Have McKinsey and its consulting rivals got too big?
economist.com
economist.com
It also made me realize that it is horrible to build software with people who expect short term deliveries like the usual McKinsey engagement. People who expect that the automation of an Excel file takes the same time as getting a BA to do it.
I am now in a full time engineering position. I don't talk to clients anymore.
What I miss the most is coming into contact with people with a huge variety of backgrounds.
Which surprisingly were the people with who I had to spent the most amount of time explaining how software works.
Maybe I'm bad at it? Who knows. But I learned a lot, and I'm happy where I'm at now, so any bitterness would be misplaced.
Not to mention they paid for my GC.
What does GC mean in this context?
How is this surprising? I read this as "huge variety of backgrounds", meaning, all kinds of backgrounds which are NOT software. It would make sense to me they don't understand how software works.
If you had to fight fires all hours day, night and weekend to keep on top of it, then so what? That’s the job. Getting heart palpitations because the red circle came up on the Slack icon on your screen? That’s the job.
Even with a clear path to a mid-term or even sustainable solution, it was like you weren’t building software but in a constant race to keep ARR ahead of churn, like in Wallace and Gromit where Gromit is frantically laying down track to keep his train going. Does the software even work? Who cares… it’s the $$$ that count.
I wasn’t really built for that, I felt like I was at odds with my own passion and I didn’t really want to put my name to the work I was doing.
I’d call it product engineering over agency work. Keep an eye out for positions in your typical SaaS setup, as well as financial institutions - not glamorous but better than being an arse on a seat.
Can’t speak for outside of Europe and UK though.
Same type of person who is completely incapable of understanding that doing more methodical, higher quality work now saves you the time wasted putting out fires later
There is real work to be done in the consulting world. Its just that there are perverse incentives to not be the one doing it.
Whether an engagement is successful or goes down in flames isn't obviously apparent until it is nearly completed. Everything feels like a high school class project where the goal is to DO as little as possible and if its successful to grab as much credit as you can, and if it fails, to distance yourself from it.
This is a tombstone for humanity and lots of companies if we all do this.
You can push much, much more volume and absolute impact through by running big merger integrations, digital transformation, and other large scale change projects at big companies.
It is basically a better business to become something like a premium Accenture, a "get stuff done" kind of consultancy. You can staff an army of junior people for a very very long time on those kinds of projects.
It's just not that easy to keep people staffed on 5-6 person teams solely on 8-12 week pure strategy engagements.
These kinds of projects are also the first discretionary spending yo get cut when times get tough.
If you're going to be focused on the pure strategy work, you'll probably want to stay really really small. We've seen some of this in investment banking with firms like Allen & Co or Qatalyst. Challenge is that consulting doesn't come with scalable monetization via success fees.
It's just not great business to be a boutique consultancy, I think.
Had a conversation with an ex-Gartner analyst—now at a product company—and his comment is that even at the big analyst firms, comp isn’t great at least below senior management.
You bill per hour and there’s only so many hours to bill and your rate can only be so high. The only way to scale revenue is headcount so you can bill more hours.
It’s like handling radioactive dynamite but I think a boutique firm specializing in fixed price projects could make a decent amount of money. You have to be really really good though because one bad project contracted at a fixed price could mean lights out.
Given this is a common business model and has known bad outcomes, what would a Blub programming language and rapid development environment designed to improve the quality and maintainability of an army of rising junior engineers look like? (I originally wrote “productivity”, but reducing billable hours is not a positive outcome for the consultancy. They surely still want to produce quality software like to reduce customer-impacting bugs and negative headlines.)
Go was supposedly designed for a similar audience, inexperienced engineers at Google, but it is pretty low level and still has its own gotchas. I’m imagining some hybrid of Go, Python, and Visual Basic with strong static typing, strong functional orientation with little shared state (to reduce the blast radius of each junior engineer), easy unit and integration testing, excellent post mortem debugging, big ints by default to avoid integer overflow bugs, FFI for integration with clients’ legacy code, and portability to mobile apps, desktop apps, and web front and back end.
As for their supposed value (which comes directly from ex-employees): big consulting firms are essentially hired as a liability shield for the C-suite. Their main job is to back up whatever the CEO already wants to do (usually cost-cutting). This way, executives can claim: a) "McKinsey recommended it, so it must be right," and b) "If it goes wrong, it’s on McKinsey, not us."
https://www.insurancejournal.com/news/national/2024/10/18/79...
Is that not an example of accountability directly for the things you're complaining about?
Better would be if people faced jail time.
The word here is not "regulate" it's "enforcement".
People doing illegal things should face personal responsibility on the actions. So do managers who approved it.
The issue with enforcement is the same thing that happened in 2008: enforcing white collar crimes is expensive and high risk for prosecutors who want slam dunks to advance their careers
Unfortunately, WallStreet/Banks/Consulting are always actively lobbying to de-regulate what is left and actively block new legislation.
Do they still exist?
Then, yes.
McKinsey was doing some work for their dept. I asked him what they did. He said, "McKinsey asked us for lots of information. Then they put it into a dossier and gave it back to us."
Information is siloed, teams compete rather than cooperate, any team's own dossier is going to be seen as biased and unobjective.
There's real value in hiring a neutral, competent vendor to come in, assemble the relevant information using best practices, and present a "dossier" with common-sense conclusions. Then the leader who hired them can use that as political cover for taking the necessary actions they wanted to in the first place, because the leader is no longer siding with one bureaucratic faction against another, but merely taking objective advice from an outsider.
That's actually worth a lot.
That looks like three deeper problems than the consultants were tasked to solve.
(Not only do you have counterproductive, misaligned culture; but even the CEO can't/won't fix it; and the CEO even has to play political games, just to work around the bad culture, for smaller goals.)
No, this is exactly the reason the consultants were hired. Not to solve the cultural problems, but to work the broken process. It's not really in the consultants interest to solve the cultural problems anyway, because it drives repeat business.
There is big money in doing that too - you gain a client for life if you're successful, and you get to recommend all your friends in Professional Services companies who give you a cut/forward strategy business your way.
Last year, we had 2 consultants hired from some Big 4 consultancy. The manager told us to give them whatever info they need. They came with us on a grand total of 2 calls. The scheduled 3rd call we could not attend coz of overlapping schedules. They never bothered blocking my calendar and I never heard from them again.
I reckon the manager wanted to use them for some political purposes.
Example: "A consultant is someone who charges you $100K, to tell you at the end, what you told them at the beginning."
Sometimes this means consultants bring you back to the right perspective, sometimes it means they don't add any value.
To be fair, that’s exactly what a psychologist does
Shifting context a bit, I used to experience school classmates complaining to me about some problem they had, and, when I repeated their information back to them, thanking me for being helpful.
That didn't feel like it was helpful to me, but other people seem to disagree. This can't even be explained by the internal communication barriers that exist within large organizations - an organization of one person has no such barriers.
In constrast, China's infrastructure projects are highly successful - high-speed rail now covers 42,000 km across 100 corridors, and the first one was only completed in 2008. Based on their example, the most efficient way to build modern infrastructure is to cut the consultancy firms out of the loop entirely.
Not a joke. Our metrics are different from their metrics. They might have succeeded.
If you cut out consultancy firms, we would still not be able to do anything close to that in America. There are many reasons. None that I would expect to figure out and resolve anytime soon , if ever.
However: 1. The costs are insane and probably we reached the point where the benefits do not justify the prices they are charging. 2. Wfh is a cheat code to get access to cheap tech personnel that is pissed with the RTO of big tech. I keep hearing tech folks working at traditional manufacturing shops remotely these days.
It is also quite difficult to surface useful information amongst all the noise in the giant archive of documents
Only time that answer is different is when a person in power is still around and they pretty much veto the engagement with a consulting company.
Their reputation doesn’t come from the quality of their work but their size: they can just muscle their way in.
They don't improve how things run.
But as an SWE at a manufacturing company, how much can your work increase their revenue/profit? The bulk of their income is still coming from the widget/commodity they are producing.
A seasoned cheme at oil and gas was easily pulling 300k + 2M pension + 10% 401k match
For chemical or mechanical engineers they need a lot of infrastructure to do work so employees are more locked to employers and wages are not as competitive. Employees are unable to capture their value without the employer therefore they get a smaller piece.
Also SV has an obsession with hiring the best while most large manufacturers consider heads interchangeable with only a few spots reserved for top talent.
So most of the requests are insipid, some are impossible, and they have no desire to spend effort to understand either.
Only the bullshit kind of consulting McKinsey is known for, IMO. The value of someone coming in and repeating what the smart folks on the team are saying is no longer there. Plenty of boutique consulting shops are eating just fine right now. Delivering real results/solutions and being a SME is always in demand.
The culture engendered into corporate America by businesses like McKinsey is exactly what causes economic uncertainty.
When the only thing that matters is the number at the bottom of the piece of paper being big enough for some analyst in lower Manhattan to be happy, humans will do all sorts of unpredictable things to make that number be that way.
The difference is, before, people had at least some confidence in their ability to make a living. We've whittled down the average person's wages and job security to the bone and when people don't feel secure, they don't spend, or maybe they do, but they put it on the card... which is another problem and story unto itself. And places like McKinsey are a part of the knife that did that whittling.
Anyways, when people don't spend, businesses don't do better over the long term.
Here’s the opposite perspective:
Real disposable income is up: https://fred.stlouisfed.org/series/A229RX0 Real median personal income is up: https://fred.stlouisfed.org/series/MEPAINUSA672N
The current situation is one of uncertainty that things may get worse. It’s not even a recession.
McKinsey has been doing "silent layoffs" in the last few review cycles, i.e., shrinking overall headcount after performance reviews – as there's not enough work to go around. Hard do meet the bar for a one-year BA, if you've only been on 1-2 studies – which is not exactly your fault.
The cloud divisions of "big tech" might be the catalysts for this upcoming disintermediation.
After the election everything that remotely touches AI is going to be at eleven. Everything from companies laying pipe to startups who are delivering services that integrate AI with bespoke business processes. The upswing is going to be far bigger than anyone is imagining right now. The market PE could shave ten points and it will still be gangbusters in AI.
Don't fight the trend.
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Consulting is the oldest profession ;)
Some would dissagree. Though i think prostitution comes after politician. /s
Talking heads are a cancer upon society.
edit: to the folks responding saying something to the effect of “you don’t know what you’re talking about!” - I could have saved you the trouble and written your responses down ahead of time. They’re trite and reflexive. Oliver is a shill, down to the so-called data. He’s an approved mouthpiece on behalf of the state. He discusses and he frames only what is allowed to be said in a context it’s allowed in, and his edgy woke takes are the complete opposite of. They’re edgy because of how milquetoast the Overton window has become.
Put another way, if you’re in unison cheering for someone who is allowed to have their own TV show, it’s time to ask yourself if you’re being played with bread and circuses. You won’t hear the opposition because, well, in older times and other places they’d be disappeared/imprisoned, but today it’s mostly people like this twat (and yourselves) drowning out the contrarian voices.
Job well done lads.
He's about as far from a hot takes engine as you could get
The phrase "doing one's own research" has been co-opted by people doing conspiracy-windowshopping. It's designed to get lazy people stuck in the muck while sending them on a Shawshank-Redemption-style crawl through the sewers of the Internet... Only those who can cut through the bull — pun slightly intended — make it to the other side.
You have to start trusting people at some point. Researchers and scientists have proven to be trustworthy, if (IFF!) the right incentives system is in place. (Edit: and talking heads, of course; my claim is that John Oliver and his team of researchers and writers is more trustworthy due to the effort that they put into making things as accurate as possible, while funny as well... All while elevating the quality of newscasters by showing attribution to what they are saying and connecting the dots on why it is relevant to the viewers).
But we are living at an awkward stage of civilization: the very rich are backing political leaders who make a religion out of economic systems and don't view them as useful tools to balance development and inequality.
Both the nutty conspiracists and the people nodding along and cheering with TV shows fall to the same kind of self inflicted ignorance: their biases get the best of them and they won’t look for counter arguments or entertain alternative viewpoints or possibilities. Now, I don’t care about what biases those are in particular, but it’s worthwhile to ask both sets of people, upon listening to them make their case/statement, a somewhat simplistic and mildly derogatory question: “where did you hear that?” because both sets are looking elsewhere for authority on what to think or believe.
Many a time I’ve had to reel peoples fantastical takes in by plainly stating back to them their sources and walking them through the narrative they’ve constructed in their head and listening to people who - in many cases - are even in a lesser position to obtain accurate enough facts to make a solid case. Not the most welcoming party trick but it does work to help wake people up from a self-inflicted trance.
I’m reminded in all of this by the usefulness of something like an LSAT, where it’s asking you to recite back minute details of what has been said or happened, or what has not been said and therefore is presumptuous, without necessarily forming an opinion along the way.
You raise a good point on having to soften a hardline stance and trust people putting in the work.
Keep some salt handy.
It's entertainment. Don't let it cloud your decisions aside from considering the raw facts. Thoroughly research everything on your own. The laughs are not free.
Vast majority of political pressure to restrict the housing supply comes from your average homeowner. They have been taught, and incentivized, to treat their home as an investment vehicle. Building more housing generally lowers their home's value due to supply vs demand.
Rent can be affordable, or housing can be a 'good' investment. We can't really have both, but it's a lot more palatable to blame the problem on Blackrock or rich condo owners than your audience.
I'm sorry, but affordable (and newly built) housing, at least in Central Europe, where I live, is most certainly a thing. It's a question of building type, unit size, density, local infrastructure, government subsidies and the location overall. I can recommend taking a look at the housing market in cities such as Vienna. Newly built housing can be affordable and of a high quality.
Why that is a seeming impossibility in the US, I cannot say, though I have seen some, albeit more than likely somewhat biased, evidence that at least some forms of higher density, low-rise mixed-use building styles common in Central Europe are not possible in certain areas of the US due to zoning laws. Unless I am mistaken, I seem to remember that zoning legislation was something the LWT piece on the topic specifically pointed out as one of many parts of what is a multifaceted problem that needs to be approached as such.
Another area that is, according to reporting, very good on the front of providing newly built, affordable housing is Singapore, though I know no first-hand experiences (I have no friends currently residing in Singapore public housing) to truly contextualize whether the system there works as well as it appears to. In either case, though, new housing can be affordable if done right.
> They have been taught, and incentivized [...]
Ok, but if that is the case, then both new and old housing cannot be affordable. You are saying, new housing by definition is not affordable, then point out that, for historic reasons, owners expect their property to increase in value, making old/existing housing even less affordable.
Many of these employees are so-incentivized by fiscal profit that they fail to see the immorality, just seeing opportunity. Maybe if our regulators weren't in bed with so many of the major funds...
"If you think there's a solution, you're part of the problem." —George Carlin (Conan O'brien interview)
Fortunately we also receive miniscule enforcement/penalties.
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You very quickly boil it down to morality and ethics.
Americans have a broken ethics code that says the free market magically solves the need for anyone to be a good person - if someone's a selfish ass, the free market and 'competition' will magically fix it.
Therefore I can be in bed with whoever I like, whenever I like - both literally and figuratively.
Life wasn't too bad as long as Americans believed in religions and this extremely stupid free market idea was balanced by an extremely stupid idea of God that wants you to be 'good'.
Now that Americans are unconstrained by anything and further emboldened by extremely stupid ideas of magical free markets - they're well on their way to societal collapse.
This is why Jordan Peterson is trying to bring God back - he knows Americans are a collapsing, degenerate culture. It's the wrong move and it won't work but he (unlike 99% of people) at least understands the root the problem. Oh well.
I wouldn't mind it too much because stupid societies full of stupid people should and do inevitably collapse but these stupid people have nuclear weapons. The way it's going - we will have nuclear war.
ps. most other cultures are also extremely stupid (they just have a different set of extremely stupid ideas). Americans just happen to have become the world ruler so they're of greater interest.
"Show me the incentive, and I'll show you the outcome" —Charlie Munger (RIP)
Money? Is the answer to your question money?
That was not an accident.
> stupid societies full of stupid people should and do inevitably collapse
No society endures forever it seems (maybe I'm misinformed?), but no society is immune to stupidity, so I'm not sure your statement about stupid societies actually has meaning. Collapse is certain, the causes less so.
I take solace in the fact that either nuclear annihilation or some kind of climate disaster, seems inevitable, but also nobody's fault in particular. We could avoid it if we weren't human. But I'm not sure that I want that. The good would likely be gone with the bad.
Maybe the cokroaches will manage better, or the robots, but maybe the Fermi paradox solution is that life always evolves to be too greedy for it's own good.
During a gold rush teach people how to use their shovels.
I'm currently working at Accenture, collaborating with a well-known German car manufacturer (OZJ). We receive a new RFP almost every other month, and due to our long-standing relationship with them, we end up securing the majority of the projects. We manage to deliver on these projects—or at least ensure they are billed.
Occasionally, we engage in some RAG work or even delve into image generation, though the quality of these outputs tends to be quite subpar. Sometimes, it surprises me that the client even accepts it, but ultimately, they receive a functioning product (most of the time), we get compensated, and the end consumers cover the costs.
(Former McK SW engineer here)
Don't fall into thinking they just want to make some easy money and don't care about your situation. They most probably saw hundreds or thousands of clients like you, and know that unless you're a unicorn, the "standardized" approach will be better for you - they synthetized it from thousands of engagements to be as simple and as idiot proof as possible. And here I mean idiots on both sides - consultants as well as the client. If you were an unicorn, you wouldn't need to hire McKinsey. Remember, most of us aren't Gates/Jobs/... This is just like tech startups thinking they're an unicorn and spending an absurd amount of effort (and thus money - also opportunity cost) on reinventing the wheel and building for infinite scalability, instead of simply doing what works well for everybody else.
Not saying they don't want money, but their approach to making easy bucks is to add a zero to their quotes, not by not doing anything worthwhile. The quotes seem crazy to us mere mortals, but the clients are usually happy - what's a few million dollars when they helped you save tens or hundreds of millions. You don't care how simple was what they did - you probably tried many times yourself before hiring them, and if they made a stupid thing work, you're grateful.
Sometimes it's really stupid - like a consultant randomly noticing that the client buys protective earplugs from 20 different suppliers while drinking coffee in the common area of 5th branch they're visiting; acting on it and making a much better deal (money and services-wise) with just one or two suppliers globally, and similar kinds of random ad hoc but monetarily significant optimization. That's where the templates come in - if you hire McKinsey they just ask "how do you do X?" - and if you say '"well we don't have a global process for that, each location handles it themselves", their reaction is to implement a template process - and I think that's good. Yes, the branches will scream bloody murder, but the corporate doesn't care - it's not their business to create cultural centers for adults. Create a lifestyle business for yourself if you want that.
C'mon, The Economist
http://www.miketodd.net/encyc/gotten.htm
Personally, for a situation like this I'd use the somewhat more formal 'become' instead!
It's time to break them all up. The "firewall" that should be there from a legal perspective is a joke in practice, and when there are only three to four companies, there is no place for fresh blood and with it fresh ideas to enter the market.
There’s a ton of competition in consulting in general.
McKinsey does not have an auditing business.
that's not the issue; consulting pays much more than auditing, which is why the Big4 would probably be fine spinning off their auditing businesses
The entire point of these consultancies is to allow collusion between competitors, which is otherwise illegal.