It turns out that being an English major is pretty good preparation for a career in consulting, for the board room is not so different from the seminar room. A bunch of people sit around a table trying to say insightful things that push the group in a particular direction. It’s both fun and gratifying—when it goes well. Over the first year I spent at “the Firm” (as McKinsey calls itself), it began to feel like I had been plucked from obscurity like some budding starlet at the drugstore. Now, I thought, I was on track to become a master of the universe.
McKinsey was founded one hundred years ago. Started by the accountant and professor James O. McKinsey in Chicago in 1926, the firm was really built by Marvin Bower, James McKinsey’s protégé, who served as managing director from 1950 to 1967. It was Bower’s ethic of superior client service—he modeled McKinsey on the great corporate law firms—that drove McKinsey’s ascent in the decades after World War II. Bower emphasized, from the very beginning, that McKinsey’s competitive advantage would be its high ethical standards and its commitment to “placing client welfare ahead of our own interest.”
In 1941, the political philosopher James Burnham prophesied that a new class of people would soon replace old-style capitalists as the primary locus of power in modern society. Burnham was no doubt unaware of McKinsey, which was still a minor concern fifteen years after its founding. But the firm’s history offers a confirmation of Burnham’s hypothesis. His book The Managerial Revolution heralded the rise of the managers—business executives, engineers, government bureaucrats, the leaders of NGOs. “What is occurring in this transition,” wrote Burnham, “is a drive for social dominance, for power and privilege, for the position of ruling class, by the social group or class of the managers.”
McKinsey played an important role in this transition. Consider its “compensation consulting” practice, which contributed to the dramatic escalation of executive pay in the 1960s through the 1980s. By the time I came on, McKinsey no longer did this kind of work. It had come to seem uncouth. But Burnham would argue that the pursuit of ever higher top-level compensation had been inevitable: The ascendant managers were simply extracting their fair share of economic returns (or more) at the expense of the owners of companies.
We often think of the private sector and the public sector as separate entities working in opposition to one another. For Burnham, this was an outmoded conception of how the economy worked, as the managerial class cut across both. In line with this assessment, McKinsey has done a great deal to blur the distinction between big business and big government.