Current Affairs.Feb. 5:
An insider’s perspective on how the world’s most elite consulting firm spreads the gospel of capitalism…
The author of this piece has chosen to maintain anonymity.To those convinced that a secretive cabal controls the world, the usual suspects are Illuminati, Lizard People, or “globalists.” They are wrong, naturally. There is no secret society shaping every major decision and determining the direction of human history. There is, however, McKinsey & Company.
The biggest, oldest, most influential, and most prestigious of the “Big Three” management consulting firms, McKinsey has played an outsized role in creating the world we occupy today. In its 90+ year history, McKinsey has been a whisperer to presidents and CEOs. McKinsey serves more than 2,000 institutions, including 90 of the top 100 corporations worldwide. It has acted as a catalyst and accelerant to every trend in the world economy: firm consolidation, the rise of advertising, runaway executive compensation, globalization, automation, and corporate restructuring and strategy.I came into my job as a McKinsey consultant hoping to change the world from the inside, believing that the best way to make progress is through influencing those who control the levers of power. Instead of being a force for good, I found myself party to the most damaging forces affecting the world: the resurgence of authoritarianism and the continued creep of markets into all parts of life.
Your views of McKinsey’s impact on the world will be largely determined by your views on capitalism’s impact on the world, for few firms have made a greater impact on the prevailing economic system. If you believe, as I once did, that capitalism is the least bad system devised so far, that its worst excesses can be reined in through effective regulation, that it has been the largest engine for human progress in human history, then McKinsey is a Good Thing. As missionaries for capital, it has helped spread the Good Word far and wide, making the world more productive and efficient as a result.If, however, you believe that, whatever capitalism’s role in history, its continued practice poses an existential threat to governments, the biosphere, and poor people the world over, then the firm’s role is that of a co-conspirator to a crime in which we are all victims. McKinsey is capitalism distilled. It is global, mobile, flexible, and unabashedly pro-market and pro-management. The firm has an enormous stake in things continuing more or less as they are. Working for all sides, McKinsey’s only allegiance is to capital.
As capital’s most effective messenger, McKinsey has done direct harm to the world in ways that, thanks to its lack of final decision-making power, are hard to measure and, thanks to its intense secrecy, are hard to know. The firm’s willingness to work with despotic governments and corrupt business empires is the logical conclusion of seeking profit at all costs. Its advocacy of the primacy of the market has made governments more like businesses and businesses more like vampires. By claiming that they solve the world’s hardest problems, McKinsey shrinks the solution space to only those that preserve the status quo. And it is through this claim that the firm attracts thousands of “the best and the brightest” away from careers that actually serve the public.“The firm does execution, not policy.” I remember the phrase vividly. We were on a conference call with the entire client-service team, including senior leadership. Trump had just begun his term, and the direction of our client, a federal agency, had markedly but predictably shifted. Our team of mostly young do-gooders were concerned about the role we were playing to enable this shift. We were up-in-arms! Well, as up-in-arms as overachieving Ivy League graduates get. To quell dissent, the leader reassured us: We only do execution, not policy.This categorical claim was meant to assuage our fears. We weren’t the ones steering the ship towards the cliffs, we were merely tasked with keeping the ship afloat until it reached its destination.
But politics touches all things. When the direction of an agency is set by the president, helping execute on that direction means participating in politics. Had McKinsey been as global in the 1940s, the “no policy” line of reasoning would not have prohibited them from helping Bayer optimize its production of Zyklon B, adding a grim double meaning to the partner’s promise to only focus on execution.How did things turn out this way? McKinsey consultants gave 27 times more money to Hillary Clinton’s campaign than to Donald Trump’s. The members of my team attended the Women’s March while serving an agency shaped by the man they marched against. The firm hires from top universities and many of its consultants have graduate degrees, both strong predictors of liberal political tendencies. McKinsey is at the top of its field, affording it the unique opportunity to turn down lucrative work that other firms cannot. The firm’s 14 values serve as a gold standard for professional services firms and are actually discussed and largely adhered to.The best explanation is structural. McKinsey’s governing model, when compared to other firms of its size and age, is anarchy. The Managing Director (CEO equivalent) has surprisingly little ability to control who the firm serves (said a partner about the Managing Director, “you are definitely not in charge”). McKinsey remains the world’s largest partnership, and partners rule. The general rule of thumb is that if a partner can staff a team, the firm will do the work. If associates don’t want to work with a tobacco company or a defense contractor, they don’t have to. As a result, only a small portion of the consultants need to buy into a client relationship for McKinsey to do work with them. What this means in practice is that the firm doesn’t work with North Korea, but that’s about it.McKinsey has grown to the point that it is taking on work that prior incarnations of the firm would have turned down due to the political risk involved. To keep lavishing its partners with multimillion dollar annual compensation packages, the firm needs to sustain double digits year over year growth. In a world that’s been thoroughly McKinseyfied, this requires a loosening of standards. With its fingers in more pots than ever, McKinsey continues to be at the epicenter of world-shaping events.
Beyond the impossibility of dividing the practice of governing into “policy” and “not policy,” the claim itself is bullshit. McKinsey teams often have a policy perspective. They will never frame it that way on the shiny slide decks presented to clients. The team will instead present options, with the preferred option appearing first, with the best supporting evidence behind it. Sometimes the pretense is disposed of and a little “*preferred option” will appear next to the favorite. (On top of all this, the firm uses the client’s logo and formatting on each slide deck. Rarely in a deck prepared for a client would McKinsey’s name explicitly appear. If any of the materials were to leak to the public, there would be nothing tying it back to the firm.)Perhaps the greatest secret to McKinsey’s success is its ability to benefit from its clients’ successes without being punished for their failures, no matter what role the firm had to play in either outcome. In perhaps the most famous example, the firm survived Enron’s collapse, despite being as close to the company’s key decision-makers as Enron’s accountants, Arthur Andersen, an entity that died with its host.Direct Harm Serving GovernmentsThe “no policy” policy is classic McKinsey: a complete abdication of responsibility (moral or otherwise) for the courses of action it recommends. However, this line may no longer cut it in today’s political environment. This summer, the New York Times reported on McKinsey’s termination of its contract with ICE:While stating that McKinsey’s work for the agency did not involve carrying out immigration policies, [Managing Director] Sneader wrote that the firm “will not, under any circumstances, engage in any work, anywhere in the world, that advances or assists policies that are at odds with our values.”
Note again the fiction that the firm isn’t involved in carrying out immigration policy (obviously, McKinsey analysts aren’t physically separating families). According to an award description for one of the ICE contracts, the firm was hired to assist the “ENFORCEMENT AND REMOVAL OPERATIONS (ERO) ORGANIZATIONAL TRANSFORMATION INTEGRATED CONSULTING SERVICES.” ERO is the “papers please” division of ICE, and any transformation and integrated consulting services—a catch-all that could mean literally anything—will have the goal of making the organization more effective at carrying out its stated mission, which will mean more people detained and deported and more families separated.The second problem with this reassurance is that while McKinsey’s “14 values” may be reassuring to a prospective client, they say nothing about the firm’s larger role in the world. The closest value is a commitment to “observe high ethical standards,” but I only ever saw this applied to the treatment of clients: don’t lie to them, don’t fudge your expenses, etc. If McKinsey had values that considered the human impact of its work and attempted to honor Sneader’s pledge, it would need to pull out of engagements all over the world. Fortunately for the partnership, the value system is free of any mandate to examine the human impact.The firm was in the news recently thanks to a report it made on the social media reaction to Saudi Arabian austerity policies. The report identified Twitter users who led criticism of the measures, and according to the New York Times, after the report was issued, the users were reportedly surveilled or arrested. Following the assassination and dismemberment of journalist Jamal Khashoggi, many US firms and CEOs boycotted the Saudi Arabia Future Investment Initiative (known as Davos in the Desert). McKinsey (along with many other top consulting firms), however, remained “knowledge partners.” The firm’s ties with Saudi Crown Prince Mohammed bin Salman are deep. In 2015, after preparing a report on how Saudi Arabia can move beyond oil, McKinsey began strategizing with the Crown Prince on the privatization of Aramco, the state-owned oil company and, according to Reuters, “the one thing in Saudi Arabia that works well.” The Kingdom of Saudi Arabia may be McKinsey’s single biggest client (between 2011 and 2016, they ran 600 engagements in the Kingdom)—it will take more than the assassination of a journalist (to say nothing of the brutal war in Yemen) to undermine that thought partnership....
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