For the McKinsey Global Institute's productivity team, 2001 was a year for problem solving and numbers - from designing hypotheses and analyses to collecting figures, crunching them, analyzing them, and ultimately, building them into a comprehensive picture of U.S. economic productivity.
A team of close to one-dozen consultants, separated by geography and topic, spent about 12 months tracking down answers and figures everywhere they could - from the dusty basement archives of the Internal Revenue Service to a hotel laundry room.
Every other week, they compared their findings in marathon two-day team briefings. Engagement manager Baudouin describes the entire experience as taking 'immersion' to a new level.
"You enter another world," recalls Baudouin, "with its own rules, language, words, and esoteric concepts, where you talk about things like double deflation, multi-factor productivity, mix shift effect, laspeyres formula bias, and the Tornqvist index, for starters"
Baudouin was one of two engagement managers on the project. Allen, based in Seattle, directed the West Coast consultants. The groups' initial macro-economic analysis pinpointed six key 'micro' contributors to the stunning growth of U.S. productivity in the 90s. Along with three other 'paradox' sectors, these industry segments were targeted for in-depth case studies.
Close to a dozen associates took to the phones, the files and, in one case, the laundry room. Assigned to understand why the hotel industry had failed to generate value from substantial investment in IT, Kevin, a San Francisco-based business analyst, followed a hotel chambermaid on her morning rounds.
"I found that what seem like mundane factors, like running out of clean sheets, make a big difference," he says, "If it takes half an hour to clean a room and it takes three minutes to run down that hall to get a new sheet, that's a big deal."
Brent, assigned to research holding and other investment companies, passed long windowless hours in the basement of the Internal Revenue Service's Washington headquarters, sifting through dusty reams of documents. He developed such statistical acumen that the IRS tried to hire him.
As they shaped their findings into increasingly detailed documents, team members were subjected to regularly scheduled high-level reviews by top experts in their assigned fields. It was an initially intimidating, but ultimately rewarding experience.
"My first McKinsey presentations were in front of a Nobel laureate and several senior directors at the firm," recalls Michael, of the Los Angeles office. "To get feedback and be able to interact with and engage these people was a great experience."
The review sessions helped ensure that this far-reaching study would remain consistently on task and on track. The meetings also provided the team with benefits that couldn't be as easily quantified, as each team member gained a tremendous amount of knowledge, confidence, understanding, and professional rigor.
"It was a heartening experience to see by the end of the study that associates were discussing and arguing complex issues on equal footing with experienced academics," observes Baudouin. "It was also great to see how much the McKinsey perspective, reflecting the reality of the business world, was so enlightening to them."
Andrew, an L.A. associate, noted that the attention to detail was unlike anything he had ever seen before.
"We had long conversations with people at the government agencies that collected the original data about exactly what their survey methods were, what the sources of data were, whether changes in collection criteria over time could have introduced any bias," recalls Andrew. "When you're trying to understand productivity growth, even slight changes can have a big impact."
The finished report represents perhaps the most exacting analysis of U.S. productivity ever undertaken. Baudouin feels certain that its detailed findings will affect current debate for policy-makers and academics as they plan for our economic future.
"Corporate America" he adds, "will also take notice, as their businesses and strategic decisions are so linked to the economic climate."
Baudouin is convinced that he will look back upon the last 14 months as one of the best professional experiences of his life.
"I have never been as passionate about any study ever, and never engaged so much on the content of it, both in terms of interest and intellectual challenge."
