Companies pay dearly for McKinsey’s human expertise, and for nearly a century they have had good reason: The elite firm’s armies of consultants have helped generations of CEOs navigate the thorniest of challenges, synthesizing complex information and mapping out what to do next.
Now McKinsey is trying to steer through its own existential transformation. Artificial intelligence can increasingly do the work done by the firm’s highly paid consultants, often within minutes.
That reality is pushing the firm to rewire its business. AI is now a topic of conversation at every meeting of
McKinsey’s board, said Bob Sternfels, the firm’s global managing partner. The technology is changing the ways McKinsey works with clients, how it hires and even what projects it takes on.
And McKinsey is rapidly deploying thousands of
AI agents. Those bots now assist consultants in building PowerPoint decks, taking notes and summing up interviews and research documents for clients. The most-used bot is one that helps employees write in a classic “McKinsey tone of voice”—language the firm describes as sharp, concise and clear. Another popular agent checks the logic of a consultant’s arguments, verifying the flow of reasoning makes sense.
Sternfels said he sees a day in the not-too-distant future when McKinsey has one AI agent for every human it employs.
“We’re going to continue to hire, but we’re also going to continue to build agents,” he said.
Already, the shape of the company is shifting. The firm has
reduced its head count from about 45,000 people in 2023 to 40,000 through layoffs and attrition, in part to correct for an aggressive pandemic hiring spree. It has since also rolled out roughly 12,000 AI agents.
“Do I think that this is existential for our profession? Yes, I do,” said Kate Smaje, a senior partner Sternfels tapped to lead the firm’s AI efforts earlier this year. But, “I think it’s an existential good for us.”
Consulting is emerging as an early and high-profile test case for how dramatically an industry must shift to
stay relevant in the AI era. McKinsey, like its rivals, grew by hiring professionals from top universities, throwing them at projects for clients—then billing companies based, in part, on the scope and duration of the project.
AI not only speeds up projects, but it means many can be done with far fewer people, said Pat Petitti, CEO of Catalant, a freelance marketplace for consultants. Junior employees will likely be
affected most immediately, since fewer of them will be needed to do rote tasks on big projects. Yet slimmer staffing is expected to ripple through the entire consulting food chain, he said.
“You have to change the business model,” Petitti said. “You have to make a dramatic change.”
Avoiding a ‘suit with PowerPoint’
One immediate change is that fewer clients want to hire consulting firms for strategy advice alone. Instead, big companies are increasingly looking for a consultant to help them put new systems in place, manage change or learn new skills, industry veterans say.
“The age of arrogance of the management consultant is over now,” said Nick Studer, CEO of consulting firm Oliver Wyman.
Companies, Studer added, “don’t want a suit with PowerPoint. They want someone who is willing to get in the trenches and help them align their team and cocreate with their team.”
At McKinsey, Sternfels is trying to cement the notion that the firm is a partner, not adviser, to clients. About a quarter of the company’s work today is in outcomes-based arrangements: McKinsey is paid partly on whether a project achieves certain results.
Advising on AI and related technology now makes up 40% of the firm’s revenue, one reason Sternfels is pushing McKinsey to evolve alongside its clients. “You don’t want somebody who is helping you to not be experimenting just as fast as you are,” he said.
The firm’s leaders are adamant that McKinsey isn’t looking to reduce the size of its workforce because of AI. Sternfels said the firm still plans to hire “aggressively” in the coming years.
But the size of teams is changing. Traditionally, a strategy project with a client might require an engagement manager—essentially, a project leader—plus four consultants and a partner. Today, it might need an engagement manager plus two or three consultants, alongside a few AI agents and access to “deep research” capabilities, Smaje said. Partners with decades of experience might prove more indispensable to projects, in part, because they have seen problems before.
“You can get to a pretty good, average answer using the technology now. So the kind of basic layer of mediocre expertise goes away,” Smaje said. “But the distinctive expertise becomes even more valuable.”
The fastest learners
How McKinsey changes is a topic of much interest inside the firm. In October, roughly 2,500 McKinsey partners will descend on Chicago, where the company was founded in 1926, when a University of Chicago professor named James O. McKinsey began advising businesses.
The meeting will open a year of centenary celebrations inside the firm. In between the dinners, speeches and historical reflections, AI is expected to be a topic coursing through the multiday gathering.
AI-proofing McKinsey means taking on new work, too. The firm is targeting projects once the realm of boutique firms, such as helping companies to identify and groom future executives. McKinsey has long had its own reputation as a “leadership factory,” training CEOs and bosses, and Sternfels said the firm can apply its internal expertise to others.
“That is something I don’t think will be disrupted by AI,” he said.
As McKinsey recruits, it is looking for people who can demonstrate they are fast learners. “Increasingly, you’re going to have to learn over a career at a rate you and I have never seen,” he said.
It also wants something else: People who can work well with others.
“It may sound pretty obvious, but it’s an increasingly important skill if you want to drive change in an organization,” Sternfels said.
