies, giving suggestions that will help them improve profitability and growth. McKinsey also offers some services to help implement its advice.

McKinsey is well known for attracting employees from Ivy League institutions and working with clients around the world. However, some of McKinsey’s work is controversial because the management consulting business is not heavily regulated, and the company has been implicated in scandals for working with unreputable clients.

McKinsey is an international company that works with clients throughout the world in various industries, including electronics, aerospace and defense, consumer goods, education, electric power, financial services, health care, oil and gas, paper and packaging, private equity, retail, technology, and logistics. McKinsey has specialized branches to service some of these companies. For example, McKinsey Digital offers consulting services dealing with digital products, platforms, and data. McKinsey Digital uses data science and artificial intelligence to help clients transform their digital products or improve their use of technology. This group focuses on analytics, business-building, digital design, and technology.

McKinsey also helps businesses complete mergers and acquisitions (M&A). The company advises on the viability of such mergers and helps companies plan and executive them. McKinsey also offers consulting services for separations, initial public offerings (IPOs), and joint ventures and alliances.

McKinsey offers consulting in other business fields, such as marketing and sales consulting. When offering consulting in these areas, McKinsey focuses on consumer insights, branding, customer lifecycle management, digital marketing, and pricing. McKinsey also offers services relating to business operations. For example, the company consults with supply chains, product development, and customer experience. It consults on organizational performance, which includes corporate culture, diversity, and organizational health. McKinsey offers consulting in areas where companies face risk. For example, the company consults on credit risk, cybersecurity, enterprise risk management, and data and digitization. It also offers crisis management consulting for clients who have already had negative outcomes. In addition, McKinsey offers services for long-term and strategic planning. For example, it consults on global forces and trends, transitions, and corporate finance. The firm also consults on sustainability, which can include consulting about net-zero financial investments, reducing carbon production, and building green businesses.

History

McKinsey & Company was founded in 1926 by James O. McKinsey, who helped pioneer business ideas such as workflow and division of labor. The company focused on giving advice to businesses and was known for expecting professionalism from its employees. McKinsey remained strong during the Great Depression (1929–1933), though James McKinsey died soon after in 1937. McKinsey had opened three offices by the mid-1940s, though it later closed two of these offices to focus on its New York office.

In the 1950s, the firm began hiring graduates from Ivy League schools and other prominent institutions—a practice for which it would later become well known. Around the same time, the firm took on pro bono work for institutions such as the Red Cross. By the end of the 1950s, McKinsey opened an office in London, making it an international organization.

In the 1960s, the field of management consulting began to grow, with other consulting firms opening and blazing their trails in the industry. In 1964, McKinsey began publishing McKinsey Quarterly, which reprinted management concepts taken from other sources and was shared with clients. In 1970, McKinsey helped transform the field of consumer goods by helping to create the universal product code (UPC), which was a scannable code. In the 1970s and 1980s, McKinsey opened offices in other parts of the world, including in Asia and Europe, and began to grow into a large, influential institution with ties to governments. McKinsey expanded its influence in the 1990s by opening the McKinsey Global Institute (MGI), a think tank that researches global financial trends, corporate trends, natural resources, and technology.

In the 2000s, McKinsey created partnerships with nonprofit and nongovernmental organizations, increasing its global influence. It also focused on issues relating to climate change and began offering sustainability consulting. Around the same time, the company created McKinsey Solutions, which focused on technology and digital tools that were meant to help clients gather data and create strategies. In 2011, the company created McKinsey Analytics, which offered more tools and services to use data to achieve positive outcomes. In the 2010s, the company continued to grow internationally, opening more offices in Africa, and concentrating on digital and design consulting. In 2014, the company founded Generation, a nonprofit organization addressing global youth unemployment.

Impact

McKinsey is considered one of the “big three” management consulting firms because of its pioneering history, international reach, and revenue. The other two forms are the Boston Consulting Group (BCG) and Bain & Company. Of the big three, McKinsey is the oldest and considered the most prestigious. In the 2020s, it has become renowned for its “one firm” principle, which requires its offices and branches to share information and work together. This enables McKinsey to assign the best people to a given task for companies throughout the world.

McKinsey is known for hiring talent from Ivy League universities and other prestigious institutions. Some of these individuals work at McKinsey after graduation and then move on to work for other corporations, usually in management. McKinsey touts a war between it and its competitors over who will lure in the best job candidates.

As McKinsey grew in the 1980s and 1990s, it became known for encouraging corporations to reorganize to eliminate many positions—especially those in mid-level management. Other management consulting firms provided similar advice. Prior to this, business leaders often rose through the ranks of their own companies, learning management and company culture as they worked in various management positions. However, after McKinsey and other companies advised their clients to make their staff “leaner,” employees were more likely to be let go than they were in the past, and managers were more likely to be brought in from other companies. Some analysts contend that these outcomes from McKinsey’s consulting had a negative impact on the American middle class.

Because McKinsey is a private company, it is not obligated to release financial information. It is known for maintaining secrecy about its clientele but claims to offer services to some of the largest and most successful businesses in the world. McKinsey’s notoriety in the field has also brought attention to its business practices, which has made it the target of some criticism. For example, McKinsey works with the US government to advise on military planning, intelligence, and high-tech weapons programs. However, McKinsey also works with Chinese state-owned enterprises, which can pose a risk to US national security. While no evidence exists that McKinsey has breached US security, critics want the company to divulge more information about its work in China.

McKinsey has also helped American corporations expand in China, which has helped grow the Chinese economy, despite China having a poor human rights record. Furthermore, some of McKinsey’s clients in China have been controversial. For example, one of its clients helped build China’s artificial islands in the South China Sea. The United States has been highly critical of and concerned about this artificial land development because China plans to use the land to gain more power in that part of the world.

McKinsey has also had numerous other powerful but disreputable clients. For example, McKinsey consultants have worked for the Saudi Arabian government, even though Saudi Arabia has been accused of human rights abuses and has been linked to the 2018 murder of Saudi journalist Jamal Khashoggi. McKinsey also worked in Turkey while autocratic leader Recep Tayyip Erdogan was in power. Erdogan was the mayor of Istanbul in 1994 but was stripped of his position, sent to prison, and banned from political office for inciting religious hatred.

McKinsey & Company has also been tied to numerous Russian oligarchs, and some of its consultants helped to transform the image of former Ukrainian president Viktor F. Yanukovych, whom the US government considered to be a puppet for Russian President Vladimir Putin. McKinsey has consulted in the Russian energy sector, which is known for its corruption, and at least one McKinsey official has served on the Russian government’s energy board into the twenty-first century.

In the 2020s, McKinsey and other large management consulting firms were also implicated in a scandal in Angola. These American management consulting firms were hired by Angola’s state-owned energy company and helped the company’s leadership maintain control of the company. At the time, the company was headed by the daughter of Angola’s president, Isabel dos Santos, who was later indicted on charges of embezzlement. However, after the February 2022 Russian invasion of Ukraine, McKinsey, like many other companies throughout the world, severed its ties with Russia. McKinsey & Company announced that, effective March 3, 2022, they would not undertake any new client work in Russia. They also stated they would cease existing work with state-owned entities and stopped work for government entities in Russia.

In late 2024, McKinsey & Company agreed to pay a $650 million settlement after a federal investigation found it played a role in helping Purdue Pharma increase OxyContin sales amid the opioid epidemic. This was the first settlement that aimed to hold a large business accountable for its role in a crisis like the opioid epidemic. In early 2025, the company partnered with artificial intelligence software leader C3 AI to provide clients with innovative consulting products. However, at the same time, the company announced significant layoffs and a restructuring plan. The company noted this was strategic as part of its increasing focus on digital transformation, analytics, and artificial intelligence.

Bibliography

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McDonald, Duff. “The Answer Men.” New York Magazine, 24 July 2009, nymag.com/news/intelligencer/topic/58091. Accessed 28 Jan. 2025.

“McKinsey & Company.” Fortune, fortune.com/company/mckinsey. Accessed 28 Jan. 2025.

"McKinsey Statement on Russia’s Invasion of Ukraine." McKinsey & Company, 22 Mar. 2022, www.business-humanrights.org/en/latest-news/mckinsey-co-statement/?utm‗source=chatgpt.com. Accessed 30 Jan. 2025.

"A New Strategic Collaboration, Mckinsey And C3 Ai Accelerate Enterprise Ai Transformations." McKinsey & Company, 22 Jan. 2025, www.mckinsey.com/about-us/new-at-mckinsey-blog/a-new-strategic-collaboration-mckinsey-and-c3-ai-accelerate-enterprise-ai-transformations. Accessed 28 Jan. 2025.