It's no secret that the sporting goods brand adidas has been struggling in recent years. While the company's outgoing CEO, Kasper Rorsted, has received much of the blame for adidas's declining share price, it's important to consider the role that consulting firms like McKinsey have played in the company's struggles. In my opinion, the influence of these firms has been fundamentally damaging to adidas, and it's time for the company to reevaluate its reliance on them.
One of the primary concerns with adidas's relationship with McKinsey and other consulting firms is the gradual process in which consultants take on senior positions within the company, only to hire more and more of their former colleagues. This creates a number of problems:
- High-performing internal employees are passed over for promotions, leading to frustration and the departure of top talent to other brands.
- The brain drain leads to a rapid reduction of subject matter experts and an increase in people in senior roles with consulting and MBA backgrounds, but with minimal actual industry expertise.
- A sudden drop in company culture as leadership with a personal attachment to the brand and its consumers is replaced with people who are more financially and power motivated.
- Leadership with a lack of basic expertise on how product is designed, tested, manufactured, and marketed.
- A loss of leaders with the broad expertise, experience, and appetite for calculated risk needed to create and launch disruptive products. i.e. Launching Boost would be impossible today.
In my opinion, this process is evidence of McKinsey's deep self-interest and the conflict of interest it creates. Rather than focusing on what's best for the company, McKinsey consultants are more interested in advancing their own careers by embedding themselves within adidas and other firms. This is not to say that consulting firms like McKinsey can't have a positive impact, but it's clear that their influence on adidas has been detrimental to the company's culture, finances, and reputation.
It's worth noting that one of the reasons why employees actively jump out of McKinsey into corporate jobs is that it is unsustainable to continue working there. At McKinsey, low-level employees are expected to work 80-hour weeks and travel a minimum of 40% of the time, with much of their job requiring them to be on-site at consulting partners. The average time an employee spends at McKinsey is just two years, which suggests that the company is churning out generic, narrowly-focused individuals with minimal actual industry experience. Once they jump into a company like adidas, they tend to hire more people from the same background rather than direct reports who have greater industry and brand knowledge. In fact, recent hiring practices at adidas have brought in McKinsey-style financial assessments, valuing these results over actual subject matter expertise. This greatly skews the hiring process in favor of McKinsey graduates who turn out to be severely limited in their capabilities.
In conclusion, while consulting firms like McKinsey and BCG may offer valuable insights and expertise, their influence on the sporting goods brand adidas has had negative consequences for the company's culture, finances, and reputation. It is important for companies to carefully consider the impact of such partnerships and ensure that they align with their values and long-term goals.