the current status of the trillian mckinsey supplier ... · page 3 of 14 1. eskom leadership...

Trillian Management Consulting (Pty) Ltd Reg No: 2015/111709/07 Address: 4th Floor, 23 Melrose Boulevard, Melrose Arch, 2196

www.tcp.co.za

The Current Status of the Trillian – McKinsey Supplier Development Partnership Eskom Turnaround Programme

Context: McKinsey & Company have entered into a Supplier Development partnership with Trillian Management Consulting as part of their commitments for the award of the Eskom Turnaround Programme. This note talks to concerns that Trillian would like to raise regarding the understanding and then buy-in to the principles of supplier development by the general McKinsey team to date. We feel it pertinent to raise this now, so that all parties can carefully consider their behaviors to date and plot a clear path forward which will include specific structural arrangements, supported by thorough understanding, acceptance and willingness to actively support this element of the award. Synopsis of concerns: The concerns relate to specific comments and general behaviors of the team and more significantly, the senior leadership of McKinsey, in relation to the supplier development relationship as highlighted by the statement; ‘…it doesn’t really matter [supplier development] as long as you get your percentage [revenue]’ senior McKinsey representative. There is a general theme emanating from the McKinsey leadership down, that Trillian as the development partner is simply a necessary, but unwanted piece of baggage in the awarded contract. Senior leadership, take calls and / or leave meetings as soon as the topic of the development of the partnership comes up, or fail to address their staff when disrespectful (to the principles of supplier development) comments or behaviors are displayed. This has created a clear message to their teams that it is not a partnership, but rather that they should entertain us, but not be too concerned about supplier development. At a more operational level Trillian teams have had to fight to ensure representation in meetings with clients and inclusion in key communications and workshops e.g. Trillian leadership were not made aware of a kick-off session with the client, even though all parties attended a meeting only 24 hours prior where the message could have easily been or should have been shared. Trillian is committed, and has communicated its intention to build a strong local management consultancy. It is open to learning and dedicated to working with partners to provide the absolute best skills and services to our clients. At this juncture in the relationship though, we find the behavior highlighted above and detailed below in the attached annexures, as highly offensive, disrespectful and in direct obstruction to the principles of supplier development. We trust that the concerns can be discussed openly and clean path agreed to ensure the success of both the programme for the client and the partnership.

of 14

Supporting Documentation Disclaimer: The content of this report reflects the Trillian Management Consulting CEO’s account of events. All referenced meeting with McKinsey are not supported by detailed minutes. The remaining incidents are supported via emails, other in attendance.

Contents

1. Eskom Leadership Meeting 1, 19th January, 17h00 – 19h00 .......................................................... 3

2. Eskom Leadership Meeting 2, 25th January, 17h00 – 21h00 .......................................................... 5

3. Telephone call between TMC CEO and Vikas Sagar, 26th January, 07h30 – 08h00 ..................... 8

4. Meeting between TMC CEO and Lorenz Jungling, 26th January, 15h00 – 16h00 .......................... 9

5. Trillian & Procurement Partner Meeting, 25th January, 14h00 – 15h00 ........................................ 11

6. Data request, on-going .................................................................................................................. 12

of 14

1. Eskom Leadership Meeting 1, 19th January, 17h00 – 19h00

1.1. Purpose

A recurring leadership meeting is scheduled for every Monday evening to discuss issues arising towards the progress of the various work streams.

1.2. Attendance All McKinsey Directors, Principles and Partners associated with the delivery of the

programme, a minimum 14 Team members. Trillian Management Consulting, (TMC) COO

1.3. Synopsis of discussion

The first Leadership meeting took place on the 19th January 2016. The topic of discussion was the program PMO (Project Management Office setup). In particular, the following items were presented: The PMO’s setup and monthly processes Work Package Initiation Finance and Contract Management Risks

Largely, the processes, scopes of work, activities, associated requirements and schedules were endorsed by the forum present. The presentation that was used to facilitate the meeting was distributed later that evening. It was mentioned that the McKinsey work stream Partners will present their respective baselines at the subsequent meeting. Trillian COO was requested to present the same information for the Finance work stream. At the end of the meeting, TMC COO tabled the following for discussion: Communication channels between McK and TMC (at all levels) Representation in key meetings - See section 5 (page 8) of this report Meeting calendar (and ideally ToR / agendas for the various meetings) Induction of partner staff onto the work stream - who leads this / how do we coordinate

this (this would include getting these members up to speed on the assignment and the McK way etc.)

Working with the PMO

The TMC COO was acknowledged and it was noted that these points will be discussed at the subsequent Leadership meeting.

1.4. Trillian’s Concerns

1.4.1. Trillian was invited to a Leadership meeting uninformed. The meeting invitation was distributed without an agenda or any form of communication that details what will be discussed. As such, Trillian was not prepared with comments, questions nor had the

of 14

opportunity to formalise their view towards processes and activities that consolidate the program and facilitate billing and contract management.

1.4.2. The presented content is regarded by Trillian, as core to the success of the Programme. Trillian was not consulted in its derivation nor compilation

1.4.3. The first opportunity that Trillian had to discuss this matter with their Senior Leadership, was after the processes were endorsed by the McKinsey Leadership team.

1.4.4. Processes that govern the activities and schedules of invoicing were pre-determined without consultation and discussion with Trillian.

1.4.5. Templates required to support the PMO activities, were pre-determined without consultation and discussion with Trillian.

of 14

2. Eskom Leadership Meeting 2, 25th January, 17h00 – 21h00

2.1. Purpose

Present the draft baselines for the various work streams for discussion.

2.2. Attendance All McKinsey Directors, Principles and Partners associated with the delivery of the

programme, a minimum 14 Team members. Trillian Capital Partners, (TCP) CFO Trillian Management Consulting, (TMC) CEO


The baselines were presented in a consistent manner i.e. in the same templates. Discussion on assumptions took place and all Partners were guided to conduct further refinement work. The last item on the agenda, were the items tabled in the previous meeting by TMC COO (Section 1.3, page 3). This agenda item was presented by TMC CEO. Communication channels between McK and TMC (at all levels)

TMC stated that communication between the partner companies was poor and to facilitate a collaborative working relationship, communication should be more structured. This will ensure that both parties are equally prepared and informed for; and on activities. TMC stated that the session just had, felt more like feedback to TMC as opposed to one of involvement. Effective communication would result in engagement such that TMC is part of decisions, deliverables, meetings etc. McKinsey Response (Lorenz Jungling, Alex Weiss): TMC needs to be more involved in the McKinsey Team on sites and at Megawatt Park. Most if not all, communication within the team is informal. That is simply how McKinsey operates. McKinsey is very much set in their behaviour and processes and is not going to change soon. ** Dr Alex Weiss left the meeting at this point **

Representation in key meetings Using Section 5 (page 8) as the example, TMC requested that there is equal representation of the Partner companies Leadership at all key engagements to ensure that there is not a perception that one Partner is ‘Left out’. McKinsey response: At the point of referencing incident described in section 5.3 (page 11), the McKinsey team all focussed on Aleck Matambo (Partner lead of Procurement) and started making ‘whipping sounds and gestures’. The McKinsey team found this humorous and laughed. Whilst still in the jovial mood, Aleck Matambo and Vikas Sagar agreed that TMC should not have been excluded and that it was merely an oversight on their part.

Meeting calendar (and ideally ToR / agendas for the various meetings)

of 14

Currently, TMC’s COO and CEO are the only resources representing TMC Leadership. As such, TMC requested a meeting calendar to enable their leadership to optimise their time and attend as many of the scheduled sessions. Furthermore, all meeting requests submitted to date, are blank and do not contain any agenda or indication on what the meeting’s purpose is (other than the subject line). A behavioural change towards including this information, will give TMC advance notice to prepare and hopefully, contribute to the purpose of the meeting. McKinsey Response (Lorenz Jungling): This is not how McKinsey works and we are not going to change.

Induction of partner staff onto the work Stream - who leads this / how do we coordinate this (this would include getting these members up to speed on the assignment and the McK way etc.) TMC stated that all staff that will be on-boarded through this partnership will go through a rigorous TMC induction process before joining the Partner teams. TMC requested a detailed understanding of what McKinsey has planned as a development programme for TMC team members, to ensure alignment between the independently run processes and to potentially schedule these processes to gain optimal and efficient results. In addition, TMC stated that since the request for team members has only been for junior or expert roles thus far, the development of TMC will be at risk if middle management roles were not equally developed i.e. a consulting company that is biased to junior skills, will not sustain itself. As such, TMC requested a separate discussion on the proposed ramp of TMC resources, to ensure that the organisation is optimally structured and developed. McKinsey Response (Lorenz Jungling): The program does not have a detailed and long term plan that will make this explicit. Besides, regardless of TMC resources allocated to projects, TMC will still get their 30%

Working with the PMO TMC has not been given any information that indicates TMC representation in the PMO. (See section 6.4.5, page 13) McKinsey has been consistent and forthcoming in resources requirements for the explicit work streams, but all information provided thus far, indicated a 100% McKinsey team in the PMO. TMC thus requested a representative in this team as it controls the core administration processes for the programme. McKinsey Response (Lorenz Jungling): “Fine. Is that it?”

The meeting closed.


2.4.1. Senior management of the McKinsey team (e.g. Principle Lorenz Jungling) clearly do not appear to compromise on the McKinsey behaviour.

2.4.2. There is a perception that TMC is only around for the “30%” and will not actually contribute to delivery.

2.4.3. Whilst coming across most disrespectful of the Supplier-Development relationship, McKinsey Directors (Alex Weiss and Vikas Sagar) did not intervene and call their team member to task.

2.4.4. This is not a priority to Dr Alex Weiss as he left after the first TMC agenda point, after TMC collaboratively participated in McKinsey’s presentation for 4 hours.

of 14

2.4.5. Formal resource requirements do not support the development of a consulting business i.e. McKinsey has only focused on either very young junior roles or highly specialized expert roles and have yet to offer a plan that will introduce development of core roles – consultants and engagement managers. See section 6.4.5 (page 13).

2.4.6. There were no definitive outcomes or actions to rectify our issues suggesting that there is limited willingness to improve the current situation.

of 14

3. Telephone call between TMC CEO and Vikas Sagar, 26th January, 07h30 – 08h00


Mr Vikas Sagar called TMC CEO to apologise for his Team’s behaviour at the Leadership meeting the night before. Mr Sagar proceeded to congratulate TMC CEO on standing her ground and tabling the supplier – development agenda items.


3.2.1. McKinsey team member behaviour was acknowledged to be out of line but not corrected in the same forum in which it was raised.

3.2.2. There are still no definitive actions tabled to address the items tabled by McKinsey Directors.

of 14

4. Meeting between TMC CEO and Lorenz Jungling, 26th January, 15h00 – 16h00

4.1. Purpose At 22h15 on the 25th January, TMC CEO requested an urgent meeting with Mr Jungling to address the sentiment raised at the Leadership meeting. The meeting was confirmed for 15h00 on the 26th January 4.2. Synopsis of discussion

TMC CEO commenced the meeting by asking Mr Jungling what his understanding was towards the development of McKinsey / TMC partnership. Mr Jungling replied that TMC would initially support McKinsey in delivery by providing resources to the McKinsey teams and after sometime (assumed to be roughly a year into the programme); TMC would commence taking the lead on certain work streams or sub-work streams, with a progression towards the delivery lead favouring TMC towards the end of the programme. McKinsey would support TMC in developing to the point where TMC could be stand-alone. TMC CEO acknowledged that this view was aligned to current thinking and stated that for this process to be achieved successfully, development of resources would have to be an intense effort as 12 months is a short time period to strongly define new behaviours, instil expert delivery approaches and to be blunt, transfer McKinsey behaviour to a non-McKinsey individual. TMC CEO stated that this was the basis for raising item 2.3 (page 5) and believes that the development process should be structured to ensure its success. Mr Jungling replied that this request was near impossible as the development path within McKinsey has a significantly longer tenure than 12 months. TMC CEO stated that regardless of opinion, this development will have to take place, in the specified time frame as it is contracted. Thus it is in everyone’s best interest to derive a plan that will increase the likelihood of success. TMC CEO’s view is that TMC resources should be evenly spread across the roles and work streams to ensure that development takes place on all levels. This will provide TMC with a greater chance of success when we are stand-alone. The current distribution of resources (section 6.4.5, page 13) will not support this objective. Mr Jungling replied that TMC CEO should table a plan to achieve this objective for further discussion. Mr Jungling then made the following statement: “TMC cannot request development and expect to tell McKinsey what to do, at the same time.” TMC CEO replied that the context of that statement was not understood and requested that the basis be explained. Mr Jungling explained that section 2.3 (page 5) was perceived as an

of 14

instruction to McKinsey whilst we are discussing development. TMC CEO explained the basis for requesting agenda’s for meetings and ToRs – TMC wishes to attend meetings prepared and assumes that we can add value, as opposed to receiving instructions and feedback on developments from McKinsey. Mr Jungling stated that the context was understood. TMC CEO proceeded to tell Mr Jungling that her personal ambition is to build an organisation that succeeds her tenure in TMC and creates excellent consultants. TMC CEO stated that she wants to prove to herself, that she can create an “awesome” organisation that delivers and can stand on its own. She did not take up this opportunity to simply be a labour broker to McKinsey teams. Mr Jungling replied that the current McKinsey sentiment is that TMC is not motivated by delivery and growth towards independence, but rather in this partnership purely to receive revenue in return for not much work. TMC CEO assured Mr Jungling that this sentiment is incorrect. Mr Jungling acknowledged TMC CEO’s vision. Mr Jungling and TMC CEO committed to working together in defining the development plan for TMC staff. Mr Jungling has since instructed McKinsey Partners to forward invitations to TMC leadership for all key meetings within the teams and with the Client.


4.3.1. The McKinsey sentiment is that TMC is not an equal partner in that TMC is not motivated by delivery but rather revenue for little to no contribution towards delivery.

of 14

5. Trillian & Procurement Partner Meeting, 25th January, 14h00 – 15h00

5.1. Purpose

A routine meeting to discuss progress on the procurement work stream and identify and mitigate any risks.

5.2. Attendance Directors of Cutting Edge Trillian Capital Partners, (TCP) CEO Trillian Management Consulting, (TMC) CEO and COO


TMC partners expressed their displeasure towards the fact that McKinsey insisted on interviewing candidates that would be placed on the procurement work stream and found 3 out of 7 candidates not suitable. TMC did not receive detailed role descriptions that reflect McKinsey’s requirements. Furthermore McKinsey hosted a Procurement kick-off meeting on the 20th January 2016 which was attended by approximately 200 Eskom employees. TMC was not made aware of this session i.e. there was no TMC senior leadership present.


5.4.1. TMC was excluded from a significant event at our Client. We were not consulted during planning nor considered for attendance.

5.4.2. The Leadership meeting on the 19th January was most opportune to inform TMC of the kick-off, yet the information was not passed on.

5.4.3. Enduring a selection process without specifications on what type of candidate / skills/ experience is required, is time consuming, non-productive and inefficient. McKinsey is not being supportive towards the acquisition of good talent.

5.4.4. Senior leadership of TMC was excluded from communication that instructed our partners to included McKinsey as part of the selection process.

of 14

6. Data request, on-going

6.1. Purpose

TMC is currently in a process of employee ramp-up and business process re-design whilst managing its cash flow very tightly.

6.2. Attendance Trillian Capital Partners, (TCP) CEO Trillian Management Consulting, (TMC) CEO and COO

6.3. Synopsis

TMC aspires to build an organisation that develops great consultants. TMC appreciates that this aspiration will require a reasonable amount of working capital and a significant amount of hard work. In order to develop the business further and manage cash flow, TMC requires assist from McKinsey in the following:

Timeous access to the latest contracts, scopes of work, supporting annexures and decision notes from our Client.

A resource schedule that details the roles required from TMC by McKinsey for each work stream in monthly time intervals for at least year 1.

Role profiles that support the resource ramp-up and selection process. Detailed scopes of work and subsequent deliverables to manage expectations of

TMC staff. Visibility to the preferred administration processes and detailed requirements to this

effect as will need to be supplied by TMC: o Invoicing schedules and templates; o Baseline business case templates; o Notice of Steering committee meetings; o Forecasted cash flow models;

Since December 2015, TMC CEO and TCP CEO have requested these datasets. The responses received thus far include: Contracts: TMC has received a dataset of contracts dated September and

October 2015. These datasets reflect inconsistent information for down payments. We are yet to receive a set of contracts that are aligned. Furthermore, McKinsey have not shared the date of the last revision to the MSA, so TMC does not know if we have a copy of the most recent.

Baseline business case templates: No templates have been shared with TMC.

Steering Committee meetings: TMC was not consulted when a decision was made to move the Steering committee from the 22nd February to the 9th February. There is no meeting notification for the subsequent Steercoms. Furthermore, rules of engagement and an agenda for the Steercom has not been shared nor discussed with TMC.

Cash flow models: Models provided do not align to the presented billing process, or the structure of the contracts. These models do not offer

of 14

resolution to guide invoicing and dilute detail so that partnership splits on fixed payments, cannot be extracted.


6.4.1. McKinsey has not been supportive towards the recruitment process. On request for

detailed role profiles, McKinsey representatives state that they employ “generalist”, yet find our procurement candidates unsuccessful on the basis of; “Regarding interviews, four of the seven did make it through and the remaining three did not make it for a variety of reasons (IT and finance backgrounds with no procurement or p2p experience) “

6.4.2. McKinsey Partners have said that TMC is not providing Generation experts in the spirit of the Supplier –development agreement as TMC experts are from abroad. Yet, 40% of the McKinsey team on Generation are not South African nationals.

6.4.3. McKinsey has not provided a view of resource requirements beyond June 2016. This leaves TMC in a precarious resourcing position - does TMC employ at risk to be proactive to the forthcoming demand or does TMC delay and fail to deliver the right resources on time. Working capital to this effect will be at risk if our staff is not found to be suitable.

6.4.4. TMC has developed a detailed excel based cash flow model, based on the contract information provided thus far. TMC Senior leadership are exposed in making decisions and injecting working capital into the business because the down payment amounts do not reconcile. TMC cannot operate effectively without knowing what is committed.

6.4.5. Resource requirements from TMC by McKinsey have been provided as follows: 6.4.5.1. Generation – 1 x Expert; 2 x Analysts for 12 weeks 6.4.5.2. Primary Energy – 3 x Experts; 6 x Analyst for 7 months 6.4.5.3. Claims Management – 8 x Analysts for 6 months 6.4.5.4. Procurement – 7 x Analysts for 6 months (To be confirmed)

With the exception of Primary Energy, role profiles for the remaining team members have not been provided. The resource requirements for the first year reflect a junior biased organisation in which TMC will not develop Engagement Manager nor Principle skills. These roles are critical to coach, guide and develop the junior team members who will be exposed to the McKinsey processes. Furthermore, TMC is expected to provide experts with +10 years operational experience in power generation and coal mining. TMC will struggle to attract South African nationals that reflect the BEE status and have the required experience. McKinsey’s expectations of TMC to provide resources are inconsistent with theirs and unrealistic.

6.4.6. TMC has provided team resources in the generation and procurement work streams. The TMC managers of these resources (overheads to TMC) have yet to receive a detailed deliverable schedule that supports their function in managing the teams output aligned to McKinsey expectations. TMC does not have visibility into what the requirements are from our teams to ensure that delivery is achieved on time and within quality standards. TMC thus runs the risk of subjective views towards our teams’ delivery as it has not been made explicit.

6.4.7. TMC has not been provided with a schedule of administrative process requirements: 6.4.7.1. Although the McKinsey team has received baseline templates, TMC has not

been on this distribution. 6.4.7.2. TMC has not been part of any Steering committee preparations and plans.

of 14

6.4.7.3. TMC was not engaged for the Majuba kick-off session. 6.4.7.4. TMC has not received minutes from any client engagements thus far

6.4.8. 1TMC has received limited (Generation only) client information and data to be able to contribute towards delivery.

1 Information on the Procurement work stream unknown to TMC CEO at the date of compilation

the current status of the trillian mckinsey supplier ... · page 3 of 14 1. eskom leadership...

Documents