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Is McKinsey and Co. The Root of All Evil? (2011)
- jsemrau 4y agoAt least from a VC perspective they are seen as the second coming of Christ.
- iforgetti 4y agoCan you elaborate? I would think VCs would be the last to use McKinsey.
- zeckalpha 4y ago(2011)
- pastacacioepepe 4y agoThe headline at least is as actual today as it was 11 years ago. Perhaps even more.
- mvdwoord 4y agoPart of the coreutils anyway.
- tasubotadas 4y agoFor anyone interested in similar topics, I would recommend reading "Confessions of an Economic Hit Man"
- pastacacioepepe 4y agoMcKinsey is merely a byproduct, if you want to get to the root you have to analyze Capitalism, the system out of which McKinsey-like entities emerged as the best fit for its natural selection.
- daviddever23box 4y ago^ this ^ It's up to the client to (choose to) implement the guidance, and, as a consequence, to realize the consequences, good, bad, or a combination of both.
- nicholasbraker 4y agoIt is, but it's so much more convenient when an external bunch of talking suits with an outrageous hourly-rate tell you what you already know but are afraid to implement.
- feet 4y agoThis is exactly the thing Capitalism is the system out of which these problems have sprung. People keep shouting about "real" or "pure" capitalism being better but that's all a lie spread by the capital owners through their think-tanks. Its propaganda If we organize corporations to be owned by the workers instead of shareholders, the few with real capital, then the interest of the corporation will shift to that of the workers instead of driving profits to shareholders. A corporation with the interest of workers won't hire consultants like McKinsey
- rightbyte 4y agoI think that is too simplistic. I believe the "McKinsey problem" is that of higher management (including the board) whos interest do not align with the owners or workers.
- pastacacioepepe 4y ago> A corporation with the interest of workers won't hire consultants like McKinsey Consultancy might still exist as it provides value, it's just that some kind of suggestions would be completely unacceptable if your priorities are worker welfare and prosperity and you are not allowed to externalize costs on society.
- michele_f 4y ago> _Indeed, where ever there has been a financial disaster in the world, if you look around, somewhere in the background, McKinsey & Co. is nearby._ It seems that selection bias is something journalists really struggle with...
- omginternets 4y agoSpeaking as someone with a journalism degree (before pursuing more substantive fields), I can assert with great confidence that journalists are trained to write, and little else. The result is a skilled rhetorician with very little hard knowledge, and little ability to reason from first principles. Without these, one has few means of evaluating the merit of any information or story. Notable exceptions to this rule exist, but they are rare. One should be exceedingly skeptical of journalism absent expertise.
- turbinerneiter 4y agoIs there any chance to get a comparison between companies who use McKinsey and ones that don't? Compare stock prices, profitability, public image, long term prospects ... This could become a nice Rorschach test, where eveybody can come to different conclusions based on which metrics they pick as important.
- strulovich 4y agoI’d love to hate on McKinsey, but this piece is just anger with a few cherry picks. It’s a bad habit to take this seriously. It doesn’t even address the simplest explanation for most of this: big companies that are doing bad contact McKinsey to try and change strategies, so of course many bankruptcies follow hiring them. It’ll be like blaming the fire department for fire deaths because the trucks always seem to be near a fire.
- civilized 4y agoThe author doesn't do a great job making the point, but there's more to it than that. In many cases, McKinsey encouraged strategies that harmed either the company, society, or both: - Shady accounting at Enron - Aggressive denial of claims at Allstate - Aggressive marketing of opioids at Purdue Pharma These strategies were not just one-off misfires, but deeply involved McKinsey's senior leadership over multiple years. EDIT: after poking around for more info on the Enron-McKinsey relationship, I'm not sure what is known with certainty other than that Jeffrey Skilling, CEO during the scandal, was a former McKinsey consultant, and McKinsey was doing stuff with Enron the whole time. McKinsey appears to have successfully convinced everyone that they weren't involved in the accounting scandal.
- fleetwoodsnack 4y agoWell said. It’s almost a meme at this point: HN commentor takes a reductive stance that sounds clever in theory, but collapses when confronted with the actual factual circumstances. Repeat ad nauseam with no gains in collective self-awareness.
- notahacker 4y agoThat's completely consistent with the GP's point that companies who are struggling or companies that are taking big decisions tend to hire McKinsey to do some reports for them. That applies equally to some really successful clients whose successes McKinsey deserves essentially no credit for. The company that actually advised Enron on how to do its false accounts, Arthur Andersen, was broken up. McKinsey's documented involvement was fluffy stuff on management culture and writing press releases citing Enron as a success story which look pretty funny in hindsight.
- vsskanth 4y agoMcKinsey is doing what they're paid to do - take the blame for bad decisions and deflect attention away from the leadership of companies who actually choose to follow their advice. Even from this article you can see they're doing an excellent job. If I were an executive I would absolutely hire them after reading this article since I can just use them to enact unpopular changes I've always wanted, and wouldn't be blamed if it goes south.
- matwood 4y agoYeah, I rarely see consultants give much advice beyond what the leadership already said they wanted to do - albeit not often directly. What seems to commonly happen is a consultant comes in, listens to leadership, and then regurgitates what leadership already really wants to do. This lets leadership absolve some of the responsibility when it fails ("The consultant told us to do X"). And it makes sense because who knows the business better than leadership? The consultants can't really do much else other than take their cues from leadership. What routinely surprises me is just how much companies are willing to pay for this service.
- lmm 4y ago> And it makes sense because who knows the business better than leadership? The consultants can't really do much else other than take their cues from leadership. What routinely surprises me is just how much companies are willing to pay for this service. The company pays but the leaders benefit. You can charge a lot when it's other people's money.
- DSingularity 4y agoWow. I wonder what conditions and experiences lead executives to end up that perspective on hiring consultants. Naive me took them at face value: idea generators for companies whose executives suspect untapped potential.
- deleted 4y ago[deleted]
- richliss 4y ago
- chasd00 4y agoMy little sister worked there for a while. I think McKinsey worked on both Obama’s and McCain’s campaign at the same time. Talk about a heads I win / tails I win situation heh.
- ciphol 4y agoHeads I win / tails you lose is the phrase I believe :)
- chasd00 4y agoI like heads I win / tails I win as one notch up from the usual. Heads i win / tails you lose could imply that we both lost. However, heads I win / tails I win seems more appropriate for McKinsey and the other truly ruthless (or singular focused) orgs out there.
- asimovie 4y agoMcKinsey’s biggest structural issue is extremely decentralized leadership. Senior partners are not accountable to anyone and there’s limited ethics oversight. Combine that with working with a majority of F500s and governments, and it’s a high risk situation. Great initial job training though, so no limit to talent pipeline when they get college grads for 2 years.
- ClumsyPilot 4y agothats the basics of how limited partnerships work
- asimovie 4y agoEh I must not have made my point well. Most similar partnerships (e.g., Goldman, Bain) have more structural oversight
- kypro 4y agoIs there somewhere I can go to understand why McKinsey has almost cult-like status among large corporates? Some of the stupidest decisions I've ever witnessed has been driven by multi-million dollar strategies from McKinsey. At a place I worked previously McKinsey advised in-housing software development to spark innovation and digital transformation. Then three years later in 2020 to it was advised that software development be outsourced to cut costs. Obviously this was a move of utter insanity but for our executives it didn't matter. If McKinsey suggested it, we did it. There was literally no debate on these decisions no matter how hard we tried or how obvious of a mistake it was. During my time at said company I was working on an innovation project which imo would have been fairly revolutionary for the company's future. For about a year we gathered input across the business and it was understood by every team we spoke to that this technology would be central to the continued success of the company. Importantly, it was understood the importance of us owning the IP and being market leaders in this technology so we could use it as leverage. The cost of the project was estimated at around £100,000 - which was a fraction of what we were being billed by McKinsey every year. Encouraged by the the overwhelming support we got from every segment of the business and the relatively affordable development costs, we pitched our plan to the executive team. A couple of weeks later we learnt that the executives deemed the project too expensive and sent us several companies who were suppliers of McKinsey who had built similar solutions. We tried to explain to executive team that the tech we wanted to build didn't yet exist and these solutions from McKinsey's suppliers were no where near ready for rollout, and in most cases these suppliers were actively lying about their tech. But it was an impossible battle. In their eyes we knew nothing despite months of research and McKinsey's word may as well have been gospel. I left the company shortly after this and have heard things have continued to go down hill. I guess I never understood why the executive team seemed to just defer all of their executive decision making to McKinsey in the first place, especially given the lack of success and costs. Why was our own executive team not better placed to form corporate strategy? Is it common for corporate executive teams to just serve as puppets to large consultancy firms like McKinsey? The relationship said company had with McKinsey was unlike any I've ever seen before. In my experience suppliers are normally on the backfoot, not calling the shots, yet this doesn't seem to be the case for McKinsey. It seems many corporates are more than willing to follow McKinsey over a cliff and I have no idea why.
- jacknews 4y agoI'm not sure any of this is specific to McKinsey. IMHO the current system supports a whole layer of consultants, MBAs, CEOs, and financiers who are either destroying the 'real' economy, or at best sucking all the juice out of it for their own gain. Late capitalism, financialization, feral capitalism, managerialism. I've seen several terms thrown around, but the essence seems to be something like the profits come from owning and/or tapping into the flowing money; the actual work involved in creating those flows is virtually irrelevant and certainly under-rewarded.
- drumhead 4y agoAll management consultants do in my experience is give an impression of authority and rigor to a decision management want to take. Want to relocate the hq, get a big consultant in to create a justification for it. Then you can say " look pwc or whoever, agree with us". Giving your dubious decision the respectablilty and authority it needs.
- spaceman_2020 4y agoThe real damage caused by McKinsey is its promotion of a certain kind of capitalism that prioritizes short term profit and optimization over long term stability and innovation. Both of these are nice to have, but in McKinsey influenced “MBAized” businesses, optimization is often almost THE end goal. This leads to all sorts of situations innovation centers get gutted and long term bets are eschewed in favor of immediate profits.
- smitty1e 4y agoAh, 2011. I had thought that Blackrock were the new Bond villains.