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Have McKinsey and its consulting rivals got too big?
- nelblu 2y agohttps://archive.is/qlF5n https://archive.is/qlF5n
- spenrose 2y ago[flagged]
- marcosdumay 2y agoIt's not a fair question. Any size larger than 0 would satisfy it.
- deleted 2y ago[deleted]
- detourdog 2y agoI think more than becoming to big the solutions are founded on a narrow matrix of logic or group think.
- throw4950sh06 2y agoThat's by design. They have few verticals that they focus on and have templates for every situation that might arise. (Former McK SW engineer here)
- toomuchtodo 2y agoWould you say McK is the consulting equiv of SAP? Where they push the business into the vertical template vs do the actual legwork to improve the org in the vertical in question?
- throw4950sh06 2y agoIn many cases, yes. But I wouldn't say it's not valuable if you're in these few verticals they care a lot about (one of them is mining, as an example). They won't provide you the data directly, but they do have it and it's central to everything they do - from across the industry, large and small clients, at all stages of life, and they stayed with many of them through significant transitions. They invested hundreds of millions of dollars into custom internal tools to make the data and derived analysis accessible to consultants. Where you have theories, experiments and anecdotes, they have statistics. And nobody has better than they do. 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.
- deleted 2y ago[deleted]
- mschuster91 2y agoOf course they got too big, and especially they got too enmeshed with the auditing business. 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.
- insane_dreamer 2y ago> too enmeshed with the 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
- wombatpm 2y agoSaid spinoffs would probably start new consulting branches after some period of time
- jncfhnb 2y agoMcKinsey isn’t in the auditing business at all. And those that do play both went the other way, transitioning from auditing into consulting. There’s a ton of competition in consulting in general.
- metadat 2y agoThis is false, the Big 4 are all in the auditing business, in addition to high-end management consulting.
- SargeDebian 2y agoWhat part of the statement is false?
- jncfhnb 2y agoMcKinsey is not a part of the Big 4. The Big 4 refers to the big four auditing firms.
- smitty1e 2y agoDeloitte sends a large delegation to Davos annually, but they do it ironically.
- jncfhnb 2y agoCurrent McKinsey here. I don’t think anyone expects the current difficulties to last indefinitely. Its fairly well established that consulting struggles during times of economic uncertainty (but does fine when things are outright bad or good).
- willcipriano 2y agoWould there be any advantage for anyone to state they feel the opposite to your view publicly? Seems like a career limiting move.
- breakfastduck 2y agoDepends how private the account they're posting the opinion on is!
- kolbe 2y agoIf all comments here were eyed with the same cynicism, we'd have no genuine discussions. And maybe we don't.
- willcipriano 2y agoI don't think the people behind the opioid crisis should be trusted to be speaking in good faith.
- kolbe 2y agoI don't think people who are so bitter about not being in a position of power that they will say any hyperbolic thing they can about McKinsey should be trusted on the topic either
- jncfhnb 2y agoI mean we’re not allowed to say anything either way
- candiddevmike 2y ago
- ProllyInfamous 2y agoLet me propose an alternate theory: fines and enforcement have become too small, so-as to become just a cost of doing business. 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)
- deleted 2y ago[deleted]
- paulddraper 2y agoYou're gonna have to connect some dots to legal fines, etc.
- ProllyInfamous 2y agoYour request requires a consultation. Fortunately we also receive miniscule enforcement/penalties. Press `X` to accept terms & conditions.
- alexashka 2y agoYes, but go on taking the logical steps: why are the regulators in bed with so many of the major funds? 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.
- robertoandred 2y agoGotten* C'mon, The Economist
- js2 2y agoPretty sure it's a US/UK thing.
- seabass-labrax 2y agoHistorically speaking, it's common to both UK and US English because it predates the European colonization of America: http://www.miketodd.net/encyc/gotten.htm http://www.miketodd.net/encyc/gotten.htm Personally, for a situation like this I'd use the somewhat more formal 'become' instead!
- lysace 2y agoAgreed. "got" is more informal and less universal across variants of the English language than "become". Bad editing.
- deleted 2y ago[deleted]
- klelatti 2y ago> Excitement among clients over this type of “generative” AI is also creating opportunities for new work. Mr Schweizer says that BCG has already completed hundreds of projects with clients around the technology. Accenture has booked $1.1bn-worth of generative-AI work in the past six months. During a gold rush teach people how to use their shovels.
- deleted 2y ago[deleted]
- throwawaycons 2y ago[throwaway because ...reasons; also, I ran my comment thru ChatGPT to anonymize it] 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.
- chasd00 2y agoI’m very close to Accenture and am suspicious of that $1.1B number. That’s 500 $2M projects, I just don’t see it. They must be very generous with the definitions. Like a $100M maintenance/operations deal that has a small genai POC as part of the scope and then putting the whole $100M deal in the genai bucket.
- jakubmazanec 2y agoObligatory John Oliver video on the topic: https://youtu.be/AiOUojVd6xQ?si=anI1_FKkDM4oDI1M https://youtu.be/AiOUojVd6xQ?si=anI1_FKkDM4oDI1M
- artursapek 2y agoNothing about John Oliver is obligatory
- stonethrowaway 2y agoLess than nothing. It has flipped to the other side in the bullshit of it all. Pundit hot takes have ruined quality dialogue. Frankly I’d rather have discussions with people who do their own research and form their own opinions, no matter how faulty those opinions may be (there is always room for improvement precisely because there is room for discussion), than to hear them regurgitate party-speak drivel shilled by actors. 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.
- malfist 2y agoI get the feeling you haven't watched Jon Oliver. He does deep dives on relevant issues and does a ton of research. I was recently interviewed about his process and it's pretty enlightening. He complains about how activists often twists perfectly good data to make a point but under scrutiny it falls apart, even if the original data would have been good enough. He's about as far from a hot takes engine as you could get
- noleary 2y agoUsed to be at BCG. I think it's worth bearing in mind that relatively little consulting revenue -- even at the top strategy shops -- comes from pure strategy work anymore. 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.
- ghaff 2y agoIt’s true in the IT analyst business too. While there are people in 1-10 person firms who earn a living, they’re mostly not getting rich and this is a long term trend line with a lot of consolidation of medium sized firms over time. To be reasonably successful you probably need a real focus and be good at selling. 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.
- chasd00 2y ago> It's just not great business to be a boutique consultancy, I think. 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.
- cpeterso 2y ago> You can staff an army of junior people for a very very long time on those kinds of projects. 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.
- whatever1 2y agoWith labor becoming fungible in the eyes of c-suites, the holders of institutional knowledge are the libraries of the consulting firms. Consulting firms also have tech talent that traditional businesses had no access to in the past, so any large scale data driven related project is done with consultants. 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.
- candiddevmike 2y agoThe economics of consulting are pretty raw: they basically arbitrage the hourly rate of folks. They pay you X and then bill you for X*1.3 (minimum). Folks are starting to realize they could just go direct to the customer, and the recent non-compete uncertainty has made a dent in the quality of talent these places have on their bench. Not to mention most of the talent at these shops are just window dressing for cheap offshore labor that actually does the work with mixed results.
- sevensor 2y agoThis is a surprising take, considering the consultants I’ve worked with never took the trouble to learn anything about the business despite sitting shoulder to shoulder with us for weeks, and then proceeded to give us spectacularly terrible technical advice. “You need machine learning for this. Trust us, we’ve done this before.” They hadn’t, and it became clear they’d wasted our time and hadn’t listened to a word we said.
- albert_e 2y agoIs it fair to say that ... Consulting is the oldest profession ;)
- black_13 2y ago[dead]
- dangsux 2y ago[dead]
- alkonaut 2y agoThe big firms just need to be big and known. There value delivered isn’t in the PowerPoint explaining that cutting costs and increasing revenue will increase profits. The value added is that companies buy a stamp from a famous firm when they deliver staff cuts, reorganizations or other controversial news. As such it doesn’t really hurt to go for scale. They’re a standards org for headcount reduction.
- betaby 2y agoWhy though? Why a company with a board, which is already independent, would need some consulting? Isn't the board to convey ideas to CEO?
- nothercastle 2y agoThe board is neither independent nor objective or often really in touch with the business. Therefore they need cover from a big name firm
- alkonaut 2y agoIt's always nice to point to a third party and keep blame from c-suite or board.
- samdung 2y agoI have a small story about McKinsey from friend of mine in the Indian Bureaucracy from about 10-12 years ago. 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."
- crazygringo 2y agoTo be fair, a lot of organizations can't do this on their own. Which is why they hire a consultancy. 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.
- samdung 2y agoYup makes sense from that point of view.
- neilv 2y ago> teams compete rather than cooperate [...] political cover for taking the necessary actions they wanted to in the first place 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.)
- datavirtue 2y agoThis comment and the parent sums up GE exactly. These consulting engagements were/are a constant stream there. However, they were often ordered by ineffectual, siloed pretend managers and absolutely nothing came of it aside from a bill and the manager getting to feel like a manager for triggering the engagement.
- fHr 2y agofuck mck, every company they get their hands on is turning into a piece of shit human capitalism slavery where max profit is the only important thing fuck consultancies
- OptionOfT 2y agoIt was a really interesting place to work at a Software Engineer. It made me understand the business. It made me understand that doing the right thing isn't valued. You do the thing that has the shortest ROI. 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.
- mtlynch 2y ago>Not to mention they paid for my GC. What does GC mean in this context?
- hammock 2y agoGreen card
- davidcalloway 2y agoThank you I was literally wondering what garbage collection needs to be paid for.
- bitwize 2y agoGarbage collection always needs to be paid for -- in working set size and CPU time. That's why you never see production kernels, databases, video codecs, or high performance games written in GC languages.
- davidcalloway 2y agoYes but it would still feel weird for me to thank my employer for that.
- ainiriand 2y agoI've por es as an external consultant to KPMG as a software engineer and I loved that all processes are clearly defined. I think is big because all steps are clear for everyone in the company so the do not misstep that often.. I also felt like we had so few meetings and a lot of work was done in little time with almost 0 interference from management.
- mentalgear 2y agoIt's not just that they're too big—it's that they're morally corrupt and largely unregulated. These firms have been involved in everything from tobacco lobbying to the 2008 financial crisis to pushing opioids, and that’s just scratching the surface. Despite their role in these crises, they’ve faced zero accountability and continue to rake in massive profits. 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."
- terminalbraid 2y ago> they’ve faced zero accountability https://www.insurancejournal.com/news/national/2024/10/18/797677.htm 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?
- eesmith 2y agoHow much did they make from helping lying drug dealers? The article doesn't say. If damages weren't at least 3x revenue + attorney fees, it's the cost of doing business. It's not like every shady thing they do gets caught. Better would be if people faced jail time.
- ziptron 2y agoSince this is reported on by "Insurance Journal" it makes wonder how much of this fine was paid for by their liability insurer. Does anyone know? Presumably they have no coverage for illegal activities, but they never agreed they did anything illegal.
- throw4950sh06 2y agoHow do you want to regulate somebody giving advice to people for money?
- photochemsyn 2y agoDon't all these consulting firms have a really bad record when it comes to large-scale infrastructure projects? Some of the worst examples are Ciudad Real International Airport (Spain/McKinsey), Karuma Hydroelectric Project (Uganda/Deloitte), Chongwe River Water Supply Project (Zambia/Boston Consulting Group), Isimba Dam Project (Uganda/McKinsey), Haramain High-Speed Rail Project (Saudi Arabia/Deloitte), and Shoreham Nuclear Power Plant on Long Island, New York (McKinsey). 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.
- immibis 2y agoBut how is the shareholder value doing? Not a joke. Our metrics are different from their metrics. They might have succeeded.
- napoleongl 2y agoNya Kalolinska Hospital in Stocholm was pretty much the work of BGC… most expensive hospital in the world. (In Swedish but GPTs exist nowadays so…) https://www.svt.se/nyheter/lokalt/stockholm/nks https://www.svt.se/nyheter/lokalt/stockholm/nks
- rcbdev 2y agoThe AKH (Vienna General Hospital) was orders of magnitude more expensive than the Nya Karolinska. It cost 43 billion Schilling to build in the 70s, amounting to roughly 5.8 billion euros today.
- shadowmanifold 2y agoAn even better example is the city of Chongqing. Looking at pictures of Chongqing from when I was in high school, I would say what stands today is simply not possible. Yet there it is. 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.
- openrisk 2y ago> The quicker corporate clients become comfortable with chatbots, the faster they may simply go directly to their makers in Silicon Valley. If that happens, the great eight’s short-term gains from AI could lead them towards irrelevance. That is something for all the strategy brains to stew on. The cloud divisions of "big tech" might be the catalysts for this upcoming disintermediation.
- datavirtue 2y agoIn the very near future your grandma is going to carry on a conversation with a machine at her bank and she will have no idea it was not human. 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.
- LunaSea 2y agoQuick reminder that McKinsey helped Purdue Pharma & co boost their opioid drugs sales, starting the opioid dependency and overdose epidemic in the US. https://en.m.wikipedia.org/wiki/McKinsey_%26_Company https://en.m.wikipedia.org/wiki/McKinsey_%26_Company
- fsndz 2y agoYes. Company continue to pay them for political reasons mostly. Just look at how many McKinsey partners became CEOs and failed terribly at it (latest example Starbucks
- swiftuser 2y agoThe mentioned memo can be read here: https://web.archive.org/web/20240316081510/https://obligationtodissent.com/ https://web.archive.org/web/20240316081510/https://obligatio... 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.
- chasd00 2y agoAll of consulting has been doing this for a while. Interest rates went up and fears of recession made companies pull back on spending. That hits consulting pretty hard. Usually consulting does well when things are going so bad you need the expertise no matter the cost or when things are nice and stable and you want to try something new. Anywhere in-between is hard times.
- kayo_20211030 2y agoWhat's interesting to me here is that in the period 2013-2023, only E&Y, KPMG and McK of the "great eight" moved up or down in the ranking, and they only moved around in the 4 through 6 spots by tiny revenue amounts. Maybe that was a max scale decision on the part of those companies' management. On the other hand, I'd love to know the yield per employee. That would be an interesting read.
- duckmysick 2y agoFor a more detailed recount of McKinsey adventures (including their involvements in South Africa and with the opioid crisis), check out the book "When McKinsey Comes to Town" by Walt Bogdanich and Michael Forsythe.
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