How McKinsey helps companies avoid responsibility
slate.com
slate.com
I spent some time with an Engagement Manager at McKinsey a few years ago, and he noted one function that they provide to executives is a seemingly neutral arbiter for tough decisions that may be politically untenable inside an organization. A CEO may know exactly what drastic steps they need to take, but will face internal executive strife, board pressure, or lack of buy-in from the business to execute. McKinsey provides credibility in cases of extreme actions (layoffs, re-orgs, shutting down business functions, etc), which is why the final deliverable of an engagement will often times simply state what was already known across the organization, but in a more packaged, compelling format. The same Engagement Manager then noted that if management doesn’t know exactly the “answer” is to the question they are asking, often times the McKinsey Partner supervising the case has seen the problem enough times to generally know the solution they will recommend out of the gate, as they specialize in industries. Their team arrives and then spends the cycles putting together justification for their upcoming recommendation.
It seemed to me similar to the old adage “nobody gets fired for buying IBM,” executives can lean on the good will of the McKinsey brand to justify and expedite certain tricky decisions. In many cases this is about providing confidence to move in a certain direction. This has two benefits: the broader organization can be told an outside firm was able to arrive at said battle plan - ideally increasing buy-in since the “experts” recommended it, and if things go awry the executive can point to the deliverable handed off by the consultants as the sanctioned playbook. So this “diffusing responsibility” is a feature, not a bug.
I’ve seen two solutions to some of the implicit problems described above, neither or which are cheap or easy: either A) the management team is solid enough and garnered enough goodwill that they can navigate such troubled waters (hard to do as the business scales) or B) An organization gets large enough they can fund their own internal management consulting team to tackle tough problems on a case by case basis - Samsung has used this across their business lines.
Another way I've heard this said is: "McKinsey doesn't typically sell you the plan for the hard change - they sell you the credibility to act on it."
Michael Pearson [1], a 23 year McKinsey veteran pharma CEO, claimed that R&D was "inefficient". It is just mind blowing that people see this and don't panic.
We are allowing ourselves to be ruled by mediocre spreadsheet jockeys.
[1] https://en.wikipedia.org/wiki/J._Michael_Pearson
[2] https://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckins...
R&D in the United States is dangerously neglected.
[1] https://www.mckinsey.com/industries/pharmaceuticals-and-medi...
You grow 5% per year by putting physicists, chemists, and engineers under one roof and letting them invent transistors. Society at large will thank you, and the builders/makers/hackers doing dope shit will thank you.
In a previous role as an industrial/process engineer, it wasn’t unheard of to productivity increases approaching 20% for relatively little capital investment
Many companies work on the same markets and sell the same products than others, but operate much more efficiently. Best practices are hard to share though, because companies cannot become full monopolies or engage in corporate espionage. McKinsey became then a discreet way of ensuring that your operating model was at least as good as the competitor, as they would share with you some fully anonymised benchmarks related to how competitors are operating.
It worked by the intermediary firm requesting things like data sheets from everyone which they were generally given because the firm was an ostensibly neutral analyst firm. Then when we needed competitive data we'd basically request the analyst firm to fax us over whatever they had in a particular product segment we had a subscription for.
The firm did some value-add work too but a lot of their business was basically acting as a conduit for companies to indirectly share information.
This comment is extremely real. I was hired as a software engineer for a Big 3 Management Consulting firm that was building out a development lab. Every single time I was brought in on a case, it was clear that the client and the consulting firm simply did not care about things like market research, product market fit, good engineering, or even solving things that were actual problems. The client had paid for us to solve a “problem” they had designed, and whether or not the “problem” was an actual problem worthy of spending millions on a solution, we were going to cut as many corners as possible to make it seem like we “solved” the “problem”
After 18 months, and an insane amount of harassment, degradation, and humiliation for insisting that our organization does the correct thing instead of continuing to swindle the clients, I left, having solved few client problems worth solving.
Consulting firms are full of con-men getting their friends at other companies in on a swindle together.
Successful projects breads success and great word of mouth which I've found is the best way to get high margin business - word of mouth deals are generally not being shopped, the customer comes to you and wants to hire you. At at a big management co, if you are bringing in the deals - you are the god.
I have however seen folks who are hired to do X, who then feel it's critical they disagree about Y, Z and Q. That is NO FUN for anyone because the right thing is sometimes to do what you were paid to do. For most managers when staff go on tangents it can be pretty tiring to focus them on actually delivering on even the imperfect solution that for whatever reason a client wants (not uncommon).
I’m glad the attacks have gone from consulting partners to random anonymous commenters on the internet though.
You may not have identified the product / market fit in terms of what McKinsey or others is actually selling. It really may not be the best product / best solution you are so intent on forcing them to sell. Sometimes it literally is political cover for mgmt to do something they (or sometimes even the board) WANTS to do. There is so much secondary level stuff here in terms of politics, job skilling or deskilling etc. I was part of a $10M deal (as the user unfortunately) which was SOO horrendous I became convinced it was just to spend out a govt budget line so a bunch of folks in govt got to go to some fancy training conferences. Truly ancient tech - you had to pin older OS / IE / Java versions to use the solution (no upgrades), but the buzzword bingo slides were amazing, and the agency using them liked them (at the top) so they were selling to the right audience (not actual users).
The big mgmt co's have been very successful in moving the middle class out (focus is on creating a bunch of generally super highly paid execs, and then a bunch of "do what we tell you" workers who are generally poorly paid). So that "do what we tell you" ethos is there (and has resulted in $8B+ annual revenue!). The idea though is to lower the skill level of workers. IT / automation is now going to play a bigger and bigger part of that - so lots of additional growth opportunities for these folks.
Middle class used to include the long tenured employees with experience and some levels of delegated decision making and corresponding pay (basically managers of various forms). Mailroom to boardroom days are over.
"Production workers did not escape the whirlwind, as companies—again with help from consultants— stripped them of their residual management functions and the benefits that these sustained."
You might find this interesting.
https://www.theatlantic.com/ideas/archive/2020/02/how-mckins...
If you really think you can outdo these consulting co's go for it, it's a ruthless horrible game (lots of nice folks burn out trying to play it).
Even people who started out by grabbing everything they can get learn to be selective with their clients later. This is just enlightened self-interest -- small companies can only work with a limited number of clients every year, and you want those projects to do well and the customers to be happy with you. This is simply because this is a word-of-mouth, relationships based industry. Every project that does not do well is an opportunity lost in building a healthy pipeline down the line.
This dynamic however goes out of the window as the company becomes successful and becomes brand-driven - customers reach out because of the aura of the company and not necessarily because a friend of a friend talked about how you once helped save their company from a cliff.
> The managers can say they’re just following the best available advice, and the consultants can say they’re just trying to help their clients boost profits and efficiency.
If you are a leader of an organization, you still have to own those decisions. After all, whose decision was it to follow that advice or hire those consultants?
It’s like when a leader blames their employees for a problem. Whose job is it to hire or train (or even fire) employees? Truman famously had a “the buck stops here” placard on his desk; did this leadership ideal get lost somewhere along the way?
It's obvious the company is making the call, it doesn't matter if it's through an intermediary.
Of course it's obvious, but with McKinsey called in, management can deflect blame and claim "it's the consultants that deemed your job being redundant, not us, we only called them in to cut costs"
I still don't buy this. The idea that this is some PR exercise seems lousy to me. It makes much more sense that it is a third party arbitration.
Layoffs are a huge distraction for a business, and so, don't happen except at need. When they do happen, they almost invariably involve losing employees tasked with things the company still needs to do. That leaves a bunch of short term business design problems of how to reassign those tasks to minimize disruption:
"We had to lose 30 salespeople, who will cover those sales territories?"
"If we got rid of dedicated agile coaches, would product managers have time to plan and run the scrum meeting? If we're able to keep 1, which teams should they work with?"
These types of questions can be analysis-heavy, are non recurring, and land on top of normal workloads (meaning executives may not have time to do them themselves), so it makes sense to hire a contractor to work on them.
> These types of questions can be analysis-heavy, are non recurring, and land on top of normal workloads (meaning executives may not have time to do them themselves), so it makes sense to hire a contractor to work on them.
No one actually does that though, otherwise the people being laid off would not be the poor sods at the bottom of the ladder but the countless layers of middle management.
C-level execs rarely give a single flying finger about the people their "decisions" affect, or how the company will fare long term, and that is the point. By the time the consequences of "dumb razor firing" become apparent and the problems untenable, the CEO who had decided on this has long moved on to another company who needed a "savior in need" and pocketed a nice fat bonus for a 20% reduction in payroll.
This phenomenon deserves attention all by itself. I’ve noticed in a lot of companies that at one relatively entry level tier but there is no real way up. Then there’s another group recruited out of university to do the leading.
Without trying to detract from current anti-racism movements that should absolutely have their say; prejudice is more nuanced than people mostly discuss. Pretty-person priviledge exists accross racial and gender spectrums. Especially in pathways to power. How brilliant does your brain have to be if you're from a poor family and you're afflicted with having "eyes a little too close together" before you'll manage any serious resources? It's a question worth pondering in an idle moment.
McKinsey (or whomever) is only motivated by money and are loyal to whomever they understand the principal to be. Given an idea or concept, you’ll have reasonably competent people running it down, backed by people who grind out tight PowerPoint stuff overnight.
It basically boiled down to “now that I’m a member of the engineering team, I’m expected to participate with the processes that are in place”. When I was a consultant, I was generally brought in to solve problems caused by those processes breaking down. Not sure why they couldn’t square that circle, but I went back to consulting 6 months later and retained them as a client, wherein they started taking my advice again and not throwing misguided projects at me.
I see this a lot with engineers who often resent having to participate in office politics. The result is that they come across as dogmatic, and unable to appreciate the concerns of other stakeholders, so people can be unwilling to trust their advice.
People will complain about bureaucracy all the time and then get mad when worthless middle managers are fired. They'll complain about job loss but then shop on Amazon and go to Wal-Mart. They'll complain about restaurants closing as they scoff at a $20 pizza and go to McDonald's instead.
All of these things are natural consequences of capitalism. We can blame individuals and CEOs all we want but everyone is in on this game and the only solution is a proper safety net so that we don't have to hide and feel bad anymore when we have to fire Sally for being woefully inadequate at her job and she doesn't have to worry about her healthcare if she loses it.
- professional advertising services (especially quant ad attribution) only exists to facilitate blame deflection in advertising choices, and does not exist to facilitate the use of scientific inquiry to measure the effect of ads and make rational choices based on the results.
- investment management services exist so trustees and board members can deflect blame or steal credit for unpredictable market performances, and they do not exist to pursue objective truth or scientific inquiry of portfolio optimization
- corporate consulting exists to provide external political capital to the weight of internal arguments. It exists to determine the correct political ally to align with, then to present that party’s mandates as if they were arrived at through dispassionate scientific inquiry. It does not exist to actually make objective, scientific recommendations that are independent of the prevailing political preferences at play in the company.
- outsourcing services exist to give credibility to economic benefits of outsourcing even if they are not actually demonstrated in the data. They do not exist to actually facilitate efficient reallocation of resources to an external party.
- recruiting and headhunting services do not exist to facilitate finding a good fit for the job or representing both a candidate and a company in a dispassionate way. They exist to represent the political leanings of the relevant party inside the company and backfill credibility and objectivity to what will obviously be a nepotistic, biased choice of candidate, or a candidate with a biased agenda in favor of the powerful party (rather than objectively assessing the situation once hired).
- human resource services exist to measure problematic aspects of employees and flag them for removal or disciplinary action, or flag genuine complaints for suppression, in the most economical way for the company. HR does not exist to advocate for employee well-being, protect employees who are wronged, facilitate adequate training or execute a role of objective mediator with checks and balances on the internal political power of other departments
- think tanks and academic and legal accreditation and certification services do not exist to ensure a high standard of professional competence nor to enforce a high standard of ethics, they exist to create artificial supply shortages and obfuscate the ability to participate in the professional class, to further entrench power of taste-maker intellectuals and governing bodies to tacitly favor those with wealth and connections, and to create what are effectively censorship tribunals that decide what beliefs are allowed to be considered good and progressive and what beliefs are allowed to be persecuted within the framework of reputation loss and legal punishment.
All these systems share the overarching pattern that they exist to say one thing but do something completely different, essentially a way to launder hypocrisy-of-convenience through reputation filters that let power be ever more concentrated and punishment be ever more a function of poverty.