Wednesday, February 27, 2013

Stockpiling "Dry Powder" For Your McKinsey Boss

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McKinsey consultants already work a ton of hours, but if they left it up to their clients and Partners, they'd work even more.  One way teams and individual consultants can keep their workloads reasonable is by stockpiling "dry powder".  In this post, I'll discuss what that means and how it can help you manage the workload you're assigned by the McKinsey consultant in your life...

What is dry powder?

The term "dry powder" comes from the days when battles were fought using cannons and muskets and it was important to keep a plentiful supply of gunpowder on hand - and for it to be useful, it had to be nice and dry.  In finance, investors might refer to cash reserves or other liquid assets that can be put to use to do battle in the marketplace as dry powder.  The consulting team's equivalent is information, data, analyses, and insights that are already or nearly client-ready.

During the course of a consulting engagement, teams will generate a lot of material including PowerPoint pages and decks and Excel models.  On most days, the goal is to push and improve this material until it is ready to move the project closer to the answer and be presented to clients and/or team leadership.  Occasionally, it makes sense to set aside some complete or nearly-completed work and save it for another day - that is what McKinsey teams refer to as "dry powder". 

Why keep dry powder in reserve?

There are a few good reasons - besides a desire to save themselves from extra work down the road - for a consulting team to stockpile dry powder.  The more proactively you can recognize, leverage, and/or point out these situations to McKinsey leadership, the more dry powder you and your team can stockpile, freeing up time down the road.  Some reasons for setting aside dry powder are....

1.  Client needs other information first

Often, a consulting engagement requires the team to bring the client along through a series of insights that build on each other.  The client might not be ready to accept Insight C until they've bought into Insight A and Insight B.  If the clients needs to see and/or accept other facts prior to appreciating the work in question, it makes sense to hold this work back until a more appropriate phase of the engagement.  But since the analysis has already been done, when the client is ready to see it, much of the heavy lifting will have already been done.

2.  Clients need to be prepared

Sometimes the team's findings are helpful to the client but potentially unflattering to some stakeholders or parts of the client organization.  In such cases, it's important to take into account how those stakeholders will react to the findings.  Delaying the presentation of these findings gives the team (or more likely, McKinsey leadership) time to "pre-wire" the stakeholders who might react negatively to the news.  In the best cases, the team can work with those stakeholders to understand mitigating factors and/or incorporate their response into the storyline.

3.  Raises more questions than it answers

Good client work is often effective because it causes people to ask or consider the right questions.  But if this is done before people are prepared to deal with those questions, it might cause more problems than the team is prepared to solve.  In those cases, it's better to sit on some great analysis and wait until you're ready to deal with the inevitable questions that will follow.

4.  There's already have plenty of material

Occasionally, the team might receive more data or get more work done than anticipated.  In those cases, it might make sense to focus on fewer things, fully flesh out and present them, saving the rest for later.  Not only will it save the team time (now and later) but it will also free up capacity and do a better, more thorough job on the prioritized items.

5.  Team needs to flex capacity

Even McKinsey consultants have lives outside of client service.  Paid time off (PTO aka vacation), training, recruiting, and other commitments can leave a team short-handed.  Since most of these absences can be known in advance, a team might start building up stockpiles of dry powder in anticipation of those periods.

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