When McKinsey comes to town

https://www.lrb.co.uk/the-paper/v44/n24/laleh-khalili/in-clover

by mitchbob • 4 years ago

309 204 4 years ago

lrb.co.uk

mitchbob• 4 years ago

Archived: https://archive.ph/yC1YQ

neonate• 4 years ago

http://web.archive.org/web/20221205184247/https://www.lrb.co...

xrayarx• 4 years ago

The article starts with an Indian dynasty in South Africa is cought with the most brazen corruption. Around 10% of the annual gdp where stolen, with the help of mckinsey.

The rest is a history of consulting companies and their (criminal) endeavours

tequila_shot4• 4 years ago

I've been in one of the "Big 4" Consulting firms, and I can vouch for the article. As a "Senior" the Customer is charged 150-160$/hour and on top of that 25% for travel. The work that we did for these customers was lackluster. We used to come in as "experts", get all the technical work done from body shops in India and offshore. I was shocked to see that Customers just keep paying for these expensive services, and have no clue they are getting hoodwinked.

runnerup• 4 years ago

I've heard that curing internal myopia is a top priority for McKinsey this decade. Focus is on broadening gender/age/economic background and also broadening professional experience backgrounds.

They're hiring and developing a lot of top talent in "hard skills" (e.g., not MBA's) across different industries. From what I've been able to tell, it's paying off a lot with strategies that are grounded in reality and catching things that non-technical people would miss.

Really depends on the team you get assigned to your project though, as with any contracting/consultant situation.

SQueeeeeL• 4 years ago

Oh, glad McKinsey is going to ruin the psychology of a bunch of LGBTQ people with 80 hour work weeks while they union bust foreign nations. You aren't developing shit when every single person you hire leaves after 2 years, don't astroturf this garbage here.

What kind of weak political literacy do we have in America where agencies who literally aligned themselves with tyrannical oppressive dictators who behead rivals and loot the wealth of their own population get an ounce of room to "change" and represent "more diverse opinions". (Spoiler warning, it's one where everyone in power secretly agrees that profit triumphs over any other possible motivation)

harvey9• 4 years ago

In some cases the customer is just looking to put a veneer on a decision they already made. The big 4 name is what they're deliberately paying for.

yamtaddle3• 4 years ago

Another rôle they play is a kind of out-in-the-open corporate espionage. You pay them to come in and tell you what the "best practices" are in your industry (i.e. effective new things your competitors have been doing since the last time they came to visit you—and they'll learn some new ones from you to tell your competitors, next time)

kennend36• 4 years ago

AS someone who has both read the book and interacted with "big 4" names a few times this is going to be one of those "underrated" comments you sometimes see here.

At my previous place of employ they made some really terrible decisions which ended up costing a LOT of money later.

Their response was classic "the design was vetted by McKinsey"..

No.. you sent them what you wanted to do, they told you what you wanted/needed to hear and now you are deflecting your decisions.

tequila_shot4• 4 years ago

This. They are just a rubber stamp on some of the shitty decisions that management makes.

kneebonian• 4 years ago

This was one of those big eye opening moments for me. Consultants are hired mercenaries in coporate warfare, they don't care about you, they don't care about your company or the rivalries or the squabbaling. You pay them a bunch of money to come run roughshod over your enemies by producing reams of analysis and Powerpoints, to fling the arrows of jargon, and lay siege to your enemies employees by endlessly trapping them in meetings and then they depart.

Consultants are brought in to secure your flank, to provide air cover and to act as disposable pawns in interoffice combat.

They are not brought in to solve problems, to find solutions, or because of their incredibly acumen. It's because they have no loyalty or love but money.

KineticLensman• 4 years ago

I have worked as a consultant, but not for the one of the big 4. We understood that we were often being used to develop an 'independent' perspective that would support a decision that had essentially already been made or disprove a rival decision.

We also were fully aware of the old joke that a consultant is someone who borrows your watch and then tells you the time. We sometimes deployed this ourselves with customers, and extended it to say that unlike our rivals, we would actually point out how late you were and how to get back on track.

[Edit] We sometimes found ourselves supporting one of the big 4 companies (as domain experts). We were often amazed by the quality of the A team that they would deploy to win the work, compared with the B or C team that would then actually execute it (often bright but junior staff).

AlexandrB• 4 years ago

I had an Econ prof who described his consulting business as:

1. Coming into the company and gathering information from the low-level staff.

2. Presenting the information to management.

3. Collecting $1000/hr or more for his trouble.

Basically information washing to get execs to accept information that they would normally ignore. I wonder how much of this kind of thing goes on in industry.

Loic• 4 years ago

In fact they have a name for it internally: "Cover my ass assignment".

Just come to provide the results the boss wants to have for him to rubber stamp and justify the cost cutting.

mbesto2• 4 years ago

Furthermore, they're trying to convince someone else (usually a boss) of a theory/idea/strategy that they might have but don't have the resources/rapport/etc. to demonstrate it's effectiveness.

kriro• 4 years ago

That's exactly my experience in Europe. We want to fire 50 people/close a factory/whatever without blowback...let's hire McK to tell us to do exactly that.

I've also had some experience working for a smallish company with very big clients and they sometimes insisted on having an IT-Consulting company like Capgemini as a middleman. That's the biggest nightmare because they were always a net-negative from my POV...integrating them was just extra work and they provided no value except for their brand name to make the client feel at ease.

game_the0ry• 4 years ago

This has been my experience when the company I work for engages with an external consultant. Managers look for validation from an external source so that:

- when things go well, they can take the credit, or

- when things go bad, they can blame the consulting company.

Grubby business if you ask me.

7thaccount• 4 years ago

This. They also sometimes just interview employees and write a report about what they heard. That should be easy for the company to do lol.

bane• 4 years ago

I'd say companies like this are a scam, but they're only half a scam -- half the customers know exactly what they're getting.

The other half haven't figured it out and think they're getting top-tier stuff and end up with life destroying garbage like your employee performance system or a citywide trash crisis? [1]

Do you need to spend millions to justify an inevitable decision but blame the hired guns for it? Hire McKinsey.

Do you need to spend millions for severely overworked junior grade consultants and offshored "experts" to provide you with objectively terrible advice and create an opioid epidemic? Also hire McKinsey! [2]

1 - https://www.nytimes.com/2022/10/07/nyregion/new-york-city-tr... 2 - https://www.mckinsey.com/about-us/opioidfacts

mayankkaizen2• 4 years ago

I have worked in a third-grade infrastructure company in India. Everyone in top management (including founder) was corrupt. Their business practices were always about bribing, siphoning off investors money, inflating assets, money laundering and so on. When it was trying to go public, it hired one of 'big 4' to do the auditing and other due diligence. Once it went public, that agency was fired (2 years after going public). With in 6 years, that company became bankrupt.

Everyone knew that one of 'big 4' was hired to make the prospects of going public legit and credible. That consulting firm made things look right in exchange of big bucks.

darkstar_16• 4 years ago

This. Big 4 consultants are also needed by law or by convention in a lot of places for auditing and such tasks. If it's for actual consultancy services, the decision has already been made. Having a Big 4 company "sign" and provide authority on a decision a manager has already made, just makes it an easier sell to his/her higher ups.

Foobar85682• 4 years ago

Only $150/hour as a Senior in a big4?

makestuff3• 4 years ago

Since "senior" is in quotes, I am guessing you probably come out of undergrad with a senior title or get it after 1-2 years.

markhlady• 4 years ago

Big 4 not really comparable to McKinsey. Completely different game and set of projects clients ask you to work on.

hef198982• 4 years ago

Plus, the Big 4 are, by law (SOX), forbidden from doing consulting work. Also, there are for, because public companies need someone to audit the books and someone to help them to prepare those books. Companies have to change auditors and the ones helping to prepare the books ever so often, and you cannot just stick with the same two simply switching chairs. All of that, of course, to avoid another Enron like disaster. Hence a pool of four big accounting firms most public companies, regardless if the fall under SOX or not, cycle through.

raincom• 4 years ago

BIG 4 = EY, Deloitte, KPMG, PwC?

Top tier consulting firms are: McKinsey, BCG, Bain

tequila_shot4• 4 years ago

the BIG 4 I'm referring to are Accenture, McKinsey, BCG and Bain.

curiousllama5• 4 years ago

This is the correct answer, btw. Accenture isn't usually included in Big 3 or Big 4. It's its own deal, but more comparable to Big 4 than Big 3

rr888• 4 years ago

Yes https://en.wikipedia.org/wiki/Big_Four_accounting_firms

xiaosun• 4 years ago

Every legit consultant knows things only come in threes.

kyawzazaw• 4 years ago

Just saw a hrly rate in my country Myanmar where they are charging an Associate rate as USD180/hr in 2022.

oneoff7864• 4 years ago

I’m mckinsey. All I’ll care to say here is that we don’t outsource any technical work

vanviegen• 4 years ago

Do you take on any technical work at all?

indigodaddy• 4 years ago

Same with Deloitte? Don’t they have a ton of directly employed engineers?

blue039• 4 years ago

I have worked with the big 4, and also been on the receiving end of their "work". I can vouch for this comment personally. I've never seen less effort put into something worth so much money. Reams and reams of documents, jargon, and other bullshit and some cheap, obviously outsourced, incredibly shitty, "wireframe" sold as an MVP of a product.

I would be impressed by them if I wasn't so disgusted.

exclusiv3• 4 years ago

I've also seen some of these expensive "strategic" documents. And they looked like they were written by a high schooler (not a top of the class student either).

jasmer4• 4 years ago

So that's actually not 'hoodwinked'.

Paying $1B for a site that should cost $50M is 'hoodwinked'.

$150/hr is really not that much money, depending on the importance of the project, and having devs from India is fine.

Almost the entirety of the question in any given situation is 'Did it work out?'

Because if it did, it was worth it.

Companies are not interested in making 'great products' like a startup would, for some secondary thing.

Mostly, it's like construction: they need something built. That works. Not some kind of innovative thing.

They don't have a year to find 'top talent' and go through interesting architectures, or dynamic processes. They wouldn't even know how to do that.

You might be very well downplaying your input: if you are competent, know what you are doing, show up, and can solve the problem, you're probably worth every penny and much more. Now maybe that is or is not the case! Or maybe 'it depends' or maybe, some projects kind of necessarily require 'proper engineering'.

Now, all of what I just said would apply to normal circumstances. In Africa, it's so complicated. McKinsey is also very different office by office. Corruption is harder than we understand, because when it's a random event we can say 'oh, corrupt!' - but when it's normal trade practice aka 5% kickback for the buyer, well, it takes on a different characteristic.

the_cat_kittles• 4 years ago

your comment just establishes a spectrum- on one extreme, you have what is essentially a helpful project manager, on the other extreme you have a worse than useless middle man. I think the point might be that Mckinsey is more towards the bad extreme than people think.

paulcole• 4 years ago

Paying $1B for a site that should cost $50M is 'hoodwinked'.

That’s not being hoodwinked either. If you’re happy to pay $1B for something and get that thing, then that’s your fault for not shopping around for a better deal.

Bernie Madoff and SBF hoodwinked people. Somebody charging a premium for their services and getting willing customers isn’t.

fudged71• 4 years ago

How common is outsourcing tasks in the big 4? I thought it was just things like powerpoint slide layout

wheelinsupial3• 4 years ago

In my experience, Accenture is the big body shop. I've worked at companies that outsource tech strategy, new system requirements / scoping, delivery and development, and post deployment support and maintenance 100% to Accenture.

There are regional hubs they have (I've worked with Philippines and India and heard of Eastern Europe) for the support and maintenance.

There are some back office financial shared services (e.g., AP / AR / cutting POs) that they also support. I wouldn't be surprised if there was more.

Accenture can give you everything from the PowerPoint slides up to the people that will be seconded or placed in your organization as contingent workers / contractors.

yamtaddle3• 4 years ago

That's Big 3 like McKinsey, and yes, notes sent to India, India turns them into powerpoints, team on the engagement has the powerpoints by the next morning (apparently execs don't even read something that's not in a powerpoint—they'll do this with stuff that's only ever going to be emailed, never presented)

sharadov• 4 years ago

Used to work as a sub-contractor for Deloitte, all the work was done by us, the Deloitte folk would spend 12 hrs a day at work - looking super busy, attending meetings, schmoozing with the client, go for lunches and dinners and building reports and spreadsheets. They hired impressionable good looking young people who were good at selling, period.

rr808• 4 years ago

Lol good timing, Deloitte is trending https://twitter.com/BornAKang/status/1599148855454420992

carabiner2• 4 years ago

You were Accenture. Just say it.

wolverine876• 4 years ago

What year is that? $150-160/hr is the cost of a local small business IT consultant.

m463• 4 years ago

I kind of wonder if that isn't how much of the business world works?

What if you have a grocery store that makes $50,000 an hour? and you need to update the payroll software to deal with the latest tax law changes.

in a situation like that, does $150/hr matter?

newsclues• 4 years ago

When I think of McKinsey, I think of organized crime.

It seems like gangsters in suits.

cjbgkagh2• 4 years ago

There is quite a lot of overlap. For a while I was neighbors with bottom tier Russian mafia members working at McKinsey at do nothing jobs. They would tell me about their yearly Mea-Culpa whenever McKinsey was caught in yet another scandal.

Edit: corrected spelling, thanks

SargeDebian3• 4 years ago

Baker McKenzie is a law firm, that’s not the same company.

hackandthink• 4 years ago

Best friends with Purdue/Sackler.

Wikipedia:

"In February 2021, McKinsey paid $600 million to settle investigations into its role in promoting sales of OxyContin and fueling the greater opioid epidemic"

CrypticShift• 4 years ago

At least, this book will make amazon books search results for "McKinsey" a little more balanced…

Does anybody know how much McKinsey services are used in the C-suite around silicon valley (Or big tech in general) ?

throwaway20221213• 4 years ago

Former McKinsey employee here. They have a large office in Silicon Valley and serve most of the big tech companies (largely on boring non-tech topics).

occasionaldev• 4 years ago

This is only one part of it, but pay grades for government employees in the US are far lower than private industry when it comes to things like software developers. Just look at the GS rates [1], why would a good developer choose to make 50% or less of what they could make in the private sector? It'd be hard to convince the general public that we should be paying $100k+ for young devs working directly for the government, which is already more money than most senior level scheduled gov employees.

So we then have this whole convoluted contracting process where consultancies run by people who know how to write and win bids, but know nothing about software engineering, end up being hired to write software systems. All because the government can't really build highly skilled teams on their own.

Again, it's not all of the problem (not by a long shot), but it definitely contributes. Plus, the government employing people directly is socialism, but paying an incompetent consulting firm that plays middle-man to the system isn't.

[1] https://www.federalpay.org/gs/2022

luckylion2• 4 years ago

They'd make 50% or less of what they make in the private sector for the difference in job security and workload.

miguelazo2• 4 years ago

Partly because private sector tech salaries were artificially inflated to an insane degree by cheap money that flooded VC coffers.

demuxxed• 4 years ago

The money is real at some companies. We’re less than 100 people with more than 200m in yearly revenue. Market positioning is worth more than engineering excellence, but paying top salaries to reduce the execution risk is worth it.

I would expect the leetcoding and system design interviews across the industry to get much tougher and juniors to get squeezed out before top salaries drop.

Software has very high leverage in the right markets. It’s comparable to pro euro football where the teams that already have eyeballs will pay huge sums for top players in order to keep the eyeballs. Software salaries will only become more bimodal as VC money tightens.

alistairSH• 4 years ago

Make sure to drill into the pay scales by location... suburban DC gets a 30% bump. SV/Bay Area is >40% bump over base GS scale.

Why would somebody take the .gov job? Same reason anybody would take a .gov job... Benefits (though that gap has closed).

Work/life balance.

Job security.

Interesting work (agency-dependent).

Inertia + location (many of my peers who are bureaucrats come from families of bureaucrats and are DC natives)

Anyways, the government can't hire developers not because the salary is too low but because the electorate has decided the government should be "small" which forces outsourcing to the big name consulting/contracting shops.

acdha2• 4 years ago

the government can't hire developers not because the salary is too low but because the electorate has decided the government should be "small" which forces outsourcing to the big name consulting/contracting shops.

I wouldn’t say “not” because those are really the same problem from different angles. Keeping salaries low encourages attrition, not adding or backfilling positions makes it permanent. The best part is that this process reliably produces expensive failures to provide the pretext for repeating it.

Spooky23• 4 years ago

I’ve worked for .gov, but not Federal. The appeal is:

- Sense of purpose. You’re working to perform some function with integrity and to the best of your ability. There’s no profit driven pressure.

- Career / Long Game. Typically you earn 50th percentile salary, but if you stay that doesn’t tell the story. In some places benefits are 50% of salary. That usually means best in class health benefits and often a defined benefit pension.

- PTO - the place where I was at I received 7 weeks of vacation and 3 weeks of sick time annually.

Government is a good place to start. McKinsey is a good landing zone for apprentice MBA types.

mck_throwaway2• 4 years ago

I worked at McKinsey for three years. Here are a few thoughts. Sorry it's so long, didn't have time to make it more concise.

- I'd guess >95% of people never run into anything morally questionable while there. My teams always tried to do their best and I never felt like we were helping achieve any sort of nefarious goal. Most of the time I think we were worth the money for our clients.

- I do think the culture makes it more likely for individuals to take risks that may end up getting them in trouble. There's a lot of pressure to succeed, and a lot of money (and prestige) at stake. It's easy to imagine individuals cracking under that pressure and making bad choices, and that the rest of the team might fall in line so that they can also succeed. I'd put most of the blame here on McKinsey and some on the individuals involved - maybe 70/30.

- I'd guess most other consultancies have bodies hidden somewhere that are similar to McKinsey's (questionable contracts, outright fraud, botched projects, moral failures, etc).

- The closest I got to something morally questionable was a project where we had a huge contract to help the client cut costs, including firing people. You'd think our budget would have been on the chopping block too, but I guess not. Obviously this left a bad taste in most of our mouths. I feel we tried to do our best, but I doubt we were worth our fees in that instance. The company eventually merged with another, so even more people were fired in the end.

- The 'internal firewalls' are real - if you've been on a project for one big company in an industry, they won't let you work for a project with another one. There were internal experts we couldn't talk to because of concerns in this area. I'm sure this hasn't been 100% true 100% of the time, but generally I think this is a real concern for McK (if they couldn't guarantee this they'd lose client trust) so they make a real effort to prevent it.

- While I was there, projects with the tobacco companies were famous for having better work/life balance than almost any other project. They were hard to staff because so many junior consultants refused on ethical grounds, so I guess this was a carrot?

- I can mostly only speak to the US. I heard some jawdropping stories about how reliant the Saudi government is on McKinsey and other consultants to get almost any work done, even the most basic things. But that's all secondhand gossip. In general, the sense I get is that the standard in the US offices doesn't carry over to every global location, but I don't have the personal experience to say that for sure.

throwaway20221213• 4 years ago

I also worked at McKinsey. 5 years, with some of that time in the Johannesburg office. Agree with the above and don't have much to add. But AMA.

makestuff3• 4 years ago

What is the coolest project you worked on?

Will the big3 be around in 15-20 years or is it a dying industry with many of the best people leaving for exist opps in tech/finance/etc.

oscare• 4 years ago

Would it be fair to say that consulting firms could get the top (good) people in a developed country, but also is more likely to hire the smartest but corrupt people in a corrupt country? As that is the name of the game in those countries.

And the HQ not caring as much because those other countries bring in the 'franchise fee'. At the risk of a story like this.

mck_throwaway2• 4 years ago

In my experience McKinsey (like most consultancies) does almost all its hiring directly out of college or grad school. Hiring outside those pipelines was becoming a little more common when I left, but I'd imagine it's still probably <10% of the total.

I don't think there'd be much hiring of already 'corrupt' people, but it's pretty reasonable that when you have a very competitive and prestigious position, on average, you might find that more 'cutthroat' people are more willing to invest time and energy to getting hired.

oneoff7864• 4 years ago

The folks that work on tobacco clients need to go to tobacco clients. They smoke ALL the time there. I’ve heard it’s a terrible thing to get staffed on unless you’re a big smoker yourself.

throwaway161718• 4 years ago

I guess you won't really come across all the cynical stuff till you become an engagement manager.

photochemsyn2• 4 years ago

Very reminiscent of Chas T Main (bought by Parsons in 1985) as described in John Perkin's "Confessions of an Economic Hitman".

https://en.wikipedia.org/wiki/Chas._T._Main

The chapter in Perkin's book on the post-oil shock economic entanglements with Saudi Arabia is very relevant. It's fundamentally about the establishment of the petrodollar recycling scheme that was intended to solve the balance-of-payments crisis - i.e. dollars flowing into Gulf Arab dictatorships represented a current account imbalance on the US/Europe side, which in turned required a capital account imbalance on the Saudi side. Thus, buying Saudi oil with dollars required the Saudis to invest those dollars back into the USA and Europe, and in exchange for agreeing to this scheme the House of Saud got military protection, engineering assitance, etc., with outfits like Chas T Main and McKinsey and Vinnell serving as the glue that held it all together (along with extensive arms sales). While many have forgotten, the Shah of Iran was also a key player in that system before the Islamic Revolution.

Notably, the vast majority of Saudi citizens live in near-Third World conditions, particularly the Shias in the east and the tribal groups in the south, not that this gets widely reported, while the 15,000+ members of the House of Saud and their hangers-on (the bin Ladens, bin Mahfouzes, etc.) collect the vast majority of the wealth that isn't re-invested back into the USA.

Understanding current world events really requires an understanding of this balance-of-payments dynamic, because that was essentially the same deal that was offered to Russia in the 1990s under Yeltsin, via the same entities, and which Putin eventually rejected after 2003 in favor of using Russian oil money to rebuild the Russian military and generally increase the general standard of living inside Russia. Prior to that, Putin was regularly praised in the US media (much like Syria's Assad before his 2009 deals with Iran and Russia).

This also accounts for the differential treatment of various authoritarian government leaders by the USA and its economic partners like Britain, i.e. Saudi Arabia is not treated like Iran or Russia. For example, if Putin had taken that deal, then today's war in Ukraine would likely be called 'a fight against neo-Nazi terrorist elements' in corporate media, much as the Saudi assault on Yemen is protrayed as a struggle against Al Qaeda and so on.

This is certainly no defense of Putin, who has held onto power for decades now - but there aren't really any 'good guys' in this storyline, the 'democratic norms and humanitarian values' claims are all nonsense. It's more like how the New York City mafia organizations or the Mexican drug cartels fought each other over access to territory and profits than anything else.

selimthegrim• 4 years ago

Putin canned Serdyukov pretty quickly, so you can scratch the 'rebuild Russian military" off the list

hammock• 4 years ago

What are your thoughts on Biden's efforts to force a move away from oil for much of the US energy needs.. will this/is this intended or related to an effort to eliminate or replace the petrodollar system in any way?

photochemsyn2• 4 years ago

That looks more like political posturing, nothing more. Consider that 99% of US vehicles are gasoline/diesel powered, there's no move to end the fracking revolution, US oil & gas production levels are not projected to decline over the next decade by any credible analysts, US export terminals for LNG are being expanded, and so on.

Even a relatively modest proposal like a 3% per year replacement of fossil fuel production with renewable production is not at all likely, I mean look at EIA projections [USA] through 2023:

"The EIA believes that oil production will hit 11.9 million barrels a day (b/d) by the end of the year. Next year, the agency expects the 2019 record of 12.3 million b/d to be shattered, with production hitting an average of 12.7 million b/d."

https://en.as.com/latest_news/energy-outlook-shows-increased...

rippercushions• 4 years ago

Notably, the vast majority of Saudi citizens live in near-Third World conditions, particularly the Shias in the east and the tribal groups in the south, not that this gets widely reported

This is... just not true. There absolutely is poverty in KSA, and the wealth of the elite is obscene, but the average Saudi citizen lives a pretty cushy life of sinecure jobs and vast subsidies (gas is cheaper than water). The official median income is around US$50k, and while you probably shouldn't trust that number, I think we can safely say it's not more than an order of magnitude off.

The people really living in Third World conditions in Saudi are the vast armies of migrant workers, who make up something like 80% of the labor force and do all the literal heavy lifting at construction sites, service industry jobs, domestic work, etc.

mjfl• 4 years ago

People who are paid to have credentials that are deffered to in courts of law.

richardwhiuk• 4 years ago

Interesting to know to what extent McKinsey is liable under the Foreign Corrupt Practices Act here....

Havoc• 4 years ago

They basically played the role of willing useful idiot. A side story really.

The real story here is that it took a decade+ to arrest (not convict...arrest) the Guptas and the vast majority of the money is likely never to be recovered (disappeared into middle east). i.e. Functionally this was a successful heist of multi-generational wealth.

Same story on government enablers size - Zuma clan is now wealthy.

The will to go after players like this is simply not there - in SA or internationally. Good business breaking countries it seems

stephc_int13• 4 years ago

In case some you are not aware; McKinsey and similar companies have been progressively replacing public servants in government offices and administrations all over the world, for decades.

There was a relatively big scandal in France before the last election, as they crossed some lines, but this is far from over.

mayankkaizen2• 4 years ago

From the article -

The revolving door between McKinsey, regulators, policymakers and businesses is a consistent feature of the consulting businesses.

malthaus• 4 years ago

Every single consulting article brings out comments who make the same mistake:

There's a difference between strategy consulting (e.g. McKinsey, BCG, Bain) and consultants that do large implementation projects (e.g. Accenture).

Yes, it's not so black and white these days as both do a bit of both but the reasons they are hired are very different:

Strategy: best practices, ass-covering, politics. Smaller teams, shorter timeframe, C-level. Think interviews & powerpoint slides.

Implementation: body leasing, offloading large projects. Larger teams, IT-heavy, longer timeframes. Actual coding / documentation, etc.

And no, your experience working on a 300-people core banking project at Accenture doesn't translate to a 5-people McKinsey project.

And while both types are "expensive", they are needed in the corporate world. Because work in that environment is more than just writing code in a text editor, it's mostly politics at the top.

i_am_proteus• 4 years ago

Would you describe examples of negative impacts to businesses' performance from not hiring these firms?

curiousllama5• 4 years ago

It’s not uncommon for firms that need to do big layoffs to not hire consulting firms, and then screw up the layoffs (multiple rounds, bad severance, etc.)

There’s a certain class of work that is (1) really critical to get right the first time and (2) only done once a decade. That’s the type of stuff where it’s good to hire an outside firm - the outside guys go from company to company, doing this one rare thing over and over.

Other examples might include M&A (eg divestitures), offshoring (eg standing up a factory in Mexico), or new market entry (eg launching a product in a brand new country).

HDThoreaun• 4 years ago

Most strategy consultants are saying what management already knows but needs to confirm in case things go bad in order to cover their ass. Without the consultants they maybe wouldn’t make the “difficult” choice of laying people off or paying pharmacies to get people addicted to opiates and therefore the business would suffer.

mitt_romney_123• 4 years ago

The big problem with talking about consulting is that there are so many different people doing so many different things that are all called just "consulting". Everyone has a different idea of what consulting is since they worked with different types of consultants but it all just gets called "consulting". Even in this article they talk about McKinsey's strategy work and their tech work basically interchangeably, even though the two are very different things.

brd529• 4 years ago

A lot of the comments make this mistake, but the article clearly talks about both. It snarkily says the Ivy League graduates end up doing strategy and everyone else ends up doing software implementations.

charles_f3• 4 years ago

There is truth to that, because strategy is what sounds the most shiny, brings the most money, and is the most prestigious... Even when it's in fact either pure garbage or outright devilness.

I draw a parallel with some Asian cultures where being tanned is a sign that you're working in the field, so it's better to avoid the sun and stay as white as can be. When I was at accenture, there was a huge culture to "leave code" as soon as you could. Code is for people who do. Mere grunts. You gotta be a decider, a boss. The only career path (I think that's not true anymore) was management track. They even had a subsidiary called accenture technology services to recruit from universities with less reputation, but "keep the blood pure". It does make sense when you're in it, but golly am I happy I left that world.

charles_f3• 4 years ago

Thanks for saying that. I worked on a bunch of large transit fare-card implementation projects for accenture, over a decade ago. Having a large company, with people having some know how from previous implementations, and the ability to handle a project that was far, far beyond the capacity of the transit operators cautioning them, made TOTAL SENSE. We effectively shipped stuff, in a very political environment (as in, with actual politicians trying to dictate requirements so the schedule fits their re-elections and stuff like that), through lots of integration pains and issues with large scale hardware deployments. I'm pretty proud of those projects, I'm sure some of the code I wrote back then is still in prod. I never worked as a bodyshop, or sold useless erp replacement projects. The outcome was a working system that millions of users can use. It's palpable. It's concrete. It's useful.

It pains me that it's always seen as an evil, because sometimes it is the best option.

AaronFriel• 4 years ago

Was the use of your team necessary due to the political and regulatory capture, however?

I don't know what you did, and I don't want to besmirch it. So let's take a recent "successful" project: OMNY, the new transit fare system in NYC.

That system cost the New York Metropolitan Transit Authority over three quarters of a billion dollars. $772,000,000.

To put that in comparison, the point of sale payment processor Square raised 170 million fewer dollars over from seed to series E and does fifty times as much payment volume.

There is a staggering amount of inefficiency in these projects, and I suspect it's because of capture.

Fiahil• 4 years ago

Note that BCG also have BCG X (recent fusion of Gamma, Digital Venture and Platinion), a Data Science and Software arm that could be compared with Palantir in size and breath and depth, but are not working with the CIA.

So, they also do some -high end- implementation work as well :)

jmtucu• 4 years ago

I had the chance to work after this boys were hired by the client, they are good in consulting and strategy but at tech level they are really bad and always delegated to teams in India for pennies.

bambax• 4 years ago

The article doesn't mention it, but McKinsey in France is currently under judicial inquiries for at least two reasons:

- They worked on the presidential campaigns of Macron in 2017 and 2022, and were awarded huge government contracts with little or no bidding afterwards

- They didn't pay any taxes in France since 2011, sending money to the mothership instead to reduce taxable profits to zero; and their managing partner, who is accused of having lied to parliament about it, resigned in the wake of that discovery.

Here's one article (of many), in French:

https://www.leparisien.fr/faits-divers/affaire-mckinsey-une-...

(Disable javascript to bypass the firewall).

So it's not just South Africa, UK and the US; it really is everywhere.

ubermonkey• 4 years ago

I'm of the age where, as a fresh grad, I was kind of impressed by the Big Consultancies in general and by McKinsey in particular.

Few of my viewpoints have changed more drastically in the last 30 years. Now, when I see someone has one of those firms on their resume or business card, I just assume they're not someone I want to hire or work with. Or even have a beer with.

neilv• 4 years ago

Both of the ex-McKinsey people I've worked with have been decent.

whatever1• 4 years ago

Nobody trusts consulting companies, but they are like a notary service. The c suite wants a change, the big 4 will create a deck that supports that with their seal of approval. Then the c-execs can present it to the board and move on with their original plan.

aeschinder• 4 years ago

Previous company of mine wanted to make drastic reorganization changes and so they hired McKinsey to simply echo what they already wanted to happen. This is to provide cover for upper management (a.k.a. the "wooden desks") who can then use the official McKinsey report as a shield against any backlash. They can simply point at the report and shrug their shoulders in apparent helplessness in the face of the recommendations of the "experts". It was quite the Office Space moment.

diogenescynic• 4 years ago

When I worked at PayPal, the Assistant Treasurer’s husband worked at Deloitte and then the Assistant Treasurer greatly expanded the number of consultants used by Deloitte (from the same team as her husband and many of them actually reported to her husband). They were usually working on unaccountable projects and billing us for work we did ourselves. Many of the consultants were fresh college grads with no relevant experience. Hilariously, one lived in Berkeley but would get a hotel in San Jose during the week to avoid commuting. I was always flabbergasted no one cared about how the budget was being spent. The people pushing consultant budgets are usually the worst sort of managers and doing it because of some ulterior motive in my opinion.

etempleton• 4 years ago

You hire agencies or consultants for 1 of 3 reasons.

1. You have no idea what you are doing. You like shiny things and the consultants are shiny, fancy, and use big words.

2. You know what you are doing and realize you have a gap in your org and it will take too long to fix it so you need outside help in the short term. This is the only good reason to hire an agency or consultant.

3. You are a bad actor. Work is a political game to you that you are trying to win. Fuck the organization. Fuck your colleagues. A consulting firm can be both a shield and a hammer. It provides plausible deniability for failure, it gives you a trump card in arguments with colleagues and it buries everyone in fancy presentations, reports, and jargon that no human has the time to sit down and parse.

curiousllama5• 4 years ago

Everyone is saying that ChatGPT is going to make homework & internet forums irrelevant. How about consultants? They're just putting words on a page anyway - you think that can't be automated?

Honestly, I think I might try...

yawnxyz• 4 years ago

Consultants make money by being a brand. The work spat out by ChatGPT could be identical, but you can't charge as much without the Big 4 brand.

It's the same for uni — you probably get similar from a public school vs. Harvard, but Harvard gets you the prestige.

curiousllama5• 4 years ago

Oh, I wouldn’t replace consulting companies. I’d sell it to them.

You think they don’t know they’re making sh*t up anyway?

1vuio0pswjnm7• 4 years ago

"The Department of Homeland Security and the Pentagon paid all three firms lavishly for `engaging human- centred design', developing a `culture of continuous improvement' and other meaningless bits of management-speak festooned with cryptic acronyms."

As a younger person, I recall being informed that a culture of continuous improvement originated in the manufacturing centres of Japan after WWII. They told us the term for it was "kaizen". I do not know if any of that was true, but it sounded sensible then and I always carried the idea with me.

Having used it in sports coaching and having seen the results on the playing field, I do not consider a "culture of continuous improvement" to be meaningless management-speak. Assuming one can get a team to buy-in, it works.

IMHO, the alternative to continuously trying to improve, complacency, mediocrity, laziness, or whatever we choose to call it, is nothing to celebrate.

Please note. Not intending to defend McKinsey here or clients who spend taxapayer revenue on vacuous consulting. But as a general principle, I would defend the idea of "creating a culture of continuous improvement". Same goes for the oft-used term "growth mindset". The terminology might sound silly, but the principles are sound, not to mention timeless, IMHO.

Maybe I misread the sentence in the context of the article. If so, pay no mind.

(I did peruse the book a while back and discussed it with a friend who used to work for a McKinsey competitor.)

SoftTalker2• 4 years ago

I think the difference is one of introducing all the jargon and acronyms and vocabulary for something like "culture of continuous improvement" vs. actually implementing it.

It's easy to talk. It's easy to convice yourself that talking and ceremony == doing. But it's the doing that matters.

waylandsmithers• 4 years ago

As a former (briefly, due to an acqui-hire) consultant at one of the big companies mentioned, this was a really interesting read.

I never thought anything the company did was morally wrong per se, it was just a different business model that I didn't really want to be a part of. The role of most people in the U.S. was landing the big deal, talking the client down when things went wrong, and then winning an extension for additional services at the end. Actual implementation was just a cost to be minimized and handled somewhere at one of the company's offshore sites. Somehow it all worked out (usually) even for some truly massive projects.

mathattack• 4 years ago

My observation is that clients hire BigName consultants for one of two reasons:

1 - They need external validation/blame.

2 - They don’t trust their own people to execute.

In reality I’ve found it’s more efficient to just hire the ex-consultants and not pay the markup.

college_physics• 4 years ago

the book that would factually describe the bizarro world of large corporations and the fungal ecosystems that have been structured around them has not been written yet and it won't be written for a while.

it would have chapters laying out the Kafkaesque, extractive bureaucracy, the amoral shenanigans concocted between lawyers, accountants and consultant suits in the remote top floors of tall glass buildings, the endless financial engineering, the non-stop cut-and-paste acquisitions and disposals, the vacuity of management fads and the zero signal-to-noise ratio of inane powerpoints regurgitating platitudes (the high-art of saying nothing because reality is too gross to discuss).

somehow we are supposed to believe that this is the pinnacle of successful private enterprise. the natural evolution of "best practice" as articulated in posh business schools

in fact historians of the future, with the independence and clarity granted by the passage of time would be very brutal about the type of social pathology this is.

mattewong• 4 years ago

One gets the sense that [the authors] think the consultants they write about are rotten apples, but [they are wrong]

OK I paraphrased the rest of the sentence into the last 3 words but if you bothered to read to the end, you see that the reviewer completely lost her way. Purporting to review a book, she concluded by the end that its authors are misguided because the real culprit is not the consultants, but rather, every pursuit of efficiency, including all "software development".

software development [is] in fact focused on enabling capitalists to enrich themselves further without the inconvenient interference of workers, taxpayers or regulation

badrabbit• 4 years ago

Why can't I reply to the top posts with archive links? Very strange.

specialist• 4 years ago

If one was to scratch the surface of any given inept, wasteful government entity, I wager 7 delicious jelly-filled donuts they'd find the culprit is in fact some well-connected consultants or vendor.

All appropriations, budgets, bids, contracts, revenue, finances, and so forth, must be public by default.

Sunshine is the best disinfectant.

fijiaarone• 4 years ago

Jelly filled donuts are never delicious.

charles_f3• 4 years ago

Let's also not forget that one time when McKinsey advised their pharma customers to take advantage of the opioid crisis and got caught red-handed(1). It gets one to wonder, how many times did they do something similarly despicable and were not caught.

1: random article there, tons more available through google https://www.huffpost.com/entry/mckinsey-to-pay-for-role-in-o...

FabHK• 4 years ago

Is there anything new?

I remember more or less the same criticisms two decades ago:

- Lewis Pinault, Consulting Demons: Inside the Unscrupulous World of Global Corporate Consulting, 2001

- Martin Kihn, House of Lies: How Management Consultants Steal Your Watch and Then Tell You the Time, 2005

https://www.amazon.com/Consulting-Demons-Inside-Unscrupulous...

https://www.amazon.com/gp/aw/d/0446576565/

TrackerFF• 4 years ago

Most gov. work that MBB (McKinsey, Bain, Boston Consulting) works on is pretty boring stuff. It's mostly just lazy politicians offloading their work onto these firms, and unfortunately that kind of culture has been allowed to fester in far too many countries.

Fortunately, it seems like there's a growing focusing on consultancy use and frivolous spending. Hopefully lazy politicians will get called out more on this kind of stuff...even though it might just be the oppositions calling each other out, but more transparency is always good.

When McKinsey comes to town

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