McKinsey’s recent high-profile embrace of something approaching REAL Lean is significant and noteworthy – and abnormal.

Historically, large management consulting firms have ignored the “Respect for People” principle in progressive management. Why? Because that was not what their customers, top executives, wanted. Nor were executives interested in a new system of progressive management. So, consulting firms focused on providing top executives exactly what they wanted: quick fixes to current operating problems within the existing conventional management framework. Specifically, productivity improvement, cost reduction, sales growth, and margin expansion. Large management consulting firms saw great long-term opportunity selling executives services that would help achieve these specific short-term outcomes, over and over again.

sour_cherriesTo help do this, large consulting firms cherry-picked tools and methods from progressive management systems and applied them within conventional management to improve operating performance. Invariably, that included laying off hourly associates and salaried staff as performance goals were met, because the “Respect for People” principle irrelevant to both consultant and client. The consultant’s cherry-picking started with Scientific Management in the early 1900s and continued through to Lean management today. (Various chapters in my REAL LEAN books, Volumes 2, 3, 5, and 6, describe this history). For more than 90 years, large management consulting firms recognized that there is a lot more money in selling quick fixes to zero-sum (win-lose) conventional management than in selling clients a new non-zero-sum (win-win) progressive management system – one that would ultimately serve their clients and their clients’ customers better in the long run (which, ironically, is where they are today).

McKinsey’s current embrace of something approaching REAL Lean is a huge break from the established tradition among large management consulting firms. Why the change? Why now? A company that makes daily progress, has a meaningful purpose (beyond making money), and which creates lasting value for customers have never been the type of client that interests large management consultants because there isn’t much money to be made. The most desirable clients for large management consulting firms are big companies that are conventionally managed and who get into trouble every few years (driven in large part by zero-sum thinking and decision-making) – not companies that operate well across the enterprise for long period of time.

This unusual move by McKinsey&Company raises some interesting questions:

  • Is this the moment that we have all been waiting for: REAL Lean is legitimate and ready to go mainstream and broadly replace conventional management?
  • Is McKinsey just looking for something new to sell to their clients, more and more of whom have heard of or are trying to practice Lean management? Does McKinsey want to appear to their clients to be in-step with the times?
  • Is it a defensive move to deflect criticism from clients, or an informed response to actual customer demand? Does McKinsey fear competition for REAL Lean from other large management consulting firms, or do they want to separate themselves from other large consulting firms that only sell cherry-picked tools for improvement?
  • Is Lean management, and its emphasis on enabling employees to realize their full potential, nothing more than a ruse to help executives continue their unhealthy focus on stock price (increase earnings per share and maximize shareholder value)?
  • Does McKinsey see better business opportunities for themselves with non-zero-sum progressive management than with the zero-sum conventional management that large management consulting firms have long proffered? Does McKinsey see the perpetual practice of laying people off as a result of productivity improvement as having fundamental limitations (such as reducing one’s ability to recognize, respond to, and effectively correct problems)?
  • Does McKinsey see sellers’ market (conventional) management as outdated and no longer viable when buyers’ markets exists for most good and services, thus requiring progressive Lean management? 
  • And, finally, will McKinsey go all-in and recommend two important requirements to their clients: 1) That they must offer a qualified job guarantee: Nobody gets laid off as a result of productivity improvement, and 2) That they must reward employees’ efforts to achieve productivity improvement, cost reduction, sales growth, and margin expansion by increasing wages and salaries for non-executives and establish quarterly profit sharing for all hourly associates and salaried personnel – to grow the pie, rather than continue to fight over the size of each slice. (Will we have to wait decades for this to happen?) Or, will the advice to clients be: “Aside from that, it’s [zero-sum] business as usual. Use the gains from Lean to buy back stock and increase executive compensation.” If it is the latter, then McKinsey does not understand Lean management at all. They are just selling a prettier version of Fake Lean.

What do you think is going on with McKinsey&Lean?

One Response to McKinsey&Lean

  1. Jeff Morrow says:

    I suspect that McKinsey’s stance is knowingly contradictory – that all of your conjectures are true – so they can have a portfolio of offerings. In this way they can milk the traditional business model while gradually responding to increasingly sophisticated needs of clients, some of whom may not yet appreciate they have these needs. Gotta stay a half-year ahead of the client …

    It has been a historical treat to watch the evolution of McKinsey’s Toyota Way stance over the past twenty years or so, from dismissal, to “might work for some but outsourcing works for everyone,” to becoming a substantial part of their (European) practice – albeit shallowly.

    Friends and acquaintances who deeply grasp the Toyota Way have negotiated with them, worked with them, and worked for them in this twenty year time frame and all of the ones I know about have chosen not to engage or finally disengaged.

    Do we think it’s even possible for McKinsey to transform itself into the sort of consulting firm that will finally usher Fordist/Sloanite/Welchian firms into what it means to be competitive in the 21st Century? How many of the F/S/W firms will actually transform instead of just going out of business or having their assets acquired, anyway? In this regard it may be instructive to keep an eye on Danaher to see if they finally figure out how to grow more organically by transforming managerial and engineering knowledge work as much as they’ve tightened up production systems in the 700-odd firms they’ve acquired over the past 25 years.

    Finally, I wouldn’t want to pin too much hope on a McKinzoid blessing of more and more of the elements of Toyota Way. That might just re-inflate unsophisticated expectations of miracle cure that would collapse back into apathy.

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