I've never hired McKinsey and so don't have direct experience of their abilities. Besides the "root of all evil" post we've had a few others that don't speak to any special insight from the consultants:
McKinsey says Germany in terminal decline
That one was from 2008. Also from 2008:
McKinsey on the economics of solar
Business consulting firm projects robust growth for solar and grid parity in many locations by 2020The jury is still out.
The current McKinsey Quarterly has an interview with Ray Kurzweil, arguably one of the slipperiest prognosticators currently predicting. On the other hand the McKinsey folks I've met told good jokes.
Here's Naked Capitalism:
McKinsey, the Insider Trading Scandal, and the Problems With Consulting
I’m not easily shocked these days, but I have to confess I gasped out loud when I read that the former managing director of McKinsey, and until recently board member of Goldman and Procter & Gamble, Rajat Gupta, had been charged by the SEC for insider trading. Why would someone with one of the most blue chip reputations in Corporate America, who has clearly done very well financially, risk it all to make a bit more? Not only is the downside considerable, but it also isn’t as if these moves would have made a meaningful difference in his lifestyle. He already had status others would kill for. And passing profitable tips to Raj Rajaratnam was never going to be a ticket to Hedgistan levels of wealth.
But the next interesting bit was to watch the reaction in terms of what this scandal meant for McKinsey. This event was a Rorschach tests on the firm, often with a bit of schadenfreude at another elite name being shown to have feet of clay. And even though I worked for McKinsey over 20 years ago and think the firm has a lot to answer for, some of the charges are a bit barmy.
So let’s dispatch with the uninformed inflammatory stuff first and get to the real dirt. Barry Ritholtz (who I normally like) tried a drive by shooting that went wide of the mark: “Is McKinsey & Co. the Root of All Evil?’ His list of seriously bad ideas that McKinsey recommended to clients, including a strategy that led to SwissAir’s bankruptcy, its involvement in some of Enron’s creative accounting ideas, and its encouraging Allstate not to pay legitimate insurance claims, manages to miss their single biggest value destroyer: the AOL-Time Warner merger, the worst M&A deal of all time. (As much as McKinsey had some fingerprints on Enron, it was central in the AOL-Time Warner deal. It pushed the board to consider it five separate times).But does it add up to Barry’s charge, “where ever there has been a financial disaster in the world, if you look around, somewhere in the background, McKinsey & Co. is nearby.” Um, no. McKinsey had nothing to do with the 1987 crash or the even bigger value destroying (but less widely publicized) 1994-1995 derivatives wipeout. And I have not seen anything to suggest it played an even secondary role in the global financial crisis. Big dealer firms tend to bring in McKinsey only in the down times; they are strongly of the view that they fact that they make so much more than consultants means they are clearly vastly smarter too, ergo there isn’t anything they could tell them that would be useful. The one exception is private equity, where McKinsey and Bain, to a lesser degree BCG, do a lot of work for the biggest buyout shops, such as KKR and TPG.
Andrew Haldane of the Bank of England has estimated that the global financial crisis cost between 1 and 5 times global GDP. Divide that across, say, 20 banks. McKinsey in its wildest dreams never had the clout to do that kind of damage. (Barry suggests a Taibbi type investigation, but journalists have been trying for as long as I have known anything about McKinsey to do a hit piece, and no one has succeeded)....MORE
