How McKinsey Netflixed Bain & BCG to shatter HBR’s monopoly

Headlining Consulting Best-Practices

Editorial

As we prepare to release our Strategy Consulting Rankings, our analyses of the Top-19 consulting firms’ marketing strategies exposes one incontrovertible trend; the Harvard Business Review is losing its importance to the spread of management consulting ideas. This is a huge, unexpected and stunning shift. It is the equivalent of saying the Bible is no longer the source of scripture within a Church.

Since before we were born, when we joined consulting and when we made partner, there had been one universal foundation on which consulting careers and consulting ideas are granted legitimacy. A prominent partner had to publish a feature piece in the Harvard Business Review, preferably two a year and keep that steady stream going. He would thereafter build a collection of books, seminars and methodologies around the theme in the articles. This would lead to work with clients.

***

Our editorials are read widely, including within the leadership of the major consulting firms. We know this because some firms write to us. These critiques may be hard to read but they have the sincere purpose of helping the firms improve. The history of management consulting is one of many great firms that either failed and/or were unable to survive as independent concerns, or were tainted by scandal. As you read this the firms are constantly making decisions, some of which may lead to the same fate.

Rather than getting upset about these pieces, it may be more useful to think about the real problems we discuss and how you can play a role in fixing them. It is not healthy for you to assume the firms are perfect nor are we attacking the firms by pointing out their areas for improvement. Other case interview preparation services choose to avoid these topics because it hurts their business. Our clients go on to join all these firms. We hope they take a hard look at what they find and try to make the firms even greater than they currently are.

***

This approach was manna from heaven for the marketing departments who did very little actual marketing. The marketing departments did not create any demand. They left that to HBR. All they needed to do was wait for the chatter to erupt around an HBR piece and ride it all the way to a client’s office. It was a tried and true method.

McKinsey shrewdly began upending that model from the mid 1990’s and we can see the results in 2014.

Across January to August 2014, McKinsey only published one article in HBR, when Dominic Barton penned a fairly pedestrian piece along with Mark Wiseman, CEO of the Canadian Pension Plan Investment Board. In that period BCG published one article, Bain published three, Accenture and IBM published two and Deloitte published one piece in HBR.

That certainly looks like a victory for Bain and the like, and we are sure they are quite proud of themselves.

But is it a victory to get so many articles into the Harvard Business Review?

To determine the usefulness of an HBR publication strategy, it is crucial to remember that being published in HBR is not the prize. It is the means to an end. So lets see what that end is, how it is typically reached and if HBR continues to be the best route to that end goal.

A HBR feature piece was previously considered a home run. It was the equivalent of Mickey Mantle stepping up for the New York Yankees and delivering a stunning home run with the bases preferably loaded. Everyone would be talking about it for weeks and months. And that is what consulting firm’s wanted with the publication. They wanted to dominate, at least for a time, all the digital chatter among executives.

To reference the gist of Anita Elberse’s insightful book, the HBR article was a consulting firm’s tent-pole event in that it was the centerpiece of a firm’s marketing efforts. Everything revolved around this article like it was the star performer circling the proverbial tent-pole at Cirque du Soleil.

Getting into HBR was so important that a firm would deploy a significant amount of a senior partner’s time, and a significant amount of research dollars and support-hours to test the idea with clients. This was done to validate the piece for publication in the HBR. The publication looked for the ideas that have been implemented and the insights extracted from that experience. A consulting firm’s research not aimed for the HBR would receive a disproportionately less portion of the investment dollars.

This is very similar to a movie studio that would invest the bulk of its resources behind a few blockbuster movies like the Harry Potter or Batman franchises, while allocating far lower investment to movies that have no chance of being a blockbuster. As Elberse proves in her entertaining book, this strategy works.

Consulting firms, in particular Bain and Deloitte S&O, may not even realize they are pursuing a strategy perfected in the movie industry. Until McKinsey started shifting the dial in the early 1990’s, this worked mightily and the payoff was massive when it succeeded. It could change a firm’s fortunes.

Think of Chris Zook and the impact his tent-pole articles had on Bain. The man has published so many articles and books on the theme of profiting from the core, around the core, adjacent to the core, if you can get a visa to the core, take a cruise around the satellite of a the core, marry into the core, divorce from the core but marry another relative of the core etc., we honestly do not think anyone but him can remember the differences between the articles.

That is not to say the pieces have no merit. They do and the point is that he has stuck to this one theme by constantly refining it with major and minor adjustments. Why leave a winning theme?

Bain used the articles to arrange client meetings, get into the press, arrange exclusive seminars, write books and build entire practices off the article. The strategy page for Bain is a shrine to Zook and there are sub-sites and sub-sites of sub-sites to his work. It is a dizzying array of interlinked sites. His work, a pillar of Bain thinking, was the gift that kept on giving client billings.

Bain must surely have dedicated marketing and digital assets just to keep Zook’s work alive on the site.

So, every Bain partner wants to copy Zook’s success, or luck. Darrell Rigby and Fred Reichheld, among others, are probably the closest to achieving this though even they are far away.

Yet, has it worked? Is Bain dominating the digital chatter and corporate corner office’s with their HBR onslaught? These are the questions that ultimately matter.

Here is the strange thing about McKinsey’s relative silence in HBR this year; the firm has not suffered in terms of being quoted, referenced, and cited or even owning an issue in the media through the year. As part of the Top-19 Strategy Firms Rankings analyses, we count the number of times each day that a prominent publication like the Wall Street Journal or the New York Times cites each firm’s research, interviews a partner or exclusively discusses the research of a firm across a variety of platforms including the news site and social media.

While McKinsey’s contributions to HBR have dropped, they completely dominate the media reference metric by a whopping margin. Therefore, while it is true that Bain bet on a few tent-pole HBR articles that were published, they bombed at the box office-equivalent of media domination.

Basically, for every 1 reference made about BCG or Bain in prominent publications, McKinsey gets between 3.5 to 5 references per day, on an average day. It is usually more, When Bain published an article in HBR we saw the references surge and then fall very quickly thereafter. Yet, the surge never takes them past McKinsey.

So Bain puts in a lot of work to basically come second on their best day.

That is what matters. Given the relatively limited and unsustainable media upside from Bain’s HBR strategy there should not be so many article sequels for Bain in the HBR. Yet, as we will explain below, they have no choice but to publish via HBR, even if the route is not very productive.

So what has McKinsey done differently?

The difference is that McKinsey’s media presence has a different structural foundation and no matter how many articles Bain publishes in HBR, unless it changes its structure to engage the public and its clients, it will continue falling further and further behind.

McKinsey has forward-integrated to control the channel through which their ideas are delivered to their C-suite client and general readers. They have a solid foundation in the McKinsey Quarterly and McKinsey Global Institute carpeted by a warm, cozy and formidable social media presence. They are like social butterflies fluttering from reader to reader because they completely control the last intellectual mile into a readers mind. McKinsey can choose when, where, how and on what terms to engage their audience. That puts them in an enormously powerful position and avoids the unpredictability of the HBR editors who naturally want to avoid one firm dominating a particular issue.

This forces Bain, and other firms who do not control their delivery channel, to take media share from McKinsey through the only influential channel they have left: constantly churning out HBR pieces.

This reliance on HBR leads to significant negative leadership consequences for Bain and any other firm which does not control their delivery channel.

Logic would dictate that senior partners have the best chance of being published in the HBR. The last time we looked a junior consultant had never anchored a major article in the HBR. Due to this Bain is forced to rely on just a few partners who have the highest probability of being published in the HBR. They are forcing those few partners into writers block, since no one can sustain the quality and pace needed for constant publications. Moreover they are not training enough consultants like the junior partners and rising stars to write effectively.

For example, we find just a few senior partners, like Darrell Rigby; dominate the list of authors in HBR.

What happens when these partners retire? A a few star partners who produced these tent-pole articles are maintaining the Bain brand. Bain’s intellectual brand is being held up by just a handful of eminent but aging partners. This is not healthy for the firm. Management consulting is about building a vast pipeline of ideas from numerous sources withing the firm. The firm’s brand must always be bigger than any one person. In effect, Bain Strategy is Zook Strategy and Bain Retail is Rigby Retail. That is great for Zook and Rigby but not so much for Bain.

There is a chain of critical dependencies. Zook is dependent on HBR to keep his ideas alive. Bain is dependent on Zook to sustain their intellectual property. Being so dependent on HBR is bad enough, but Bain is dependent on to few partners for major intellectual impact.

What about the younger partners who want to create a brand but are unable to? Their lack of a serious and credible avenue to nurture their thinking does not speak to strong intellectual depth on Bain’s side.

However, if Bain owned its own platform like the McKinsey Quarterly or the McKinsey Global Institute it could conceivably publish more since there are no quota’s on the articles that can be produced and the standards are different. This is the advantage McKinsey has and why it no longer needs to publish as heavily in HBR.

McKinsey has invested in its own platform, integrated its site, bolstered the McKinsey Global Institute and McKinsey Quarterly whereby all partners and consultants are encouraged to produce content and there is of course no limit on the number of articles that can be published. McKinsey has diluted HBR’s prestige for McKinsey’s benefit. That is a clever strategy since it means McKinsey can unleash hundreds of consultants, managers and principals who would likely never appear in HBR with their current pieces.

Just as the internet gave rise to Netflix, McKinsey is using alternative channels to bypass HBR.

The interesting thing is the firm’s embarked on their diverging media strategies at roughly the same time.

In the 1980’s and 1990’s BCG was killing McKinsey in HBR. It was a serious matter of concern for the firm. Around this time Bill Matassoni took over the role of guiding McKinsey’s brand. His view was that “thugs” duked it out to get the attention of the HBR editors and it was indeed a zero-sum game – since HBR had a fixed number of pages and an unlimited number of wannabe authors. He did a couple of things to wean McKinsey off its dependence on HBR.

First, he encouraged the firm to use other platforms like the WSJ to produce provocative yet factual op-eds that weaved together a narrative for CEOs. In some ways, this was McKinsey’s early test to see if a platform beyond HBR could have the same impact. It did. Partners within McKinsey started professionally challenging the opinions of their peers through more and more pieces, which fed the content cycle.

Second, Matassoni was part of the team, which set up the McKinsey Global Institute (MGI) to merge macroeconomics with rigorous on-the-ground consulting analyses. At a time when the world was shifting, emerging markets were opening up and US firms expanding internationally, MGI helped CEO’s understand the risk, opportunity and impact of economic issues. This really changed the conversation. McKinsey was no longer trying to speak about strategy better than BCG; they simply changed the language and nullified BCG’s strengths in microeconomics.

It was a structural change and BCG has yet to catch-up here.

Third, Matassoni focused McKinsey on bolstering and improving the McKinsey Quarterly by increasing resources and expanding the scope. It basically stopped being a quarterly and became this glittering luxury showroom for curated and handcrafted ideas from the firm. Crucially, since McKinsey hired professional editors, even average pieces from average McKinsey consultants could be polished for publication. The cap on the number of articles was no more and a thousand articles bloomed, while McKinsey controlled the channel to deliver them.

McKinsey had Netflixed its competitors. It owns the last mile of the delivery channel directly into readers’ homes and minds.

BCG’s response was actually to hire Matassoni, which implied they were simply trying to reach parity with McKinsey versus changing the conversation. BCG, however, wisely started building out its own platform in BCG Perspectives. It should do more but it is a start.

Bain has always had the weakest culture of producing internal research and ideas, and distributing it. And that has led to Bain’s enormous reliance on HBR, at their great risk. To mitigate this risk, Bain needs to not just invest in research but also radically overhaul the delivery mechanism to get its ideas out. If HBR does not allow Bain to get out a tent-pole article, Bain’s entire model for building out methodologies fails.

Bain has outsourced the delivery of its messaging and brand power in the market to HBR.

Bain will argue that despite the logic of the above argument, they would like to appear prominently in HBR while simultaneously building out their own delivery channel. While that dual strategy appears eminently logical at face value, it ignores one important fact.

Even if Bain were to publish 6 HBR articles a year, which is theoretically possible in its very best year, and even if a Bain article was somehow awarded the prestigious title of HBR article of the year every single year for a decade, McKinsey always wins.

This is simply because the award is called the HBR McKinsey Award for Best Article and that gets first mention in a tweet, with the author’s employer rarely, if ever, mentioned.