Companies have paid dearly for McKinsey’s human expertise for nearly a century, relying on the firm’s armies of consultants to synthesize complex information, crunch huge amounts of data and map out solutions to thorny business challenges.

But what happens now that AI can do much of that analysis in a matter of minutes—and deliver a slick PowerPoint deck to boot?

This week, Chip Cutter reports on how the biggest name in consulting is navigating the industry’s AI transition.

McKinsey is rapidly rewiring its business to adapt to the new technological landscape, changing how it works with clients and coordinates its employees.

Since fewer clients want to hire consulting firms for strategy advice alone, McKinsey is positioning itself as a partner, not adviser, to clients. About a quarter of its work today is outcomes-based, where it is paid partly on whether a project achieves certain results.

The shape of the firm is also changing: McKinsey has reduced its head count, partly to correct a pandemic hiring spree, and rolled out roughly 12,000 AI agents. These bots now assist consultants in building PowerPoint decks, taking notes and summing up interviews and research documents for clients.

Though the firm’s leaders are adamant McKinsey isn’t looking to reduce the size of its workforce because of AI, the size of teams is changing. Traditionally, a strategy project might have required a project leader, four consultants and a partner. Today, it might need a leader and two or three consultants—alongside a few AI agents and access to “deep research” capabilities.

More on this topic:

• 🎧 Are AI agents the future of business? Salesforce is betting $8 billion on it. (Listen)
• CEOs have started saying that AI will wipe out jobs. (Read)
• AI is wrecking an already fragile job market for college graduates. (Read)

🤔 Do you think consulting firms will become obsolete in the age of AI? Why or why not? Send me your thoughts, questions and predictions by hitting "reply" to this email.

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Last week, we reported on electronic shelf labels that are spreading at grocery chains. Readers shared their thoughts on dynamic pricing in the grocery aisle:

• “I’m in favor of surge pricing because, like on a ride-share or airplane, it creates a balance between supply and demand. That said, I think there should be somewhat of a limit in the number of times a price can be changed—hourly, maybe—so the price can’t be different from when I pick up an item until I get to a checkout.”—Dwight Johnson, Wisconsin
• “Ha! Anyone who believes dynamic grocery pricing in the U.S. will either benefit the consumer or be managed in the same way it has in Norway may also be interested in a bridge I heard is for sale in New York City…. One only needs to look at what certain airlines have already done with end-user specific pricing to get an idea of how a for-profit company will hoover up all the customer data they can find to squeeze every penny from prospective buyers.”—Bo Kopynec, North Carolina
• “If electronic pricing saves money, it should lower or retard growth in food prices. I’d be happy with that outcome. But the devil is in the details. If the prices change frequently then they can’t really advertise them in printed media—and even online ads would be useless without a disclaimer.”—Henry Fink, Minnesota
• “Dynamic pricing is coming to all industries. The current setup comes with a huge labor cost, as stated in the article. In an industry that works on thin margins, this kind of system should pay for itself. The next thing will be robots that stock the shelves and place new products with dealer prices specified.”—William Lechner, New York

(Responses have been condensed and edited.)

• Why the U.S. is racing to build a nuclear reactor on the moon. (Wired)
• A British politician made an AI clone of himself, and the outrage was real. (The Washington Post)
• A new French battlefield drone startup aims to raise $200 million. (Bloomberg)

Thanks for reading The Future of Everything. We cover the innovation and tech transforming the way we live, work and play. This newsletter was written by Conor Grant. Get in touch with us at future@wsj.com.

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