Briton gets top job at McKinsey for first time

1.30pom - by SUSIE MESURE

LONDON - Nearly 300 senior partners at McKinsey made history yesterday by electing the first non-American to head the management consultancy since it was founded more than seven decades ago.

In what could mark a turning point for the US firm, Ian Davis, the 52-year-old who will become its managing director this July, is British. A decision to base Mr Davis in London rather than New York, where McKinsey is headquartered, would instantly shift the firm's nerve centre, but the consultancy remained silent on this crucial detail yesterday.

A McKinsey man since 1979, Mr Davis pipped his long-term rival Michael Patsalos-Fox to the post after a unique election process, perhaps most notable for the complete absence of any campaigning by the candidates. Issuing manifestos, making speeches and canvassing are all strongly frowned upon at a firm that has long endeavoured to convince the world that management consultancy is a profession, rather than a business.

Mr Davis, who was appointed head of the London office in 1996 over Mr Patsalos-Fox, will succeed Rajat Gupta, who has served the maximum tenure allowed in the firm's hot seat.

His first challenge will be how to steer the 77-year-old partnership through a business downturn that has seen companies cut back on the amount of money they spend on hiring external advisers. He will also have to cope with the repercussions of Mr Gupta's expansion drive, which saw the firm grow from 54 worldwide locations to 84, and more than double its number of consulting staff to 7,000.

But former associates of Mr Davis, an Oxford University graduate with a degree in politics, philosophy and economics, are sure he is up to the task. Archie Norman, the Conservative MP and ex-McKinsey alumnus, described Mr Davis, one of his direct contemporaries, as "the sort of leader who people would follow into the jungle".

Another former McKinsey man who knows Mr Davis well said: "Managing a bunch of consultants is more like herding cattle than being Jack Welch. It is about being the first among equals rather than being a 'lay down the law'-type of CEO. In that type of environment Ian will do very well."

The Davis family is no stranger to high-flying business circles. Ian's brother Crispin is the chief executive of Reed Elsevier, a FTSE 100 company with one of the most highly regarded management teams in the world of publishing.

Mr Davis' election was the result of a three-step election process that kicked off last month, when each of McKinsey's 270 senior partners was asked to nominate five candidates. That list produced seven "runners", who after a second ballot were whittled down to just two contenders. How the senior partners decided between Mr Davis and his fellow London alumnus, the Greek-Australian Mr Patsalos-Fox, is not known because neither man was allowed to solicit votes.

Mr Davis, who was brought up in Kent, started his career at Bowater, a paper manufacturing company, where he spent seven years. As head of the group's UK office, he was also responsible for its outlets in Ireland and the Middle East. His areas of specialty include consumer-related and retail industries.

While McKinsey, which was founded by James O McKinsey as a Chicago-based accountancy and engineering group in 1926, is widely regarded as the world's leading consultancy business, the past few years have not been trouble free.

"The Firm", as it is known to insiders, was infamously caught up in the downfall of Enron, which it had advised for nearly 18 years on basic strategy. Enron's former chief executive, Jeffrey Skilling, was a former McKinsey partner and as a McKinsey director regularly attended board meetings at the disgraced energy trader. Other unfortunate associations have included the telecoms company Global Crossing, the retailer Kmart, and Swiss-air, the now defunct airline.

Although McKinsey's reputation is still second to none - prompting none other than Chelsea Clinton to apply for (and be given) a job - industry observers argue its decision to shift away from providing pure strategic thinking to supplying more organisational and operational improvement advice, means the group has lost some of its edge.

Past glories include orchestrating far-reaching corporate reorganisation at General Motors and General Electric, while closer to home the firm has advised the Bank of England and FTSE 100 stalwarts such as Kingfisher and Boots. Its alumni range from William Hague, the former Conservative party leader, to Adair Turner, an adviser to Merrill Lynch and former head of the Confederation of British Industry, to Sir Howard Davies, the director-elect of the London School of Economics.

The firm's direction may change with the accession of Mr Davis, but in the words of Mr Norman: "McKinsey will go on and on. It's an unstoppable force."


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