A Father of Contemporary Consulting
This
article appeared in the December 28, 2003, issue of The
New York Times Magazine -- reviewing the career highlights of
interesting people who died during 2003. Marvin Bower was one
of them. He's pictured at the far left in the photo below ...
along with senior partners at McKinsey in 1944.
Marvin Bower b. 1903: The Purist
December 28, 2003
By ROGER LOWENSTEIN
Over the years, the consulting
profession has sometimes elicited a snicker, or at least a
skepticism
about what these high-priced advisers really do.
Provide a plan, submit a bill and jet off before
the managers on the ground have to face the consequences
-- that has always been the suspicion. The Enron
disaster, which was scripted by Jeffrey Skilling,
a former McKinsey & Company partner, seemed
to confirm the worst that had ever been said about
the modern consultant's smooth detachment, not to mention his
arrogance. So it is important to recall that, in Marvin Bower,
the profession has its roots in the very Old World notions
of integrity, ethics and unyielding loyalty to the customer.
As the man most responsible for building McKinsey
into the premier problem-solving firm for blue-chip orporations, Bower
was also the architect of a new profession -- what Bower's
contemporaries referred to as management engineering. He did
this by adhering to an ironclad set of principles.
Chief among these was that consultants should put
the interests of their clients above everything else, even
if it meant turning down their business. Howard Hughes
was so eager to hire the father of consulting that he summoned
him to his desert hideaway on three occasions (always after midnight). Each time, after hearing Hughes
out, Bower refused to take the job. He didn't think the reclusive
billionaire would listen to anything he said --
and
to take his money for producing a report that would
gather dust in a fancy binder struck him as unprofessional.
A young associate at McKinsey once recommended
that a Fortune 500 client create a planning department -- and strongly
hinted that he was the man to run it. The idea that
one of McKinsey's vaunted professionals would personally
profit from his advice violated everything Bower stood
for. The young man was the top-producing associate in the
firm, but Bower didn't care. He fired the consultant on the
spot.
Bower was especially vigilant
about guarding McKinsey's independence. To offer
untainted advice, he understood, the
consultant could not suffer conflicts of interest. In this,
he was rowing against the powerful tide of postwar America,
in
which one profession after another -- accounting, law,
consulting and so on -- enthusiastically branched into related
fields, even if it meant getting involved in conflicting
and competing businesses. By the time Arthur Andersen
collapsed in 2002, the dangers of this approach
could
no longer be ignored. Bower had figured it out in
1935, when he wrote to James O. McKinsey, the firm's
namesake, that a firm could do either auditing or consulting
well, but not both. ''Any crossover between the
two
will result in mediocrity at best or questionable
conflict at worst.''
Bower's ethics were nurtured
at Harvard Law School and then burnished at the prestigious
law firm Jones Day Reavis & Pogue
in Cleveland, where he started his career in 1930, the
thick of the Great Depression. As he watched many of the
firm's law clients struggle, Bower realized that American
C.E.O.'s needed some decent advice. Moreover, Bower
had been impressed by McKinsey, an auditor whose practice
was starting to broaden into general corporate strategizing.
And so Bower left the law to become a partner with
McKinsey and, in effect, to start a practice in a profession that did not yet exist.
Immediately, Bower tried to convince
McKinsey that no self-respecting firm could
audit the books of a business to which it was
also consulting. Whereas the consultant naturally
took a rooting interest in his client, the auditor
could allow no prejudice. McKinsey disagreed. In fact,
he merged McKinsey with another firm that specialized in
accounting. After McKinsey died, prematurely, in 1937, Bower
engineered a separation of the firm into two parts, accounting
and consulting. This anticipated by more than half
a century the division of labor that Congress would
partly insist on in the Sarbanes-Oxley Act of 2002.
Few of Bower's peers agreed with
him. As the complexity of business grew, corporations
increasingly called on their auditors to give
assistance outside the realm of accounting.
By the postwar era, audit firms like Arthur Andersen
were starting consulting wings. But Bower ignored the
trends and kept his firm focused on its primary mission.
When McKinsey ventured into executive search, he persuaded
the firm to get out. Then, when some of the partners wanted
to form a joint venture with an investment bank,
Bower helped talk them out of it. ''He got very upset at
some of the things McKinsey was talking about,'' says Jack
Sweeney, editor of Consulting Magazine. Bower's influence
was also felt in McKinsey's refusal to go public, though
a sale would have netted the partners millions.
Today, in an age when values
often seem malleable, it is fair to wonder at
the source of such Calvinist rectitude. You
may as well wonder why Bower, a conservative Midwesterner,
insisted that his consultants dress for work always
in hats and long socks. Elizabeth Haas Edersheim, who
is writing a biography of Bower, cites the role model of
his father, a diligent expert in the field of land transfers,
and also of his strait-laced mentor at Jones Day.
Today, McKinsey partners bristle
at the suggestion that their ties to Enron,
once a prized client, mean the firm strayed
from Bower's principles. It may be more accurate to say
that the entire business world has strayed. The news that
Arthur Andersen accepted $27 million for consulting and
related work from Enron while resuming to also be its ''independent''
auditor vindicated Bower's worst fears from the
1930's. And of course, Andersen was not alone; America's
professions have become crassly commercial. Bower was in failing
health by the time of the Enron revelations, but
he was painfully aware of its McKinsey connection. Moreover,
he was deeply saddened to see law firms behaving as
crassly as commercial businesses, or to see accounting firms
sponsoring golf tournaments. The battle for independence was never won; Bower fought it all his life.
Roger Lowenstein is a contributing writer
for the [New York Times Magazine] and the author of the coming
''Origins of the
Crash.''
