by Rajat Gupta
I went ahead and scheduled a party to celebrate, on the Saturday night that marked the end of the board meeting. News of the elections usually came on Friday night, so it would be official by then, I reasoned. But Friday came and went, with no call. On Saturday, with the office decorated and refreshments waiting, I began to worry. At six o’clock, I told Anita to go ahead, and was left alone, pacing the halls of my house. Finally I called the New York office, only to be told the board meeting was still in session. I went back to pacing, even more anxious now. Was I going to have to cancel the party, and embarrass myself and publicly humiliate some of my colleagues? Had I acted with too much confidence? I called New York again, and this time insisted that they get Ron Daniel out of the meeting to speak with me. He was not too happy about it, but he understood, and, thankfully, the news was good. We had reason to celebrate after all.
McKinsey guys tended to be generous in their mentorship when working on the same teams, but many of them guarded their own client relationships and kept their cards close to the vest. We instituted a different approach. Each week, we would hold a meeting involving the entire professional staff, and we would go around and discuss every client and every prospective client, all weighing in and helping each other out. It was my strong belief that if we supported each other, we would all succeed beyond our wildest expectations.
While I fostered a collaborative spirit within the office, I encouraged a highly competitive attitude outside. At that time, McKinsey was the only consulting firm with a local office in Scandinavia. Our main rivals were firms with offices in London or Germany, who would send out teams to Scandinavia. To shore up our position as the dominant firm in the region, we decided to corner the market on Scandinavian talent. This was a preemptive strategy designed to prevent our competitors from establishing themselves in the region. We’d go to the top US and London business schools and hire every decent Scandinavian graduate. We also approached every competitive negotiation with a win-at-all-costs mentality, aggressively underbidding our competitors if that was what it took to prevent them from getting a foothold. We almost never lost a client.
I remember one particular weekend when we were working on a proposal for a client we were determined to win. We spent two days poring over it, and because we were all smokers at the time, the room in which we were working, which had no air conditioning, became thick with smoke. It was only when we finally stepped out into the sunlight at the end of this marathon work session that we realized how bad it had been in there. We looked at each other, and right then and there, we agreed that if we won the client, we’d all quit smoking. That was indeed my last weekend as a smoker. We won that client, and many more—in fact, our strategy worked so well that no other firm even opened an office in the region for at least ten years.
As a result of this strategy, the office grew rapidly in my first few years as its leader. We increased our staff from twenty to 160 people in three years, at the same time importing dozens from other offices on temporary assignments. Our client base was growing rapidly as well. Christian and I got to know the influential Wallenberg family, who dominated the Scandinavian industrial scene. Christian worked closely with the grandfather, Marcus Wallenberg, Sr., and I served his son Peter Wallenberg, Sr. quite extensively. Soon, we had become the fastest growing and most profitable office in the firm, and, most importantly, we had a truly enviable, high-quality client base.
In the early days of my leadership in Scandinavia, we had a disproportionate number of Norwegian clients and associates. The first leadership challenge I faced was when the talented Norwegian associates got together and told me that the establishment of an Oslo office was critical if they were to stay in the firm. I did not like the ultimatum, but I knew they were right in asking for the office, so I relented. In addition to Oslo, we went on to expand our office in Stockholm and open one in Helsinki as well. The original Copenhagen office became quite secondary.
It was in Scandinavia that I honed the entrepreneurial skills that would serve me through the next several decades. I became accomplished at understanding and leveraging business networks, and gained confidence in introducing clients. Had I stayed in New York, I think it would have taken much longer to gain those skills, because there were so many senior partners doing the work of bringing in the big clients. In Scandinavia, there were so few of us that I was forced to put my natural reticence behind me once and for all and get comfortable meeting new people and convincing them to work with us.
I was fortunate to work with some very talented colleagues and interesting clients. Christian Ringnes and I served Norgas, one of the industrial conglomerates in Norway. They owned a tiny company called Nycomed and hired us to do a small study to determine its potential. Together with another colleague, Gert Munthe, Christian and I did the study and in the process realized that this little company, with only around $25 million in revenue, had a unique product with huge global potential. Under Gert’s guidance, they expanded to eventually become the most valuable company in Norway, besides the oil companies.
During my time in Scandinavia, my career development gained some momentum as well. Only four and a half years after I’d become partner, I was elected director, and for once I was ahead of my peers. Our planned two-year stay quickly turned into six, with our family welcoming two more daughters during that time. Megha was born in 1982, and Aditi followed in 1985. We also became surrogate parents to Anita’s younger siblings, after her father died unexpectedly from a brain hemorrhage in 1984. Her brother Arvind was just sixteen at the time and her sister Aninda was twenty. Anita had always been like a mother to them. Now they were orphans, and we felt responsible for raising them as we would our own girls. Over time, Arvind stopped calling me Bhaiya, which means elder brother, and began to use Baba instead. Aninda also visited us regularly in Denmark, where she would first meet Ajay Kaul, the man she later began to date and eventually married.
By the late 1980s, everyone in the firm expected me to stay in Scandinavia, since I’d established myself there and made a name for myself. I loved the work and was proud of my team and our accomplishments, but I knew that Anita and the girls were not nearly as settled as I was. While everyone in the business community spoke English, the same was not true of the locals, and simple tasks like grocery shopping were a challenge. In those days, English-language newspapers were hard to come by, and there were no English television channels. There were five Indian families in the entire city, and during our time there we connected with all of them and became good friends, which we remain to this day. Every weekend we would gather to cook Indian food and play bridge. Although we had a network of friends among the families of my fellow partners, and our family from India visited when they could, it was clear that Anita often felt isolated. If we were to stay much longer, we should probably consider this our home for life, and that was not what she wanted. After much discussion, I decided that it was time to return to the US and let the Scandinavians run their own office.
Most of my colleagues and mentors advised against the decision. “Why would you walk away from what you’ve built?” they asked. “Why would you leave such a nice situation and such prestigious clients? Everybody loves you there.” But my instinct told me: don’t settle—get out of your comfort zone. I decided to trust my gut, and respect my wife’s preference, and so we chose Chicago as our next home.
Just before I left Scandinavia, I had two surprises. The first was a call from Ron Daniel informing me that I had been elected to McKinsey’s board, something almost unheard of for a thirty-seven-year-old. I almost fell off my chair. The fourteen-person board was mostly comprised of senior partners with a decade or more tenure and life experience than I had. I knew my success with the office had made an impression on the firm’s leadership, but this was unexpected, to say the least.
The second surprise occurred during my farewell party, organized by my good friend Christian Caspar, who would succeed me as office manager. It happened to be Christmas, and so the
party had a festive theme, complete with carols and a Santa Claus. In the middle of the party, Christian told me it was up to me to guess the identity of Santa. He hadn’t said a word, and I could not see much of a face behind the flowing white beard and fur-trimmed hat. After a few tries, I admitted defeat, and Santa reached out and shook my hand. The moment he spoke, I knew who it was, although I could scarcely believe he had flown halfway around the world to attend my party. Marvin Bower, McKinsey’s early leader and the widely acknowledged father of modern management consulting, thanked me for my service in the region and raised a toast to my future. It was the most moving moment in my McKinsey career.
9
Chicago
[W]hen old words die out on the tongue,
new melodies break forth from the heart;
and where the old tracks are lost,
new country is revealed with its wonders.
—Rabindranath Tagore, Gitanjali, 37
Christmas 1986, Chicago
No clients. For a McKinsey consultant, that’s the worst possible situation. Yet that was the predicament that confronted me when I arrived in my new home. When I showed up for work on my first Monday morning in the Chicago office, I had nothing to do. There simply weren’t enough clients to go around. And I soon realized that no one was going to help me—they were all trying to keep the clients they had. Even my friend and mentor Mike Murray, who was head of the office and had convinced me to come to Chicago, wasn’t busy enough to share.
From a business standpoint, McKinsey’s Chicago office was the polar opposite of Scandinavia. The birthplace of the firm, it was a very mature office with about sixty professionals and a heavy preponderance of long-time partners and directors—too many, in fact, to serve the firm’s limited client base in the city. Why had Mike encouraged me to come here? The office clearly didn’t need yet another partner.
Luckily, I had anticipated that it would take me a little time to get established in my new city, so I had not given up my key Scandinavian clients. For my first year in Chicago, I basically commuted to Scandinavia, continuing to serve Ericsson and others. I even started taking some of my colleagues from Chicago with me to help, since they had time on their hands. In between trips, remembering everything I’d learned from my colleagues in Scandinavia, I set out to build a new client base in my new home.
As a first step, I got out the HBS alumni directory and looked for people I knew in the city. Soon enough, I discovered that one of my classmates, Steve McMillan, was head of strategy at Sara Lee Foods, one of the biggest consumer product companies in Chicago at the time. He’d joined McKinsey the same year as me, but had left to work at Sara Lee. I knew he’d understand my predicament, so I called him up.
“I just landed here, I don’t have any clients yet, so if you need anything, please let me know.”
Steve was happy to hear from me, but he said he didn’t really need a consultant right now. “Besides,” he added, “our CEO, John Bryan, doesn’t like McKinsey.”
When I inquired as to the reason for this antipathy, Steve explained that John had hired a McKinsey guy to be his number two and the guy had tried to overthrow him. “I doubt I could convince him to work with anyone from the firm again.” A week later, however, he called me back with the offer of a small six-week project—an acquisition evaluation. “This is an opportunity for you to impress John. He doesn’t have to sign off on it beforehand, but I’ll make sure you have an opportunity to present to him so you can meet in person and perhaps dispel some of his negative feelings toward McKinsey.”
The project was successful, and when I met with John I laid my cards on the table. “I understand you’ve had a difficult history with the firm, but I’d like to have the chance to serve you.”
John, then in his forties, was a shrewd, soft-spoken Southern guy. He’d joined Sara Lee as a young man when the company had acquired his father’s meat processing business, and become a favorite of the CEO, eventually being tapped to succeed him at the unusually young age of thirty-nine. He told me about his unhappy history with McKinsey, but agreed to give me a chance. I thanked him and also asked for his help: “I’m new in this town. I have no work and my partners are not in a position to help. Can you make some introductions for me in the business community?”
John seemed surprised by my request. McKinsey consultants have a reputation for arrogance, and never want to show weakness. I guess my asking for help was unexpected, but it’s always been my experience that when you’re honest and vulnerable about your needs, people want to help. And John was no exception. “Okay,” he said. “I’ll help you.” We became good friends, and McKinsey would go on to do a lot of work with Sara Lee. He was also as good as his word, introducing me to many CEOs in his circle. Within a year, I’d become a big client producer.
A Premature Nomination?
In 1987, Ron Daniel’s final term as managing director was coming to an end. The firm had an age limit of sixty for the role, and Ron was fifty-nine. An election was scheduled for the end of the year to choose his replacement. McKinsey’s managing director election is often compared in the press to the papal conclave, but it’s actually a fairly simple process. There are no smoke signals or sealed doors. However, like prospective popes, McKinsey partners know that it’s considered poor form to publicly campaign for the role. That’s not to say there wasn’t subtle jockeying for position, of course. The process began with a nomination round, in which anyone’s name could be put forward. The seven most popular would become the nominees, and then several rounds of voting would follow, with the person with least support dropping out each time until a managing director was elected. I was sad to say goodbye to Ron, who had been such a champion of mine, but curious to see whose names would come up. When the nomination ballot was revealed, the one name I absolutely had not expected to see was my own. But there it was, on the ballot, alongside some of the giants of the firm, many of whom were a decade or more my senior.
My board election had been a surprise; this seemed absurd. It seemed I’d gone from being late to reach every milestone to being early. I was not yet forty. Although I had an impressive track record with the firm, I did not think myself ready to lead it.
Mike Murray seemed to agree. He was unable to hide his genuine surprise and told me bluntly: “You’re not ready.” I shrugged—this was probably true. Mike was a supporter and a good friend, so I didn’t take it personally. Perhaps it was just a fluke that I’d gotten a few votes and somehow ended up making the cut—if so, I’d be out in the next round. However, clearly some among the partners didn’t agree with Mike’s assessment of my readiness, as my name stayed on the ballot for two rounds before I was voted off in the final four.
In retrospect, I think my nomination said less about my personal readiness and more about a growing readiness in the firm to pass the baton to a new generation of leaders. Until that point, McKinsey’s managing directors, like the others on that 1987 ballot, had come from the generation who had worked directly with Bower and they’d been shaped by his influence. But times were changing, the firm was changing, and some people felt it was time for younger leadership. While perhaps premature, my nomination would prove prescient. McKinsey was not quite ready for a young, non-American, non-white leader, but it would be before long. In the end, the election came down to Fred Gluck and Jon Katzenbach, and Fred prevailed.
The new managing director had been an early mentor to me, and we had a good relationship, but we didn’t always see eye to eye. In particular, I remember an incident not long after his election involving my Danish colleague Jan Aarso Nielsen. It turned out that Jan had been serving two clients who were competitors, albeit in different countries—a practice that was frowned upon, although not a direct infraction of McKinsey’s rules. To be honest, I’d seen many partners work in similarly gray areas, and while Jan clearly should have been more careful, it didn’t strike me as cause for overly severe punishment.
Others felt quite differently, however. An ev
aluator was sent to the Scandinavia office, and he recommended that Jan should be fired “with cause.” The directors committee agreed, and their recommendation came to the board, at which point I raised an objection. “This seems excessive. Surely the punishment is not proportional to the infraction. And besides, if we’re firing Jan for this, we need to question a lot of other partners as well, including ourselves.” I felt Jan should be reprimanded, the incident should be reflected in his evaluation, and, more importantly, the gray areas should be clarified.
Privately, I suspected that the firm’s leaders were looking for an excuse to show Jan the door. I considered him a good friend and had great respect for his professional aptitude, but I knew that many of the partners were not so fond of him. He was not the typical suave, self-effacing consultant type; his personality was rather abrasive and domineering. But he was extremely good at his job and his clients liked him. I considered it one of the firm’s weaknesses that it tended to select a particular personality type. It was my personal policy to never judge others by surface characteristics alone or be too quick to dismiss someone because he had rough edges.
In Jan’s case, the board overruled my objection, and it was decided that he should be fired. I was disappointed, but there was not much I could do other than make my feelings clear. After the meeting, Fred pulled me aside.
“You know, Rajat, if you’re thinking about your future as a leader in the firm, you might want to reconsider your position. You don’t want to be supporting that guy.”
“Is this a threat or is this a piece of advice?” I asked him, only half joking.
