
How McKinsey helps companies avoid responsibility - yarapavan
https://slate.com/business/2020/06/mckinsey-companies-avoid-responsibility-management-consulting.html
======
danmostudco
From the article: _“McKinsey started as a business that sold candid,
dispassionate advice to corporate managers, but selling advice and building a
brand around it also sets up a mechanism for diffusing responsibility. 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.“_

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.

~~~
rmrfstar
GDP growth comes from productivity growth. Productivity growth comes from
research and development.

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](https://en.wikipedia.org/wiki/J._Michael_Pearson)

[2] [https://dealbook.nytimes.com/2013/09/02/in-a-new-book-
mckins...](https://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckinsey-co-
isnt-all-roses/)

~~~
bumby
While I agree that R&D can be a major driver, it’s not the sole way to
increase productivity. Making existing processes more efficiently is also a
means to increase productivity, often with more immediate ROI and less risk
than R&D. I have a feeling that may be the “inefficiencies” he was alluding to

~~~
rmrfstar
Yeah, but you don't grow GDP 5% per year by shaving basis points off of vacuum
tube manufacturing costs.

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.

~~~
bumby
R&D is definitely necessary for long term growth but I think you might be
surprised how much process improvements can improve productivity.

In a previous role as an industrial/process engineer, it wasn’t unheard of to
productivity increases approaching 20% for relatively little capital
investment

------
froidpink
I think a big part of the value proposition that firms like McKinsey and BCG
brought during the 70s'-80s' is the idea of operational excellence.

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.

~~~
ghaff
When I was a product manager in the 80s, there was a whole class of company
that was largely in the business of being an intermediary for data that
everyone needed to operate but which they couldn't request directly from a
competitor.

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.

------
bob33212
Consultants can also help companies be dishonest with themselves. Imagine a
company who has failed to find product market fit bringing in a sales
consultant to "fix their sales problem" or a engineering consultant to fix
their "product problem". Are either of these consultants going to turn down
the work and point out the real problem of missing market research?

~~~
wbronitsky
> Are either of these consultants going to turn down the work and point out
> the real problem of missing market research?

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.

~~~
thoraway1010
if you are good at market research / product market fit / good engineering and
solving actual problems you will be EXTREMELY successful both with the big
mgmt co's and working as a consultant yourself.

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).

~~~
wbronitsky
This “shut up and do what I tell you” mentality is remarkably similar to that
of the management in the consulting firm I was in, and is a big reason I left.
They hired experts, asked them to give their opinion, then ignored it and/or
shouted it down when it didn’t conform to their previous expectations. I would
then be told I was incompetent and that my opinion was not valid, always
without evidence. Interesting to see the pattern here as well.

I’m glad the attacks have gone from consulting partners to random anonymous
commenters on the internet though.

~~~
thoraway1010
A couple of notes.

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...](https://www.theatlantic.com/ideas/archive/2020/02/how-mckinsey-
destroyed-middle-class/605878/)

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).

~~~
bob33212
Thanks for the info. This was very helpful, not totally unexpected though.

------
yarapavan
> McKinsey started as a business that sold candid, dispassionate advice to
> corporate managers, but selling advice and building a brand around it also
> sets up a mechanism for diffusing responsibility.

> 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.

~~~
bumby
This diffusion of responsibility just strikes me as bad leadership.

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?

~~~
spaced-out
To the corporation, all that matters is returns generated for shareholders.
None of the things you talked about contribute to that (or at least not very
directly), thus they're not valued.

------
peter303
Amusing to see those 20-somethings (including H1Bs) arrive with their laptop
and spreadsheets. Then interview experienced workers twice their age as how
their duties are redundant. Life changing consequences for the workers.

~~~
ntsplnkv2
Everyone thinks they're an experienced worker, everyone thinks they're
underpaid, and everyone thinks they're valuable. The reality is most of the
workforce is simply not that extraordinary and are unimportant when it comes
to the overall business.

~~~
knightofmars
Including all of the leadership telling everyone else they aren't important.

------
MattGaiser
> Corporate jobs were increasingly divided between replaceable cogs at the
> bottom and stressed-out captains of industry at the top.

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.

------
code4tee
There was a time when McKinsey could probably say they “hire the best of the
best” but I’m not aware of anyone that honestly believes this to be the case
today. Top talent doesn’t want to work for consulting firms anymore.

~~~
Aperocky
Best of the best in making powerpoints and convincing the upper management,
I'll concede that.

~~~
harry8
Relevant: You don't see graduate hires in consulting or banking who couldn't
also moonlight as underwear models. Unless Daddy or Mommy is rich, powerful
and connected. Then you can be ugly but well dressed for sure.

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.

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newyankee
haha, so much experience where i see these consultants summarising the same
suggestions i made but with a fancier language, accent and level of confidence
and managing to sell it to leadership

~~~
FlorianRappl
Quite often its not even "fancier language, accent and level of confidence",
but just that management - for whatever reason - trusts these "outsiders" more
than their own employees. We live in a weird world. When I (used to) sit next
to McKinsey consultants on a plane I always asked "what's your current
outsourcing project?".

~~~
Spooky23
Having worked as employee and manager in places doing transformation, it’s
hard to trust employees because of internal political strife, etc.

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.

~~~
crocal
In other word, use mercenaries to do the dirty work in your own organisation.
Ever read about the fall of the Roman Empire?

------
motohagiography
It's not really a McKinsey thing, they just have a mystique. The value a
consultancy can offer requires understanding a concept related to "stakeholder
salience," which is essentially the logic of how group decisions get made.
Their networks are also valuable, since if McKinsey facilitates the
introduction, the person is going to return the call. I've also seen some VC
firms move more into this role where they use their brand to get enterprise
exec meetings for their portfolio companies, and I think that model could be
an endgame for a lot of VC firms, not unlike Bain's private equity/consulting
plays. In this sense, some of McKinsey's near term competition might not come
from big-5 accounting firms, but from tech VC firms leveraging the brands,
networks, talent, and tech of their portfolio companies.

------
goatinaboat
This isn’t a revelation. Blame is just another corporate function that can be
outsourced for a suitable fee.

~~~
Zenbit_UX
It actually is a revelation because Mickinsey invented and perfected this
game. They even went as far as offering themselves as scapegoats for the
executives that couldn't stomach the guilt.

~~~
gcatalfamo
No, really, this is very well-known

~~~
sumedh
Well known to you not to others.

------
mlthoughts2018
This why many, many professional services exist, and their stated intentions
exist solely to create complex arguments about social values and virtue
signaling.

\- 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.

------
ntsplnkv2
McKinsey did a lot of outsourcing? Who hasn't - this isn't McKinsey - it's a
natural consequence of capitalism. Sell thinks cheaper, lower internal costs,
make more profit. This isn't rocket science.

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.

------
golemotron
Incorporation, insurance, and staff focused on strategy help companies avoid
responsibility too.

------
thrawa567
Infamously, German minister of defense von der Leyen channelled large sums of
money to facilitate nobody knows what. This borderline corruption has been
subject to investigation, which unfortunately did not got the attention it
should have - because she was promoted away to the EU where she is just doing
more of the same.

~~~
uwatz
illustrative and short
[https://www.youtube.com/watch?v=-fWxHXEduuQ](https://www.youtube.com/watch?v=-fWxHXEduuQ)

~~~
aspenmayer
Same story in English:

[https://www.youtube.com/watch?v=TVcI2XWAWyk](https://www.youtube.com/watch?v=TVcI2XWAWyk)

[https://www.euronews.com/2019/07/16/watch-german-mep-
stages-...](https://www.euronews.com/2019/07/16/watch-german-mep-stages-
protest-against-von-der-leyen-in-eu-parliament)

