McKinsey looks to Eminem for turnaround plan 🎤
McKinsey Partner sues | BCG bucks trend in hiring | Strategy must be 'imperfect'
Exec SumBCG’s investments in AI start to payoff with 2024 revenue forecast
Middle East tops ranking for consulting salaries when accounting for living costs
The rise of ‘supercompetitors’ means strategic planning must change
👀 What to expect: ~1,200 words / 6 min read
Thanks to Savant, Cristina and Dominic for referring to BTO and welcome to the 198 new readers who’ve joined since our last issue. Invite your friends and get access to free resources using your unique code below:
Industry NewsThe Headlines 📈
BCG says AI consulting will supply 20% of 2024 revenues
BCG CEO projects share of sales will double by 2026 as companies integrate technology into operations and GenAI use cases expand. CEO Christoph Schweizer highlighted the rapid relevance of GenAI in boosting company revenues and productivity, amid a broader slowdown. BCG's collaboration with tech giants including Google and Anthropic and its extensive in-house AI training underscores its commitment to integrating AI into business operations. Read more.
BTO’s take:
Questions are often raised as to whether consulting firms' have the required level of expertise to advise on domain-specific problems, particularly where this relates to novel innovations or require deep expertise. In this case, and despite the economic challenges of 2023, BCG's investments in AI since 2015 appear to be paying off. BCG’s acquisitions and strategic partnerships have enabled it to match technical AI expertise with C-Suite relationships, garner market credibility and upskill its teams to get a head-start on the competition. How long AI transformation processes will be in demand by clients remains a question, as presumably this has a lifespan similar to the digital transformation wave of the mid-2000s. Give your say below:
McKinsey attempts to rally partners with song
In a spirited mid-April event in Copenhagen, McKinsey aimed to rally partners with optimism and a soundtrack featuring Eminem, Bob Marley and Chumbawamba, as Global Managing Partner Bob Sternfels forecasted a positive 2024, despite the firm's recent turbulence. Amid workforce reductions and industry-wide challenges, Sternfels encouraged collaboration and candid communication, reinforcing McKinsey's commitment to distinctive problem-solving. He emphasised the firm's development opportunities while addressing partners' concerns and acknowledging external pressures. Read more.
McKinsey intensifies up or out amid wider market pull back
McKinsey is reinstating rigorous mid-year performance reviews as the consulting giant seeks to realign to current market demands. There is an accelerated push to decrease staff numbers through formalised grading systems. This comes while the consulting sector is broadly witnessing a significant transformation, with voluntary attrition rates hitting historical lows across the industry. Firms like Deloitte, KPMG, and Bain are also grappling with these shifts. The sector's struggle to adapt to these new norms suggests that a stabilisation of hiring and promotion practices might not occur until well into 2025, signalling a prolonged period of adjustment. Read more.
The News 📰
BCG Teams Up with NASA and USRA on GenAI Lab - BCG is collaborating with NASA's Ames Research Center and the Universities Space Research Association to form a GenAI lab focusing on Earth science applications. The partnership aims to advance AI in areas like satellite weather data and life sciences, leveraging BCG X's tech expertise to benefit global society. Read more.
Ex-McKinsey Partner sues, citing Opioid scapegoating allegations - Arnab Ghatak, a former McKinsey Sr Partner, has filed a lawsuit against the consulting giant, accusing the firm of scapegoating and defamation in relation to its advisory role with opioid manufacturers like Purdue Pharma. Ghatak, dismissed in 2021 amidst a DOJ investigation, alleges the firm falsely claimed he violated non-existent document retention policies by deleting emails. He claims that McKinsey used him to divert attention from its own controversial opioid-related work. McKinsey has dismissed the lawsuit as meritless. Read more.
A glimmer of hope? BCG announces headcount expansion plans - Despite the industry-wide trend in reducing workforces, BCG is set to add 2,000 employees in 2024, increasing its total headcount to 34,000. This move contrasts with the rest of the MBBs who have cut jobs and frozen salaries. Read more.
Bain partners with WEF for special meeting - Bain contributed as a knowledge partner at the WEF's special meeting in Riyadh, which brought together >1000 business leaders to discuss some of the most pressing economic, societal and environmental challenges. Key discussions included advancing the MENA region's sustainability and economic gender parity. Read more.
FTC rules to eliminate non-compete agreements - Issued amidst divided opinions within the FTC, the rule restricts non-competes across almost all U.S. employees, aiming to enhance worker mobility and market competition. Senior executives making over $151,000 are exceptions, however most existing non-competes will become unenforceable, pushing firms to explore alternative protections like trade secret laws and non-disclosure agreements. Read more.
Elixirr's robust growth defies industry downturn - Despite a broader slowdown in the consulting sector, Elixirr reported a significant 20% increase in revenue to £85.9 million, outperforming industry growth trends. The firm attributes its success to strategic diversification and investments in AI, data, and transformation sectors, alongside acquiring companies like Responsum and Insigniam to bolster its capabilities and geographical reach. Read more.
BT appoints McKinsey partner amid strategic overhaul - BT has appointed Tom Meakin, a senior partner from McKinsey, as interim chief strategy and change officer, marking the first major move by new CEO Allison Kirkby. This appointment is part of a broader strategy to revitalise BT's corporate direction and improve its share performance, integrating significant changes across the company. Read more.
Best of the rest: Oliver Wyman to consult on Iraq's Development Road project, PwC names new head after 3-way race, Accenture completes acquisition of Climb, McKinsey proposal to digitise Pakistani Federal Bureau of Revenue approved, Intel & BCG to sell AI to corporate customers, Oliver Wyman has been raiding Strategy&’s senior ranks to grow government business.
Contribute 🛣️
Working EffectivelyChart of the Week 📊
Hiperpool’s recent salary index shows The Middle East, US and UK rank highest for consulting salaries on a purchasing power parity basis, meaning each $ earned buys you the most in your local region.
The Coffee Break ☕️
Report Review 📖
Why Strategists Should Embrace Imperfection - from ‘Inside the Strategy Room’, a podcast from the McKinsey’s Strategy and Corporate Finance Practice.
KTAs:
Strategists should adopt ‘imperfectionism’ in strategy by embracing an iterative approach that favours bold moves and quick decision-making rather than seeking absolute certainty, which can lead to ‘analysis paralysis’
Today’s business environment is changing rapidly due to the rise of ‘supercompetitors’ like Amazon, Apple, and Microsoft who, despite operating across many industries, boast the financial clout and technological expertise that enables them to often be indiscriminate market leaders
Disruptions such as these require an adaptive and responsive strategy that is ‘more like rugby than chess’. In this dynamic environment, the annual strategy refresh is insufficient
To facilitate this, companies should encourage employees, especially those on the front lines, to ask bold questions and experiment, to ensure their strategy can evolve in step with these changes
That’s all folks. Don’t forget your timesheets.
BTO Team
P.S. We’re starting up our socials - give us a follow on LinkedIn and Twitter to get more regular news and BTO content.
Submit anonymous feedback: Love it | It’s great | Good | Okay-ish | Stop it
It's interesting how every week Accenture completes a new acquisition 😶