Why Is United Using McKinsey for Strategic Consulting?
Dec 11, 2002, 7:26 pm
#16
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Strategy consulting isn't necessarily a bad idea right now. Sure, it's pretty clear that expenses need to be reduced. But how and where? To figure out what you should be doing, you have to know where you are and specifically where you want to be. McKinsey will help figure out where they want to get to. Only then can they formulate a plan on how to get there.
Having worked side by side with McKinsey consultants, their conclusions and recommendations aren't exactly revolutionary. After all, many of their recommendations come from employee interviews and well-known business models. But they're capable and have their own methodology which puts everything in a structure that can be explained and defended.
However, they serve several other purposes...1) they are less likely to have their own agenda in making recommendations (vs. employees); 2)since they are outside consultants, if their recommendations don't work, management can lay the blame on the consultants; and 3)Nobody ever got fired for hiring McKinsey.
Having worked side by side with McKinsey consultants, their conclusions and recommendations aren't exactly revolutionary. After all, many of their recommendations come from employee interviews and well-known business models. But they're capable and have their own methodology which puts everything in a structure that can be explained and defended.
However, they serve several other purposes...1) they are less likely to have their own agenda in making recommendations (vs. employees); 2)since they are outside consultants, if their recommendations don't work, management can lay the blame on the consultants; and 3)Nobody ever got fired for hiring McKinsey.
Dec 11, 2002, 9:13 pm
#17
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You said that "no one got fired for hiring McKinsey". I guess you arent counting the people at some of their clients. Swissair was mentioned, as was Enron. A lot of people fired at Enron. I think KMart used them too. A while back there was if I recall a cover story about them in Business Week. It made interesting reading. When I read the NY Times article saying UA was using them I almost choked.
Dec 11, 2002, 9:18 pm
#18
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As a former strategy consultant with a McK rival a little perspective. Several reasons
1. Independent opinion
2. They do have industry expertise believe it or not (Delta is McK Atlanta office top 3 client)
3. A good chunk of McK's work is operational
4. Access to smart people who under the guidance of gray haired partners will work 70 hour weeks; and in a few weeks do work that would take the company staff several months.
Corporations except at the very top in general have mediocre people and this is an even bigger issue for Airlines which in general pay very poorly.
I think McK is very well qualified to do this. My company (a large Pharma co) recently hired then on a 6 week gig to identify $500 M in savings - and by all accounts they did a fine job. Most of it was not rocket science - but it would have taken us much longer and would have disrupted out regular work.
When I graduated from b-school I had an offer from UAL in Financial Planning and Analysis. I was a fan of UAL, and the job sounded great - only problem was the pay plus sign-in was $30K lower than the consulting offer.
1. Independent opinion
2. They do have industry expertise believe it or not (Delta is McK Atlanta office top 3 client)
3. A good chunk of McK's work is operational
4. Access to smart people who under the guidance of gray haired partners will work 70 hour weeks; and in a few weeks do work that would take the company staff several months.
Corporations except at the very top in general have mediocre people and this is an even bigger issue for Airlines which in general pay very poorly.
I think McK is very well qualified to do this. My company (a large Pharma co) recently hired then on a 6 week gig to identify $500 M in savings - and by all accounts they did a fine job. Most of it was not rocket science - but it would have taken us much longer and would have disrupted out regular work.
When I graduated from b-school I had an offer from UAL in Financial Planning and Analysis. I was a fan of UAL, and the job sounded great - only problem was the pay plus sign-in was $30K lower than the consulting offer.
Dec 11, 2002, 9:18 pm
#19
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Its a waste of money.
Dec 11, 2002, 9:24 pm
#20
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Prolly the UA management is just plain fatigued at all the hassles of running an airline, and wants to wind it up as fast as possible.... called in consultant weasels as the fastest bestest way to turn chapter 11 into chapter 7.
Fits the facts, anyway....
Fits the facts, anyway....
Dec 11, 2002, 9:54 pm
#21
Join Date: Apr 2001
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IMO consultants are really nothing more than hired guns that you employ because you don't have the leadership and capabilities to order your own troops to do the work.
They are a scapegoat for senior management in case an implemented business strategy fails. Can they add value? Sure. Do they know the business or identify problems better than the rank and file? NO. If management created better communication between them and the rank and file and incentivized ideas for improving the company beyond their personal option grants then they would never have to hire consultants.
I worked at an IB for years and IB guys are just another type of "consultant". The best run companies never listened to us or consultants. They hired us for strategic reasons but they always TOLD us what they wanted us to do and how much they were going to pay us.
Crappy management at poorly run companies always listened to their consultants and bankers and were gouged with fees. Funny thing was the advice was always the latest business theory or practice en vogue at the time and never brilliant or original.
Consultants are rarely worth the price you pay for them. Great business though if you can make partner.
They are a scapegoat for senior management in case an implemented business strategy fails. Can they add value? Sure. Do they know the business or identify problems better than the rank and file? NO. If management created better communication between them and the rank and file and incentivized ideas for improving the company beyond their personal option grants then they would never have to hire consultants.
I worked at an IB for years and IB guys are just another type of "consultant". The best run companies never listened to us or consultants. They hired us for strategic reasons but they always TOLD us what they wanted us to do and how much they were going to pay us.
Crappy management at poorly run companies always listened to their consultants and bankers and were gouged with fees. Funny thing was the advice was always the latest business theory or practice en vogue at the time and never brilliant or original.
Consultants are rarely worth the price you pay for them. Great business though if you can make partner.
Dec 11, 2002, 10:33 pm
#22
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Hmm, I always thought management consultants serve the same role as "outside counsel".
It's to produce a document which says exactly what management wants it to say, except now you can blame somebody else when the strategy doesn't work.
"It wasn't my idea. The consultants said it would work."
By the time the error is obvious, the consultants have been paid, the bonus has been cashed, and you bring in a new set of consultants to "help on the vision".
It's to produce a document which says exactly what management wants it to say, except now you can blame somebody else when the strategy doesn't work.
"It wasn't my idea. The consultants said it would work."
By the time the error is obvious, the consultants have been paid, the bonus has been cashed, and you bring in a new set of consultants to "help on the vision".
Dec 12, 2002, 1:48 am
#23
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by 99ejs:
Since Fallinasleep posted that McKinsey's recommendation is to scale back "certain corporate discounts," my inference would be that they would be suggesting a more sophisticated discount from the x% off that many companies have.</font>
Since Fallinasleep posted that McKinsey's recommendation is to scale back "certain corporate discounts," my inference would be that they would be suggesting a more sophisticated discount from the x% off that many companies have.</font>
Dec 12, 2002, 1:54 am
#24
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I'm delighted by all the consultant bashing that's taking place on this board. In my experience though, most consultancy fails to deliver its stated objectives because it is purchased incorrectly.
Consultancy should be purchased in small doses to achieve specific tasks. Yes, sometimes consultants simply serve to validate and legitimise what management have already decided to do. But other times, they add real value through their experience.
I don't know much about much, but what I do know I've done with over 50 Fortune 500 companies. How many executives can claim that sort of experience? Through experience, I can highlight the pitfalls ahead of time and save a company an enormous amount of learning time and expense.
Where consultancy fails to deliver is on an open brief. I've seen this, particularly with the big-five consultants, again and again. In many Fortune 100 organisations, there are swarms of consultants running around the organisation with no clear strategic objective. And that gets very expensive, very quickly.
Sigh. Aren't there some lawyers around to pick on?
Consultancy should be purchased in small doses to achieve specific tasks. Yes, sometimes consultants simply serve to validate and legitimise what management have already decided to do. But other times, they add real value through their experience.
I don't know much about much, but what I do know I've done with over 50 Fortune 500 companies. How many executives can claim that sort of experience? Through experience, I can highlight the pitfalls ahead of time and save a company an enormous amount of learning time and expense.
Where consultancy fails to deliver is on an open brief. I've seen this, particularly with the big-five consultants, again and again. In many Fortune 100 organisations, there are swarms of consultants running around the organisation with no clear strategic objective. And that gets very expensive, very quickly.
Sigh. Aren't there some lawyers around to pick on?
Dec 12, 2002, 2:26 am
#25
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by fallinasleep:
Nothing against consultants, but I don't think UA needs to pay a few million to have a group of some 20-something kids out of college of B-school to tell them that JetBlue is a well run airline.</font>
Nothing against consultants, but I don't think UA needs to pay a few million to have a group of some 20-something kids out of college of B-school to tell them that JetBlue is a well run airline.</font>
Is there anything above you couldn't have been told for free by avek00 or mdtony?
Dec 12, 2002, 3:45 am
#26
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by LexPassenger:
Prolly the UA management is just plain fatigued at all the hassles of running an airline, and wants to wind it up as fast as possible.... called in consultant weasels as the fastest bestest way to turn chapter 11 into chapter 7.
Fits the facts, anyway....</font>
Prolly the UA management is just plain fatigued at all the hassles of running an airline, and wants to wind it up as fast as possible.... called in consultant weasels as the fastest bestest way to turn chapter 11 into chapter 7.
Fits the facts, anyway....</font>
Dec 12, 2002, 4:02 am
#27
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by blairvanhorn:
LexPassenger, has avek00 borrowed your handle and password?!</font>
LexPassenger, has avek00 borrowed your handle and password?!
</font>
Dec 12, 2002, 4:23 am
#28
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Generally speaking the stupidest guys I went to school with work for McKinsey. I know many more horror stories than success stories with them. They are normally slightly better than mediocre people that hire them, those of course being sub-mediocre themselves.
Dec 12, 2002, 5:42 am
#29
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Because Arthur Andersen is no longer available for them to use???
Dec 12, 2002, 10:06 am
#30
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In my experience with consultancies as far as what qualities they look for in recruits, being able to speak confidently (and authoritatively) about a subject you have no previous knowledge or awareness of is very high. As someone mentioned, IB (or more specifically, corporate finance) look for the same quality.