McKinsey & Company, 2012

John R. Wells; Galen  Danskin

Case | HBS Case Collection | October 2014

McKinsey & Company, 2012

by John R. Wells and Galen Danskin

Abstract

In 2012, McKinsey & Company (McKinsey) was the world's premier management consultancy, providing advice to CEO's and top executives of leading companies around the globe. Many consulting firms were bigger but few could match the reputation McKinsey had built over more than half a century or the level of fees that McKinsey consultants could demand for their work. With almost 24,000 alumni working in 120 countries in senior positions in almost every sector of the economy, McKinsey also represented one of the most powerful business networks in existence. Many Fortune 500 CEO's were McKinsey alumni, and the firm had been dubbed by Fortune Magazine "The best CEO launch pad." In 2012, Managing Director Dominic Barton presided over an organization of more than 9,000 consultants generating more than $7 billion a year. As the world stumbled from crisis to crisis, there was no shortage of corporations and institution seeking McKinsey's advice, and Barton continued to meet his personal target of visiting with two CEOs each day.

But Barton was also managing a public relations crisis. In 2010, Anil Kumar, a long time McKinsey partner who built the firm's dotcom practice, pleaded guilty to insider trading and implicated Rajat Gupta, MD of McKinsey from 1994 to 2003. Gupta was subsequently sentenced to two years in Federal prison for insider trading. Barton described this as "incredibly embarrassing and tough to deal with, particularly internally" and he launched a full review of all of the firm's policies. He commented, "From the client point of view we have been very fortunate. We are very grateful, we have a lot of support so there has literally been no impact on that side. But there is no way it cannot affect our brand … I think it will take some time (to repair the damage). I think it's going to be determined by how we respond, the actions we take, and our behaviors moving forward."

Keywords: CONSULTING firms; McKinsey; strategy; Strategy; Consulting Industry; North America;

Language: English

Format: Print

23 pages

Educators

Citation:

Wells, John R., and Galen Danskin. "McKinsey & Company, 2012." Harvard Business School Case 715-424, October 2014.

In April 2019, Asesh Sarkar, co-founder and chief executive of Salary Finance Limited, a London-based FinTech, faced tough choices. Sarkar had founded Salary Finance with Dan Cobley and Daniel Shakhani in 2015. The company’s value proposition was quite simple: partner with employers to offer employees affordable loans that were repaid through automatic payroll deductions. Taking repayments directly from salary, and collecting those repayments in one transaction from the employer, dramatically reduced costs, saving employees large amounts of interest when compared to market alternatives like credit cards or payday lenders. For improving access to affordable credit, Salary Finance garnered considerable praise in the media, being named one of the UK’s most socially responsible and innovative FinTech companies.
Since the beginning of 2018, Salary Finance had introduced a savings product and an earned income advance product that were linked to employee salary. In September 2018, they expanded to the United States, in partnership with the United Way, opening an office in Boston, Massachusetts.
Sarkar was excited by the progress but was still pondering how best to accelerate further growth and improve the business. First there was the question of geographic expansion. Did it make sense to pursue other markets like India? Or, should he focus on building Salary Finance’s position in the UK and US? In these markets, should he prioritize attracting new employers to the platform or adding new products such as mortgages or investments? Should he register as a bank, tapping into low cost deposits and reducing the dependence on commercial borrowing to fund loans? Finally, he was concerned about how to best maintain Salary Finance’s culture – “For People Not Numbers” – during rapid growth. These questions and more weighed heavily on Sarkar’s mind as he considered the company’s future.

Case | HBS Case Collection | May 2019

State of Charge: The Massachusetts Energy Storage Initiative

John R. Wells and Benjamin Weinstock

In early 2017, Judith Judson (Harvard Business School MBA, 2000), Commissioner of the Massachusetts Department of Energy Resources (DOER), was reflecting on the results of the initiative she had led to identify the contribution advanced electricity storage could make to electricity generation and distribution in the Commonwealth of Massachusetts. The study was the first major output from the $10 million Energy Storage Initiative (ESI) launched by Massachusetts Governor Charlie Baker’s administration in May 2015. The advanced simulation techniques employed in the study indicated that over a ten-year period, the optimal deployment of storage capacity would cut the cost of electricity for consumers in the Commonwealth by $230 million per year, deliver $110 million in annual revenues for storage providers, and reduce CO2 emissions by 100,000 tons a year, the equivalent of taking 22,000 cars off the road. Moreover, neighboring states would benefit from $250 million in lowered wholesale prices. To deliver these benefits, 1.77 GWh of advanced storage would be required across the grid, costing between $970 million and $1.35 billion. Incorporating the perspectives of a wide body of stakeholders (from utilities to municipalities to generators), the study wound up recommending a suite of policies that would facilitate the installation of 600 MWh of storage capacity by 2025, representing about six minutes of the state’s daily electricity consumption and delivering $800 million in benefits to ratepayers. It would also make the Commonwealth a leader in advanced storage technology and deliver substantial greenhouse gas reductions. At the end of 2015, according to figures from the Department of Energy, Massachusetts ranked 23rd in the United States in energy storage deployment, well behind the leader, Arizona, with nearly 300 MWh, and Texas, with over 150 MWh. However, with advances in storage technology, California promised to become the leader and had plans for nearly 1 GWh of storage capacity over the next five years. The ESI was seeking input on how to spend the balance of its $10 million budget and whether to authorize an additional $10 million on proof-of-concept deployments of the technology. Commissioner Judson pondered. Was this aggressive enough? And where did advanced storage stand in the priorities for the energy future of the Commonwealth?

Keywords: energy storage; Energy Generation; Programs; Policy; Strategy; Energy Industry; Utilities Industry; Massachusetts;

Citation:

Wells, John R., and Benjamin Weinstock. "State of Charge: The Massachusetts Energy Storage Initiative." Harvard Business School Case 719-448, May 2019. View Details

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Electric cars had long been championed by environmentalists as a superior solution to the internal combustion engine (ICE), but, despite large government incentives and strong pioneering efforts by a few automakers over the years, electric and hybrid cars and light trucks still accounted for less than 1% of total global production in 2016. However, events took a turn in 2017 and 2018, when many governments committed to banning ICE vehicles. In response, leading automakers announced plans to launch hundreds of electric vehicle models within five years. Early pioneer Tesla, which, in 2017, had built a stock market valuation exceeding that of General Motors (GM), despite only delivering 103,000 cars compared to GM’s 9 million, looked as if it were about to be engulfed by this new competition. But not all were convinced that electric cars would soon displace conventional ICE vehicles. It was not clear that the infrastructure was in place to charge all these electric vehicles. There were also questions concerning the electrical generating capacity to meet the new demand. Would battery prices fall enough to make mass-market demand a possibility? In low gasoline cost jurisdictions, such as the United States, the economics of owning an electric vehicle didn’t appear justified, unless subsidies were maintained indefinitely. In Europe, where gasoline taxes were high, the case for electric vehicles was stronger. But European governments depended on those taxes to meet their budget needs. Would a significant uptake of electric vehicles necessitate higher taxes on electricity? In 2018, electric cars were an expensive novelty for the rich subsidized by the poor. Would the sudden rush of new models change the balance?

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