Thursday, June 16, 2016

History and Reputation of the McKinsey Global Institute

This in an excerpt from the book "The Firm: The Story of McKinsey and Its Secret Influence":
Despite some missteps, [Frederick] Gluck also grasped that the firm had to do a better job publicizing its accomplishments.  Under his direction, in 1990 the firm launched the McKinsey Global Institute (MGI), an independent research operation with the goal of developing "substantive points of view on the critical issues" faced by McKinsey clients.  Even in a world overflowing with economic think tanks, McKinsey brought a unique perspective to the table: The firm's understanding of actual company economics and industry structures gave specificity to its work.  "What's different about MGI is the unique access we have to information that doesn't show up in statistics that we can use responsibly to inform research," said Diana Farrell, head of MGI from 2001 to 2008, when she left to join the Obama Administration.
MGI has been successful in giving the firm a quasi-academic glow that's yet another in the long list of the ways it is differentiated from the competition.  The institute's work on productivity in the early 1990s is widely regarded as groundbreaking in economic circles.  Later work on global capital market developments, the US healthcare system, and energy productivity continues to give McKinsey a voice in conversations to which its competitors are not invited.  But it has also given an outlet to the firms' recurring eruptions of arrogance.  When the institute paid significant sums to lure Nobel laureate Robert Solow and other leading economists to its board, then-chairman Ted Hall reportedly professed the belief that the institute itself was doing Nobel-quality work instead of merely buying Nobel-quality window dressing.

According to rankings by the University of Pennsylvania (which takes money from the think tanks it ranks), McKinsey Global Institute is ranked as the best for-profit think tank in the world.