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McKinsey & Company is an American multinational strategy and management consulting firm that offers professional services to corporations, governments, and other organizations. Founded in 1926 by James O. McKinsey, McKinsey is the oldest and largest of the "Big Three" management consultancies (MBB). The firm mainly focuses on the finances and operations of their clients. Under the direction of Marvin Bower, McKinsey expanded into Europe during the 1940s and 1950s. In the 1960s, McKinsey's Fred Gluck—along with Boston Consulting Group's Bruce Henderson, Bill Bain at Bain & Company, and Harvard Business School's Michael Porter—initiated a program designed to transform corporate culture. A 1975 publication by McKinsey's John L. Neuman introduced the business practice of "overhead value analysis" that contributed to a downsizing trend that eliminated many jobs in middle management. McKinsey has a notoriously competitive hiring process and is widely seen as one of the most selective employers in the world. McKinsey recruits primarily from top business schools and was one of the first management consultancies to recruit a limited number of candidates with advanced academic degrees (e.g. PhD, MD) and deep field expertise, and who have demonstrated business acumen and analytical skills. McKinsey publishes a business magazine, the McKinsey Quarterly. McKinsey has been the subject of significant controversy related to its business practices. The company has been criticized for its role promoting OxyContin use during the opioid crisis in North America, its work with Enron, and its work for authoritarian regimes like Saudi Arabia and Russia. History Early history McKinsey & Company was founded in Chicago under the name James O. McKinsey & Company in 1926 by James O. McKinsey, a professor of accounting at the University of Chicago. He conceived the idea after he had witnessed inefficiencies in military suppliers while he was working for the United States Army Ordnance Department.: 4  The firm called itself an "accounting and management firm" and started out giving advice on using accounting principles as a management tool.: 3  McKinsey's first partners were AT Kearney, hired in 1929, and Marvin Bower, hired in 1933.: 133  Bower is credited with establishing McKinsey's values and principles in 1937, based on his experience as a lawyer. The firm developed an "up or out" policy, where consultants who are not promoted are asked to leave. In 1937, Bower established a set of rules: that consultants should put the interests of clients before McKinsey's revenues, not discuss client affairs, tell the truth even if it means challenging the client's opinion, and only perform work that is both necessary and that McKinsey can do well. Bower created the firm's principle of only working with CEOs, which was later expanded to CEOs of subsidiaries and divisions. He also created McKinsey's principle of only working with clients the firm felt would follow its advice. Bower also established the firm's language. In 1932, the company opened its second office in New York City.: 20  In 1935, McKinsey left the firm temporarily to be the chairman and CEO of client Marshall Field's.: 5 : 133  In 1935, McKinsey merged with accounting firm Scovell, Wellington & Company, creating the New York-based McKinsey, Wellington & Co. and splitting off the accounting practice into Chicago-based Wellington & Company.: 5  A Wellington project that accounted for 55 percent of McKinsey, Wellington & Company's billings was about to expire and Kearney and Bower had disagreements about how to run the firm. Bower wanted to expand nationally and hire young business school graduates, whereas Kearney wanted to stay in Chicago and hire experienced accountants.: 134  In 1937, James O. McKinsey died after catching pneumonia. This led to the division of McKinsey, Wellington & Company in 1939. The accounting practice returned to Scovell, Wellington & Company, while the management engineering practice was split into McKinsey & Company and McKinsey, Kearney & Company. Bower had partnered with Guy Crockett from Scovell Wellington, who invested in the new McKinsey & Company and became managing partner, while Marvin Bower is credited with founding the firm's principles and strategy as his deputy. The New York office purchased exclusive rights to the McKinsey name from the former McKinsey Chicago office which was separated with AT Kearney in 1946.: 25  Years of growth McKinsey & Company grew quickly in the 1940s and 1950s, especially in Europe.: 12–13 : 25  It had 88 staff in 1951 and more than 200 by the 1960s, including 37 in London by 1966. In the same year, McKinsey had six offices in major US cities, including San Francisco, Cleveland, Los Angeles and Washington D.C., as well as six abroad. These foreign offices were primarily in Europe, such as in London, Paris, and Amsterdam, as well as in Melbourne.: 12–13  By this time, one third of the company's revenues originated from its European offices. Guy Crockett stepped down as managing director in 1959, and Marvin Bower was elected in his place.: 61  McKinsey's profit-sharing, executive and planning committees were formed in 1951. The organization's client base expanded especially among governments, defense contractors, blue-chip companies and military organizations in the post–World War II era. McKinsey became a private corporation with shares owned exclusively by McKinsey employees in 1956.: 12  After Bower stepped down in 1967, the firm's revenues declined. New competitors like the Boston Consulting Group and Bain & Company created increased competition for McKinsey by marketing specific branded products, such as the Growth–Share Matrix, and by selling their industry expertise. In 1971, McKinsey created the Commission on Firm Aims and Goals, which found that McKinsey had become too focused on geographic expansion and lacked adequate industry knowledge. The commission advised that McKinsey slow its growth and develop industry specialties.: 14  In 1975, John L. Neuman, a McKinsey consultant at the time, published "Make Overhead Cuts That Last" in Harvard Business Review, in which he introduced new rules for scientific management such as "overhead valuation analysis" (OVA).: 65  OVA guided McKinsey's "path to downsizing", responding to the "mid-century corporation's excessive reliance on middle management". Neuman wrote that the "process, though swift, is not painless. Since overhead expenses are typically 70% to 85% people-related and most savings come from work-force reductions, cutting overhead does demand some wrenching decisions." In 1976, Ron Daniel was elected managing director, serving until 1988.: 42  Daniel and Fred Gluck helped shift the firm away from its generalist approach by developing 15 specialized working groups within McKinsey called Centers of Competence and by developing practice areas called Strate.... Discover the Mckinsey Global Institute popular books. Find the top 100 most popular Mckinsey Global Institute books.