McKinsey & AI: What's Happening, the Revenue Impact, and What We Know

McKinsey's AI Revelation: Consulting on the Cusp of a Quantum Leap

Okay, folks, buckle up. Because what's happening at McKinsey & Company right now isn't just a minor adjustment—it's a tectonic shift. We're talking about the very foundation of how businesses are built and advised, all thanks to the explosive arrival of AI. And honestly, when I first read about their new approach to pricing and services, I felt that familiar thrill: the feeling that the future isn't just coming, it's sprinting toward us.

The old model? Billable hours, scope creep, and a general sense that consultants were paid handsomely whether the client truly won or not. Now? McKinsey is increasingly betting on outcomes. As Michael Birshan put it, clients are saying, "Here's the outcome we'd like to get to," and McKinsey's fee is contingent on delivering that. It’s like they’re saying, “Put your money where your mouth is.” About a quarter of their global fees are already structured this way, with expectations for it to increase. This isn’t just McKinsey either; other firms like EY are considering similar models.

The AI-Driven Transformation

This isn't just about pricing, though. It's about a fundamental rethinking of what consulting is. Kate Smaje, global leader of tech and AI at McKinsey, nails it when she says they're "really rethinking the nature of the work that we do." Strategy advice, the bread and butter of consulting, is now less than 20% of their work. Instead, clients want "deep implementation expertise" and multi-year transformation projects. They want a partner, not just a vendor. The implications are enormous.

Think of it like this: for decades, consultants were architects, drawing up blueprints for grand buildings. Now, they're increasingly becoming the construction crews, the engineers, and the project managers—the ones who actually build the thing. AI is the crane, the power drill, the automated assembly line that makes it all possible.

But here's the real kicker: this shift toward outcomes-based pricing is perfectly suited for the age of AI. Why? Because AI allows us to measure results with unprecedented precision. We can track key performance indicators (KPIs) in real-time, identify bottlenecks, and optimize strategies on the fly. The scorecard that matters to the client's board? That's McKinsey's scorecard too. This alignment of incentives is revolutionary.

And it couldn't come at a better time. Kevin Carmody, a senior partner at McKinsey, notes that CFOs are entering a period of conservative budgeting, with emphasis on downside protection. Companies are being more careful about what they must spend versus what is a ‘nice-to-have’. AI-driven insights and performance-based arrangements can help CFOs navigate this uncertainty with greater confidence. More on this can be found in CFOs are reaching for downside budget protections, McKinsey exec says.

What does this mean for you? Imagine a world where businesses are held accountable for their promises, where consultants are incentivized to deliver real, measurable value, and where AI is used to drive efficiency and innovation across the board.

Of course, with great power comes great responsibility. We need to ensure that these AI-driven transformations are ethical, transparent, and aligned with the best interests of society as a whole. It’s easy to get caught up in the excitement of it all—the potential for increased profits, streamlined operations, and groundbreaking innovation. But we can't afford to lose sight of the human element. We need to think critically about the implications of these changes, ensuring that they benefit everyone, not just a select few.

Consulting Reimagined

Here’s the thing: we’re not just talking about a change in pricing models, we're talking about a paradigm shift in the entire consulting industry. McKinsey's embrace of AI and outcomes-based pricing is a sign that the future is already here. What this means for us is that the consulting world is changing forever, and the winners will be those who embrace AI and focus on delivering real, measurable value.

So, What's Really Happening Here?

The game has changed. McKinsey's not just selling advice anymore; they're selling results. And in the age of AI, that's a bet worth making.