
How McKinsey Lost Its Way in South Africa - doener
https://www.nytimes.com/2018/06/26/world/africa/mckinsey-south-africa-eskom.html
======
sonnyblarney
Ok, I find this very problematic - along the lines of 'Hey, our country is
massively corrupt and dysfunctional, and these Westerners came in and didn't
do really anything really wrong or corrupt, there are other actors who are
clearly to blame, but let's blame the Western Colonialists!

This is a bad meme.

First - don't trust McKinsey or any consultants to implement anything unless
it's been done before and clear. They're smart people who make slides.
Sometimes they have specific knowledge.

Second - it seems as though they were a little aggressive on pricing, who can
blame them? It's not their fault - whoever was on the procurement and
oversight side on the fence is definitely the guilty/stupid/corrupt party on
that one. There doesn't seem to be any indication that McKinsey cheated on
that, I mean, literally they are even admitting 'maybe we could have charged
less' like a self-aware faux pas? Would we expect that of any business
anywhere?

It seemed they knew there was some risk and tried to investigate it
legitimately, and then backed away ultimately when things were known. So
that's not so bad.

And yet - it looks like there were obvious corrupt actors in this - Gupta's -
surprise (!) who where knowingly and specifically trying to screw over the
system!

\--> So why isn't this article about the Guptas?

Shouldn't the headline be: "Indian-South African Gupta family swindles South
Africa yet again?"

The evidence in the article doesn't really indict McKinsey of anything other
than 'knowing maybe they shouldn't have been getting into something risky'.
Sure. But they're clearly not the bad guys, and not even 'knowing enablers'.

The problems in this area have little to do with McKinsey.

~~~
mad_tortoise
You are totally wrong as another commentator pointed out. Mckinsey knowingly
incited and spread racial hatred for their personal gain, and pushed the idea
of "white monopoly capital" so that the ANC could leverage that as a political
point. The result being highly inflamed racial tensions on their part, not
only this but they were paid by Gupta linked companies and organisations. The
Gupta's, an Indian billionaire family, have been responsible for corruption of
the previous president Zuma, and even had a term 'state-capture' defined to
explain what they have done. Through corruption they have literally come to
own large state entities, however this was stopped and they and former
president are being charged with corruption.

Mckinsey was pivotal in enciting racial tensions, among many other things, to
try to obfuscate what the president and Gupta's were responsible for in terms
of corrupting the state, by blaming other parties namely "White captial".

~~~
wernsey
The "white monopoly capital" was not incited by McKinsey, though.

What happened was that the Gupta brothers and the president received a lot of
negative media attention for a series of very serious corruption allegations,
so they hired UK-based PR firm Bell Pottinger.

Bell Pottinger spun a story that they were victims of rich white people who
spread these stories because their wealth was being threatened. They also
hired mobs for protests and ran twitter campaigns.

This did agitate some racial tensions, but fortunately they weren't successful
thanks to the dedication of investigative journalists and some heroic whistle
blowers.

Here are two relevant links: *
[https://www.dailymaverick.co.za/article/2017-06-06-scorpio-a...](https://www.dailymaverick.co.za/article/2017-06-06-scorpio-
and-amabhungane-guptaleaks-how-bell-pottinger-sought-to-package-sa-economic-
message/) *
[https://www.dailymaverick.co.za/article/2017-07-10-analysis-...](https://www.dailymaverick.co.za/article/2017-07-10-analysis-
bell-pottinger-has-thought-us-what-to-treasure-in-the-long-painful-haul-back-
to-freedom/)

~~~
sonnyblarney
Yes - to add, McKinsey does not do corporate communications.

I know some McKinsey types and they are the last people on earth to really
grasp populism, field marketing, branding, perception etc..

You don't hire McKinsey to do 'online twitter / Instagram' campaigns.

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jessaustin
_Also troubling was the fact that McKinsey had won the contract without
competitive bidding._

One finds this nugget more than halfway through longish TFA. This really
buries the lede. Without a competitive bid process, a public organization is
at the mercy of its stupidest and most corrupt officials. When a tiny town in
the middle of nowhere wants an abandoned building torn down, they don't call
the mayor's cousin. They open an RFP, and the only way the mayor's cousin gets
the job is if her bid is the least expensive for the town. Perhaps developing
nations can't be expected to have any officials who know how such things
should work (!), but every McKinsey employee damn well ought to have known
that a giant secret contract is necessarily corrupt.

~~~
hectormalot
Don’t really agree with the idea that everything should be tendered. Tenders
are a poor fit for complex situations where the complete path is not clear. To
use your analogy: what if the tender included selecting the building to tear
down as well as demolishing it? Without further specification, the winner of
the tender could have an abnormally low price, be incentivized to pick the
easiest building to demolish, and leave the rubble on site because you forgot
to define what demolish actually means.

In coding terms: if you can do it waterfall then you can probably tender it,
otherwise I’m not so sure.

~~~
jessaustin
It wasn't an analogy. This literally happens every day. All towns have a
process in place for selecting which local hazards to demolish.

Of course for more involved requirements it may be good to break the process
into more than one step. It's possible that no one knows what's wrong with the
public power utility. If you have to hire McKinsey because corruption,
negotiate a simple fee for them to run an actual RFP process for an actual
management consulting engagement for you. One of the requirements for that RFP
will be that theirs cannot be the only viable bid. If they can't get a bid
from another firm that has consulted for publicly-owned utilities, they don't
get their RFP fee either.

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olivermarks
[https://asiancorrespondent.com/2011/10/what-drove-rajat-
gupt...](https://asiancorrespondent.com/2011/10/what-drove-rajat-gupta-stray-
greed-or-ego/#DP7SyYK1zBOO5bKE.97)

[https://www.cnbc.com/id/41853809](https://www.cnbc.com/id/41853809)

Many McKinsey partners were consumed by greed and exposed during the 2008
banking meltdown and aftermath. This NYT piece is essentially a pr whitewash
despite all the details and acceptance of failings. There are plenty of good
people lower down at McKinsey but people like Rajat Gupta did a lot of damage
to McKinsey's credibility worldwide imo.

~~~
JumpCrisscross
> _Rajat Gupta did a lot of damage to McKinsey 's credibility worldwide_

This claim is correct, but I think we can reference better sources . The SEC
complaint [1] "alleges that, among other things, Rajat K. Gupta tipped his
business associate Raj Rajaratnam, Galleon Management’s founder and managing
general partner, to confidential information Gupta learned in the course of
his duties as a member of the Board of Directors of The Goldman Sachs Group,
Inc. The complaint alleges that Gupta disclosed material nonpublic information
concerning Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs in
September 2008, and concerning Goldman Sachs’s financial results for both the
second and the fourth quarter of 2008. Rajaratnam used the information he
learned from Gupta to trade profitably in certain Galleon hedge funds" [2].
Somewhat pertinently, Gupta did not violate his responsibilities to Goldman
Sachs as a McKinsey officer, but as a GS Board member.

[1]
[https://www.sec.gov/litigation/complaints/2011/comp22140.pdf](https://www.sec.gov/litigation/complaints/2011/comp22140.pdf)

[2]
[https://www.sec.gov/litigation/litreleases/2012/lr22582.htm](https://www.sec.gov/litigation/litreleases/2012/lr22582.htm)

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mikorym
I think the article is relevant in addressing the private sector's partial
accountability in the general scene of corruption and exasperation in South
Africa.

It is not that McKinsey could be blamed for Eskom's general inefficiencies but
rather that it shares responsibility in the lack of a managerial and
efficiency turnaround at state companies like Eskom.

The general rhetoric is to blame the government (perhaps correctly), but the
present article I think does not attempt to singly shoulder responsibility on
McKinsey. It shows how government inefficiency may lead to a general free-for-
all or at least a atmosphere of being exempt from justice in the private
sector as well.

My summary on the matter would be that many South Africans have the desire to
build towards a more economically competent country and that complications in
bureaucracy and malevolent actors complicate this. This is a country where
anyone rather easily can weaponise different kinds of racism or partiality
that degenerates into a debate about whom we should blame. In preventing this
particular counter productive and frequent exercise perhaps it is useful to
remain as objective as one may be in identifying responsible parties, letting
them be held accountable in the corresponding legal framework, and from there
focusing on actual problems such as the state of disrepair of Eskom run power
stations. It may well be that action by private companies would catalyse the
process towards an efficient and economically sound South Africa. However,
what this articles shows is how an internationally respected private firm fell
into the same traps that local politicians do.

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anonu
My favorite McKinsey failure is the one where UBS (the Swiss Investment Bank)
brought them in circa 2000 to understand how they could better expand in the
USA. McKinsey said something along the lines of "Well - you guys have very
little subprime mortgages exposure and we think this is the next hot thing -
you guys need to move all your chips into subprime".

Fast forward 7 to 8 years and the US was hit with one of the biggest financial
crises ever. Caused by what? Sub-prime debt. UBS had some of the biggest debt
writeoffs - maybe 2nd to Citi.

Source: There is a post-mortem report that UBS released after the financial
crises that explains how they got there.

------
known
Which caste is looting India? [https://www.quora.com/Which-caste-is-looting-
India/answer/Ad...](https://www.quora.com/Which-caste-is-looting-
India/answer/Adarsh-Sapoota)

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trhway
>Since President Trump took office, McKinsey has greatly expanded consulting
for Immigration and Customs Enforcement through that agency’s office of
“detention, compliance and removals.”

Now ICE need the consultants for that! I wonder whether McKinsey had anything
to do with that risk assessment software update discussed today?

