The article discusses the issues related to McKinsey's close connection with the bankrupt Enron and also the failure of its other prominent clients like Kmart, Swiss Air and Global Crossing. The article also addresses topics like change in corporate culture, McKinsey's aggressive growth strategy and its outlook for the future.

For the past few months, McKinsey & Co has been in the news for all the wrong reasons. Rajat Gupta, the Managing Partner at McKinsey, is facing a few important issues like client failures, change in corporate culture, etc., and that need immediate attention. The problems for the company started in December 2001, when Enron filed bankruptcy. McKinsey has had a very close relation with Enron for the past 18 years. It was McKinsey that advised Enron on its innovative principles like "asset light" strategy, "loose tight" culture, securitization of debt, etc. Also, former McKinsey partner Jeffery K Skilling, has served as the CEO of Enron (such corporate move is not uncommon for McKinsey. In 1978, McKinsey partner Louis Gerstner left for American Express and later became CEO of RJR Nabisco and IBM). Because of this close association with Enron, McKinsey has received its share of bad publicity. Though it is not implicated like Arthur Andersen, there is a significant issue to be addresseddid it cross a legal line while advising Enron?

recently, McKinsey took measures to answer this question. Rajat Gupta sent his chief legal counsel to visit Enron's offices in Houston, Texas to look for any evidence that would possibly link McKinsey to the fraud at Enron. Much to the delight of the entire company, no files were found that showed McKinsey ever helping Enron with its off-balancesheet accounting policies. Rajat Gupta commented: "In all the work we did with Enron, we did not do anything that is related to financial structuring or disclosure of any of the issues that got them into trouble. We stand by all the work we did. Beyond that, we can only empathize with the trouble they are going through. It's a sad thing to see." Though there were no direct link for fraud, there is a widespread belief that McKinsey, like the other consultant companies, might have kept things under wrap just to maintain the lucrative relationship ($10 mn in annual fees) with Enron.

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