McKinsey & Company, Michael Patsalos-Fox visited Tsinghua SEM
June 10, 2005
On May 16 th , Chairman of the Americas Region, McKinsey & Company, Michael Patsalos-Fox visited Tsinghua SEM and shared with the students McKinsey's perspective on corporate strategy. Professor Zhiwen Li hosted the speech. Before the speech, Chairman Patsalos-Fox had a friendly meeting with the school deans.
Michael interpreted the McKinsey's understanding of corporate strategy as creating shareholder value at the very beginning of the speech by demonstrating the value creation hexagon as shown below. He emphasized that there is no best strategy. What McKinsey does, instead of just to solve the problem, is to lead a dialogue between management and itself, to setup the best practice benchmark in the industry, to tell the management what they can do to improve and to help the management understand the context when they form a decision.
Value creation management
Capital market diagnostics
After elaborating on the topic of corporate strategy, Michael went on to introduce some models used in McKinsey, like the SCP model, Porter 5-Forces Framework and the MACs framework. When talking about Porter 5-Forces Framework, he mentioned the importance of timing on substitutes, saying that if the timing is wrong, the company will probably attack itself, resulting in the fall of profit, which is not desirable on the capital market. When talking about the profitability of business units, he emphasized the specific capabilities, also known as core competency. The MACs framework introduced is very much close to the BCG metrics. The difference is that it put value creation potential in BU on the horizontal axis while the relative ability to extract value on the vertical one.
After the 40-minute presentation, Michael spent another 50 minutes to answer the questions of the audience. Students are especially interested in the question that whether McKinsey will be as successful in China as it is in other parts of the world. Michael mentioned that, in North America, McKinsey and its client both know clearly what to expect from each other, but it is not really the case in China and that may be the reason that they are not performing that satisfactory here. Professor Li added that McKinsey is still in a learning process here in China . It should learn how to manage their clients' expectation and also get their clients to know about them better.
Along the whole speech, Michael was always responding sincerely to the audience and even stayed until the last student finished his question. As a top consultant in the world's top consulting firm, Michael showed us the charm of consulting, as well as the professionalism of a consultant.