McKinsey claims book 'fundamentally misrepresents' work of the firm

21 October 2022 Consultancy.uk 6 min. read
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Strategy giant McKinsey & Company has lashed out at a book that it believes “fundamentally misrepresents the firm and its work”. The book, by two New York Times journalists, examines the influence and controversies of the consultancy throughout its history.

As one of the world’s largest, most famous consulting brands, McKinsey & Company has spent close to a century serving some of the largest corporations and most powerful government figures on the planet. As well as seeing the firm play a major role in advising on the strategies that have led the world’s economy and society to its current state, this has seen the firm become a prestigious proving-ground for new generations of leaders. The likes of former Foreign Secretary of Britain, William Hague; United States Secretary of Transportation, Pete Buttigieg; and Greek Prime Minister, Kyriakos Mitsotakis, have all come through the ranks at the firm.

But when a firm serves the richest and most powerful people on Earth, a certain kind of notoriety comes with the territory. McKinsey is no stranger to controversy – and in the last two decades alone, it has been either directly involved in, or closely associated with, a number of notable scandals. These range from the Enron collapse at the turn of the century, to strengthening ties with Saudi Arabia’s government in the wake of journalist Jamal Khashoggi’s murder, allegedly being embroiled in a state-capture scheme in South Africa, consulting for Immigration and Customs Enforcement in the US during a draconian crackdown on US migrants in 2019, among others.

McKinsey claims book 'fundamentally misrepresents' work of the firm

Those are among the cases noted in a new book, from US journalists Walt Bogdanich and Michael Forsythe. ‘When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm’ catalogues ways McKinsey’s advice has reshaped the world – suggesting that as long as McKinsey serves its shareholders successfully, there is rarely a job too grim for it to take on.

Forsythe and Bogdanich are keen to argue that McKinsey’s negative influence extends far beyond individual cases, though, with the firm’s finger-prints also covering a wider ideological shift in the global economy over the 20th century. With union membership high, and workers’ wages in America rising faster than executive pay, many would-be clients were keen to find ways of turning the tables on their empowered workforce, and boost their profits. Looking to tap into this, the book states that McKinsey came to specialise on downsizing and offshoring – liquidating middle management to help balloon executive salaries, while also crushing the domestic industrial base of unions.

This continued well into the 1990s, when Forsythe and Bogdanich claim the firm advised American clients to ship jobs to cheaper countries such as India. It just so happened that McKinsey was advising major outsourcing firms like Infosys in those countries. And in the 2010s, the book also notes that McKinsey advised health experts on opening the UK’s health market up to private providers. While for most in the UK, privatising the NHS remains unthinkable, Bogdanich and Forsythe suggested the consultants “also amplified the conceit that Britain, with one of the world’s most cost-effective healthcare systems, needed to cut its health budget” – the legacy of which has seen wait-times boom, while helping further claims the healthcare entity is ‘inefficient’, and in need of ‘reform’.

While the standard defence of consultants is that they are paid for ‘advice’, and are not responsible for whether or not clients implement that, this paints a picture of a firm which in the pursuit of profits, willingly informed clients of how to build a less healthy, equitable, and fair society at every turn. It is a far cry from the picture that many consulting firms are currently trying to build – of being ‘purpose-led’ businesses, devoted to ‘making the world a better place’.

“We are not perfect”

Responding to the allegations, however, McKinsey was steadfast in its belief that it has done no wrong. In particular, a statement from the firm was keen to note that the book’s authors themselves acknowledged the line between ‘advising’ and ‘doing’.

The statement expanded, “A recently published book fundamentally misrepresents our firm and our work. The book also seeks to associate our firm with events… that we simply had nothing to do with. Perhaps this is why the book contains more than a dozen disclaimers, across these and other issues, acknowledging that our work did not cause or was not associated with the trend or event for which the authors criticize us.”

At the same time, McKinsey made it clear it was unhappy with how little of the book related to its taking culpability when it had been at fault. For example, the firm pointed to its past work on opioids. McKinsey was one of Purdue Pharma’s key strategic advisors during the years that the pharmaceutical company launched OxyContin – one of the drugs which the US Health Service CDC believes caused almost half a million Americans to die from overdoses between 1999 and 2018. The consulting firm agreed to pay $573 million to avoid the possibility of a civil suit – while it has also made important operational changes.

“We have invested more than $600 million to upgrade our legal, risk, and compliance capabilities, and hired some of the world’s top experts to lead those teams,” McKinsey said of it’s response to the scandal – the fallout of which also contributed to the 2021 downfall of its former CEO. “We now follow a global client selection policy more rigorous than any other in our industry.”

And while McKinsey acknowledged “we are not perfect”, the firm added its mission “to help our clients – and business at large – deliver lasting value for their shareholders, employees, customers, and communities around the world” was “as important as ever”. But beyond the standard defences of core values, and pleas of being ‘only human’, to some it might appear as though there was also something of a cloaked warning amid the statement – noting Forsythe and Bogdanich’s own bosses have depended on McKinsey advice previously.

“Despite the stereotype some have about consultants, McKinsey is typically hired to help our clients grow their businesses and expand their workforces,” McKinsey stated. “Indeed, we helped the authors’ own newspaper, The New York Times, develop the digital subscription model that has made it one of the most successful media companies.”