McKinsey and Company. It is a name that echoes around board rooms across the world. Described by some as the most influential management consulting firm in the industry, McKinsey works with more than 80 per cent of the world’s largest organisations. The Bank of England, the Catholic Church and the NHS have all at some time called upon McKinsey. It was with this in mind that I looked forward to meeting Dominic Barton, McKinsey’s Global Managing Director.
Barton, a one-time Rhodes Scholar at Brasenose College, is keen to stress the impact that his days as a student at Oxford have had on his career. Describing Oxford as an “extraordinarily special place” in terms of the architecture and the history, he nevertheless suggests that it was the challenging workload that had the most significant impact on his character.
“I will never forget being so shocked just coming here and asking my supervisor for a reading list. He said, ‘I’m not giving you a reading list, that’s your job,’ and I said, ‘What the hell are you paid for? You’re the teacher, come on’ and he said, ‘No, you figure it out.’ And so learning how to learn in that way was one thing, the other aspect was the cross studies view. I didn’t do Philosophy but Amartya Sen was here and I went to his lectures… that was amazing.”
Barton adds that he also treasures the friendships he made at Oxford. “There were so many different groups you could be part if, yet it’s small enough that you don’t feel like you are in some massive campus so I just loved it. The closest friends I have are from here; some you study with, some you interact with. They weren’t all Rhodes Scholars.”
Having touched upon the social and academic aspects of life at Oxford, I ask him about what for many is another significant part of University life: student politics and activism. Much of the attention of progressive movements in Oxford is focussed on inequality and a lack of diversity higher up in some of the country’s largest companies. Barton expresses a strong belief in the value of diversity for a company like McKinsey, arguing that it is critical that the firm continues to hire people from a variety of backgrounds.
Barton describes McKinsey’s mission statement, suggesting, “We want to have a lasting impact with our clients, we want to make a difference in the world.” Given this, he claims that it is critical that McKinsey attracts, develops and retains outstanding people. “People come in diversity,” he adds, so McKinsey will not meet its mission statement unless it hires a diverse range of people.
Furthermore, adds Barton, “The clients want diversity, they want variety. We have doctors, lawyers; we’re actually now starting to hire people who don’t even have a university degree. You know they’re talented people who did not have a chance for whatever reason. We can help train them and then get them into the system so it [diversity] is really important. We have to keep pushing that because if we don’t then we won’t fulfil our mission. It’s quite a performance measure.”
Diversity amongst its senior partners and junior consultants is evidently of great importance to McKinsey. But at the core of its operations is trust. “You can’t have a client,” suggests Barton, “if you don’t have trust.” McKinsey employees are privy to some very sensitive information and this can sometimes put the company in a difficult position, particularly when McKinsey operatives are serving two organisations that are in competition with one another. The potential for a conflict of interests reared its head with the Galleon Insider Trading Scandal of 2009, when two of McKinsey’s senior executives were convicted for sharing inside information with the owner of the Galleon Group hedge fund.
Barton describes how the Galleon Scandal “jolted the firm in a very big way”. He added, “To have that type of mistake made at a senior level – it wasn’t junior people, it was senior people – made us really rethink discipline and the edge to which we go. We brought in a lot of outside help and so we now have very rigorous processes regarding the use of information. No one is allowed to trade information and… we are very conservative on the rules regarding how long information is competitive.”
Having made the importance of trust between McKinsey and its clients very clear, Barton goes on to tackle the issue of trust between McKinsey and the wider public. A particularly contentious issue in recent years, or at least one that has been dramatised significantly in the media, has been McKinsey’s work with Britain’s NHS. Some are dismayed by the sight of a large American management consulting firm extracting profit from its work with the Health Service. I therefore ask Barton how McKinsey goes about ensuring that the public think that their work is motivated by a genuine desire to improve the healthcare system, rather than motivated purely by profit.
He suggests that most people “don’t join McKinsey to make money”, they join because “they want to make a difference, they want to change something”.
“A good chunk of our work is now outcome based, so we have no interest in doing work for a fee. And 70 per cent of our work is reference based, so people won’t hire us if there are not the results. We won’t do work, you will not get a McKinsey team unless we can have $300 million dollars of impact.”
The difficulty with regard to the NHS, for example, is the confidentiality issue. McKinsey have a policy of not talking to anyone about their clients. Indeed, despite the fact that McKinsey’s work with the NHS is public knowledge, Barton says, “We won’t admit to you that we serve the NHS, even though you may know.” Inevitably though, confidentiality gives rise to issues of transparency, “We can’t go out there and say it, so that makes it tough.” There is likely to never be full public trust in McKinsey given the inherent lack of transparency.
As an example, Barton describes some work that McKinsey are doing in the USA, “a major turnaround of a steel company”.
“If I were to tell you what the fees were, people would say, ‘What the hell, what are these guys?’ But if you were to then sit down with the CEO and CFO and say this is the impact, well the impact is just in multiples of it [the cost].”
Barton insists that McKinsey’s work with the NHS was born of a desire to “help make the system better”. He adds that the impact of McKinsey’s work with the Health Service has been larger than many people realise.
“Work we’re doing in Australia revamping healthcare, work that we’re doing in China, work we’re doing in Mexico: a lot of that leadership comes from the UK experience… but people here are not going to read about that, so that is part of the challenge.”
In addition to issues of trust and transparency, another challenge facing McKinsey as they move forward is technological progress. The challenge is twofold: helping clients to remain up-to-date with technological advances whilst also using technology to gain an advantage over its competitors. Barton explains that technological change is affecting McKinsey in a number of ways.
Number one is “big data”. Barton tells me, “The amount of information we can get today versus when we first started is radical. One of my very first projects was to figure out how many pieces of chicken to put in a lunch delivery for a fast food company. It took six months of work because there was not much information, you had to survey people and you had to look at competitors. That would take four days now.”
The second big change is computing power and data analytics. McKinsey employs a lot of “machine learning people”. Machine learning explores the construction and study of algorithms that can learn from and make predictions on data. “It is affecting the way we work and how people collaborate, using the various tools that people have to be able to work across time and space is something that is important.”
Technological change clearly presents some serious challenges for McKinsey. But it brings opportunities too. Barton is keen to emphasise the importance of seizing opportunity and taking risks, something that he says he feels he did not do enough of.
“I would have taken far more risk much earlier than I did; I was tentative and nervous. Your instincts are very good, I know that. They may not be tested, but they are going to be good.”
Perhaps it is partly as a consequence of working in one of the world’s most prestigious organisations, but Barton clearly has high expectations of Oxford students.
“One thing I’d say is there’s that phrase, I don’t know if it is a biblical phrase or one of those sayings, but it’s something of the order of, ‘For whom much is given, much is expected’. I would just say that being at Oxford is an incredible privilege: what are you going to do with it? I feel like it better be big. You want to be the best journalist in the world, you want to be an inventor, you want to run a business, I don’t know… but be ambitious, in a good way for the world. So that would be my advice, for whom much is given, much is expected.”
Barton is clearly an extraordinary man: highly driven, motivated and passionate about what he does. McKinsey’s influence in the world is by all accounts almost unprecedented. But under Barton’s leadership, that influence has the potential to be very much a positive force.