mckinsey claims they are a leadership factory. can they prove it? · 2016. 10. 4. ·...

FIRMSCONSULTING

McKinsey claims they are a leadership factory. Can they prove it?

FIRMSCONSULTING

Source: https://www.firmsconsulting.com/consulting-rankings/consulting-value-index/To see the footnotes and methodology please visit the Consulting Value IndexTM on the link above

We set out to prove McKinsey’s marketing claim and devised three analyses, with the Consulting Value IndexTM being the main test

•  The three analyses test Dominic Barton’s, and McKinsey’s, claim: –  Which firm had the most alumni serving as CEO in the Fortune 1,000?

–  Which firm was most efficient at producing CEO alumni?

–  Which firm’s CEO alumni created the most value? (main test)

•  We took the Fortune 1,000 and filtered out the companies run by consulting and audit alumni in the USA.

•  We clustered all the companies run by one firm’s alumni into one share portfolio to calculate if investing in that portfolio generated greater value than investing in the S&P 500. We created portfolios for:

–  McKinsey & Co.

–  BCG

–  Bain & Co.

–  PwC Audit

–  E&Y Audit

–  Deloitte Audit

–  KPMG Audit

–  Arthur Anderson Audit

FIRMSCONSULTING


McKinsey & Company does have more alumni running Fortune 1,000 listed companies in the USA…

Alumni CEOs of the Fortune 1,000

Num

ber

of C

EOs

Consulting & Audit Firms

26

2321

16

12 11 10 9

5 42 1

0

5

10

15

20

25

30

McK

inse

y &

Co

.

Art

hur A

nder

son

PwC

Aud

it

E&Y

Aud

it

KPM

G A

udit

Bai

n &

Co

.

Del

oitt

e A

udit

BC

G

Bo

oz

Alle

n H

amilt

on

Oliv

er W

yman

Mo

nito

r

Del

oitt

e S&

O

FIRMSCONSULTING

… although Bain consultants have a 33% higher probability of becoming a Fortune 1,000 CEO versus McKinsey consultants…

Alumni CEOs of the Fortune 1,000 / 1,000 employees

Num

ber

of C

EOs

/ 1,

000

emp

loye

es


2.04 1.96

1.531.33 1.33

0.930.71

0.450.27 0.23

0.11 0.08

0

0.5

1

1.5

2

2.5

Bai

n &

Co

.

AD

Litt

le

McK

inse

y &

Co

.

Oliv

ery

Wym

an

Mo

nito

r

BC

G

Kur

t Sal

mo

n

Alv

arez

& M

arsa

l

Art

hur A

nder

son

BA

H

PwC

Aud

it

E&Y

Aud

it


FIRMSCONSULTING

…while a portfolio of Fortune 1,000 companies led by PwC Audit alumni created greatest value and easily surpassed the S&P 500

Consulting / Audit Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t


Against the S&P 500

S&P 500 Value= $1,395

$2,121 $2,052

$1,774

$1,528$1,333

$1,052$932 $907

$0

$500

$1,000

$1,500

$2,000

PwC

Aud

it

E&Y

Aud

it

Del

oitt

e A

udit

Art

hur A

nder

son

BC

G

McK

inse

y &

Co

.

Bai

n &

Co

.

KPM

G A

udit

Read the commentary below to discover why Bain’s own shareholder analyses, at http://www.bain.com/about/client-results/index.aspx, is incorrect

Source: https://www.firmsconsulting.com/consulting-rankings/consulting-value-index/To see the footnotes and methodology please visit the Consulting Value IndexTM on the link aboveFor the period Jan 2008 to October 2014

FIRMSCONSULTING

The CEO alumni of the audit firms create the most value and, with the exception of KPMG, are the only firms beating the S&P 500


$0

$400

$800

$1,200

$1,600

$2,000

$2,400

1-2-

2008

10-2

-200

8

7-2-

2009

4-2-

2010

1-2-

2011

10-2

-201

1

7-2-

2012

4-2-

2013

1-2-

2014

10-2

-201

4

PwC Audit

E&Y Audit

Deloitte Audit

Arthur Anderson

S&P 500

BCG

McKinsey & Co.

Bain & Co.

KPMG Audit


Consulting / Audit Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

McKinsey CEO alumni have consistently trailed the S&P 500 since mid 2009

2008 – 2014 Time Period

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14

Value $1,000 investment in hypothetical portfolio

Value of $1,000 investment in S&P500


Value of $1,000 investment in McKinsey portfolio

McKinsey CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

BCG CEO alumni closely track the S&P 500 and you will not earn more than the market by investing in the BCG portfolio


$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1-2-

08

10-1

6-08

8-4-

09

5-20

-10

3-7-

11

12-1

9-11

10-4

-12

7-25

-13

5-12

-14




Value of $1,000 investment in BCG portfolio

BCG CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

The poor performance of Bain alumni CEOs is surprising since it is the only firm trumpeting shareholder value creation on its website


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14




Value of $1,000 investment in Bain portfolio

Bain CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

PwC Audit’s stunning #1 position slays the myth that audit alumni cannot successfully create value in complex businesses


$0

$400

$800

$1,200

$1,600

$2,000

$2,400

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14




Value of $1,000 investment in PwC Audit portfolio

PwC Audit CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

E&Y Audit’s #2 position reinforces the strength of audit practices in producing CEOs who produce shareholder value


$0

$400

$800

$1,200

$1,600

$2,000

$2,400

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14




Value of $1,000 investment in E&Y Audit portfolio

E&Y Audit CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

The Deloitte Audit alumni performance is largely driven by a female led energy concern, Duke Energy


$0

$400

$800

$1,200

$1,600

$2,000

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14




Value of $1,000 investment in Deloitte Audit portfolio

Deloitte Audit CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

The KPMG audit alumni portfolio was the only portfolio to break the trend of audit firms outperforming strategy firms


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14




Value of $1,000 investment in KPMG Audit portfolio

KPMG Audit CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

FIRMSCONSULTING

Arthur Anderson alumni “only” come in at #4 which is a strong performance for a now shuttered firm


$0

$400

$800

$1,200

$1,600

$2,000

01-0

2-08

10-0

2-08

07-0

2-09

04-0

2-10

01-0

2-11

10-0

2-11

07-0

2-12

04-0

2-13

01-0

2-14

10-0

2-14




Value of $1,000 investment in Arthur Anderson Audit portfolio

Arthur Anderson CEO Alumni Portfolio Value

Valu

e fo

r a $

1,00

0 in

vest

men

t

Against the S&P 500

mckinsey claims they are a leadership factory. can they prove it? · 2016. 10. 4. ·...

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