In the desert during military officer training, Yuval Atsmon entered one wrong number into a GPS device. Instead of reaching the intended destination, he and his team ended up in the wrong location, and the simulated mission failed. The mistake cost him the chance to finish at the top of his class, he tells us. Years later, he would recognize that moment as an early lesson in leadership: numbers and systems matter only if you truly understand them.
That principle resurfaced when Atsmon was working with McKinsey & Company in the Philippines on the privatization of an electricity asset. He spent several late nights studying a pricing framework that did not make sense. Eventually, he concluded the formula was recursive and would allow prices to rise indefinitely. Others initially thought he was wrong, but the process was halted and reexamined, he tells us. The experience reinforced what would become one of his core beliefs: “You can never delegate understanding.”
Read MoreThat mindset helps explain a career shaped by movement across industries, cultures, and responsibilities. Raised in Israel, Atsmon studied law before joining McKinsey as a business analyst roughly 25 years ago, he tells us. His career later carried him across more than 20 countries, including six years in Shanghai during a pivotal economic period. There, he became one of the few non-Chinese leaders in the office and made partner during a moment of global uncertainty, he tells us.
Today, as CFO of McKinsey & Company, he applies the same discipline to a far larger stage. Whether assessing liquidity, guiding investments, or navigating AI-driven change, Atsmon returns to the lesson first learned in the desert: leaders may delegate tasks, but they cannot delegate understanding.
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CFOTL: Most business people think they know McKinsey & Company. But what sets this company apart today? What sets this firm, this strategy house, apart today?
Atsmon: I think I touched on a couple of the things that have made McKinsey special for a long time. One of the challenges any long-standing industry leader faces is preserving the qualities that made it distinctive while also recognizing that the world has changed and some things must evolve. For us, that starts with a professional standard that puts client interests ahead of our own, along with the respect, objectivity, and rigor that clients trust for major decisions and transformation programs. That remains at the core of what we call our distinctiveness. Clients know they are going to receive high-quality work from dedicated partners and senior partners who lead from the front.
Read MoreOne thing that is unique is that our partners and senior partners spend close to 80 percent of their time with teams and clients doing the work. We do not have a culture where one group reviews the work while another group performs it. If you are confirming the work, you are accountable to the client end to end. We also maintain a high degree of partner autonomy, along with a strong commitment to exceptional hiring and development.
At the same time, we are in a period where clients expect more than PowerPoint. They expect implemented solutions. Sometimes that means new processes, new ways of working, or new capabilities. Sometimes it means technology deliverables. That requires us to invest capital. Historically, we were a very capital-light and highly self-sufficient business. Today, we sometimes deliver solutions on our own through technology investments, and other times through partnerships within the broader ecosystem that help create the full client outcome and impact.
That is a very different environment. It means taking risk at a different level of complexity. We have also evolved our commercial model. About a third of our work today is outcome-based, where we are paid only when a CFO or client confirms that the agreed financial impact—or KPI proxies for that impact—has been fully achieved and validated.
That has been powerful because it reinforces that we are working toward client impact, not our own economics. But it also changes how teams think about the work. If you are engaged in a five-year transformation, for example, how do you know in year one or year two that you are on track? How do you promote people, allocate credit, and manage incentives in that environment? Those are important questions we continue to navigate.
We have also evolved our talent model. In the past, 99 percent of our consultants came from similar backgrounds and were expected to succeed with broadly similar skills. Today, we have technology experts, financial experts, and professionals with far more diverse backgrounds and capabilities. Our ability to bring all of them together on increasingly complex client challenges is what helps us remain distinctive. Client needs continue to rise, and staying ahead of that requires a different mix of capabilities and a different mix of incentives.
CFOTL: Is the billable hours model today a legacy? What’s changed?
Atsmon: We were early innovators as an industry, and many firms that came after McKinsey—whether as spin-offs or otherwise—have followed models we introduced going back to the 1940s. We originally started with the billable-hours approach used by law firms, but we later shifted to fixed rates tied to deliverables. That was a significant change.
Interestingly, it was also a very hotly debated change. I was recently sharing the story internally of a major debate that took place after the firm had been operating for 15 or 20 years. At the time, many of the partners opposed moving away from billable hours. In fact, almost all of the firm’s 17 or so partners were pushing back against the small group advocating for the new model.
In classic McKinsey fashion, the shift did not begin with full consensus. The first two partners who wanted to try it were simply given permission to do so. Over time, the rest of the partnership saw that it was better for clients and better for the firm, and the model spread.
For many decades after that, we operated on a project-based model where we would agree on a scope and timeframe—whether 10 weeks, 12 weeks, or another duration. Pricing was based on the engagement, but we were accountable for delivering the agreed outcomes within that budget, rather than billing by the hour.
What we have found over the last 20 years is that another major transition was needed. That shift has been toward outcome-based fees, where we may partner with clients around growth targets or efficiency goals and be compensated based on the results we help enable.
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