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Death by PowerPoint: the global influence of McKinsey

A new book connects the consultancy firm to a series of social and economic crises. But how culpable is a company that only advises?

By Will Dunn

In the desert outside Kashgar, in the Xinjiang region of western China, pristine white tents dotted the rolling dunes. Guests from around the world strolled between them along paths of red carpet. They lounged on cushions, dined in the open air and gathered to share their wisdom about the world and their excitement about the future. They spoke about the values of the company for which they all worked, values that are reinforced at an annual Values Day held at every one of the company’s global offices and which include such precepts as “create positive, enduring change in the world”, “sustain a caring meritocracy” and “uphold the obligation to dissent”.

Few places on Earth could have better illustrated the difference between the principles espoused by McKinsey, one of the world’s largest management consultancies, and the realities that surround it. The desert getaway, which took place in 2018, was situated just four miles from a huge detention centre in which thousands of Uyghur people were imprisoned. The Chinese government, which has since been accused by the UN of committing genocide and crimes against humanity in these camps, is the owner of a number of McKinsey’s biggest clients. McKinsey’s success in China has been built on bringing Western management principles to the great state-owned firms, the zhongyang [guoyou] qiye, and helping to develop the soft-power investments China has made in its Belt and Road strategy of economic expansion.

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The bright young consultants enjoying their corporate retreat would have been horrified to know that large numbers of people were being tortured, murdered, raped and forcibly sterilised a few minutes’ drive away. But they could hardly have claimed to have been oblivious to the plight of the Uyghurs: Xinjiang was under a brutal security regime, and other countries had already voiced concerns about the mass surveillance, compulsory DNA collection and forced “re-education” of the region’s Uyghur population. Some among the McKinsey group may have worked on the conversations about “smart cities” that McKinsey was already having with Chinese state-owned businesses – discussions that focused on implementing technologies for collecting and sharing all the available data on citizens’ lives, much as the Chinese government was already doing in Xinjiang.

Management consultants have had a bad reputation for a long time. In a talk to students at MIT’s Sloan School of Management, Steve Jobs asked how many had taken work experience positions in consulting; seeing a lot of hands raised, he said: “Oh, that’s bad.” The crowd laughed, but Jobs pressed on: “You should do something”, he said. “Without owning something, over an extended period of time… where one has to see one’s recommendations through… and accumulate scar tissue for the mistakes… one learns a fraction of what one can.”

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But as Walt Bogdanich and Michael Forsythe – both investigative reporters at the New York Times – argue in this comprehensive and excoriating exposé, this is a misunderstanding of what management consultants are really for. Their book shows the many ways in which, since 1926, corporate America – followed by the rest of the business world, as well as governments, regulators and charities across 67 countries – has paid McKinsey to rationalise, justify and take temporary responsibility for actions that business owners and managers wanted to do anyway.

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Some of these decisions are shown to have helped shape whole societies and economies. In 1950, a McKinsey partner, Arch Patton, conducted a study for General Motors in which he found that the growth in executive pay at 37 large American companies was being outpaced by the growth in worker pay. CEOs were aghast to discover that their salaries were a mere 20 times that of the average shop-floor worker, but Patton had a solution: he recommended that executive compensation be connected to profit, and paid partly in stock options.

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In the decades that followed (during which time Patton became McKinsey’s biggest earner) American corporations went from favouring slow growth and stability to chasing rapid increases in profit and market capitalisation – from making things to planning to make things – because this was what the people at the top were paid to do. Today, the wealth of many of the world’s richest people is predicated on their willingness to “move fast and break things”, as Mark Zuckerberg once put it. 

Disruption wins not because it is most profitable for the company or useful to its customers, but because it is most beneficial to speculators, the biggest of whom is usually its leader. The apotheosis of this trend is Elon Musk, whose company Tesla between 2009 and 2021 made a net income of minus $352m from selling cars, but who has a personal wealth, based largely on the share price of his car company, of nearly $200bn. Last year the ratio of CEO to worker pay in the US rose to 670 to one.

Bogdanich and Forsythe find McKinsey guilty of more than just the growth of inequality and the deindustrialisation of America, however. The authors credit the company and its army of dynamic MBAs with some degree of involvement in, amongst other things: the downfall of US Steel, fatal accidents at Disneyland, Chinese aggression in the South Sea, mass teenage nicotine addiction, climate change, the opioid epidemic, the caging of children at the US-Mexico border, the privatisation of the NHS and the 2008 financial crisis.

That’s quite a list, and McKinsey has denied being the cause of any of these events. As far as the firm is concerned, it sells services to clients, but it doesn’t conduct the client’s business. Microsoft and Google provide software to most of the world’s businesses, but they are not seen as culpable for what their customers do with it – and how much damage can PowerPoint slides and memos really do?

The authors argue that the answer to this is evident in the slides that discuss “targeting and influencing prescription behaviour in pain clinics” and a strategy to “turbocharge” sales of OxyContin, which McKinsey presented to the pharmaceutical company Purdue. These slides make a persuasive case for McKinsey’s role in an epidemic of drug addiction that had killed more than 400,000 Americans by the time its consultants stopped advising opioid manufacturers in 2019. (In 2021, McKinsey denied wrongdoing and agreed to a $573m settlement to resolve claims brought against it for its work with Purdue Pharma.)

In the case of the 123-slide presentation that McKinsey delivered to the Gordon Brown government in 2009, in which it proposed cutting £20bn from Britain’s healthcare budget and losing 10 per cent of the workforce, causation is less clear. The proposals would later feed into the 2012 Health and Social Care Act and the marketisation reforms that have led to swathes of GP practices being taken over by foreign companies. Clearly, McKinsey played some part in the formation of these policies – but it didn’t enact them.

The effectiveness of management consultancy is also debatable. A four-year study of 120 NHS hospital trusts found that the majority lost money and became more inefficient as a result of using external management consultants. But they are certainly adept at helping themselves. One former partner advised a colleague: “Wedge yourself in and spread like an amoeba.”

Perhaps this is why, unlike other companies, McKinsey doesn’t cling to staff; instead it seems to encourage them into other businesses and government jobs. And perhaps this helps explain why so many organisations are keen to bring in consultants. Dido Harding, a former McKinsey consultant, clearly saw their value: after she was appointed to run NHS Test and Trace at the height of the Covid-19 pandemic, the programme employed 2,300 consultants – more people than work in the Treasury – to deliver a service that MPs concluded “failed” to protect the public despite spending over £300m on consultancy. More than £560,000 of this went on a single “vision, purpose and narrative” document compiled by McKinsey.

Reading this clear-eyed and infuriating book, it’s tempting to conclude that McKinsey is what’s wrong with the world. As one former consultant wrote to the authors, there are no “Illuminati, Lizard People, or ‘globalists’… There is no secret society shaping every major decision… There is, however, McKinsey & Company.”

However, such a conspiracy theory would mean McKinsey had fixed principles. The truth is that management consultants are only ever a catalyst. With slide presentations and studies, they can make the depredations of capitalism seem anodyne or inevitable, but ultimately they are not the people making decisions. Their job is to do what the client wants – whoever that client is and whatever they desire. And who needs a conspiracy when you have the profit motive?

When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm
By Walt Bogdanich and Michael Forsythe
Bodley Head, 368pp, £20

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[See also: Books of the year 2022]

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