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Name: When McKinsey Comes to Town
Rating: 4.1 (304 reviews)
Author: Walt Bogdanich and Michael Forsythe

Walt Bogdanich and Michael Forsythe

The Hidden Influence of the World's Most Powerful Consulting Firm

4.1 (304 ratings)

24 mins

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When McKinsey Comes to Town
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What’s in it for me? Uncover the dark secrets of the world’s biggest consulting firm.

For a century, McKinsey & Company has been the world's most influential consulting firm. Its consultants have shaped decisions at the highest levels of business and government, with the claim of improving efficiency and making the world a better place.

But “when McKinsey comes to town,” the impact on the community isn’t always positive. In fact, it can be disastrous.

In this Blink, we’ll peek behind the curtain of secrecy to expose the firm’s role in creating public health scandals, deepening the climate crisis, and empowering authoritarian regimes worldwide – to name just a few.

Who really benefits when America's most prestigious consulting firm dispenses its advice?

Let’s find out.

It’s just business

You’ve probably heard the name “McKinsey.” It usually appears in connection with Fortune 500 companies like General Electric, Microsoft, and Ford. In fact, it’s safe to say almost every major corporation has worked with the consulting powerhouse at some point.

McKinsey & Company has advised pharmaceutical giants, government regulators, airlines, universities, weapons makers, and media outlets. It’s even counseled US presidential administrations – including those of Obama and Trump.

Operating in 65 countries, McKinsey works with top business, political, and military leaders. Sometimes entire nations hire them for advice. This has netted the firm an estimated worth of $31.5 billion.

But what does McKinsey actually do to earn these hefty fees?

The company claims to help clients craft innovative policies and strategies to stay competitive. In the grand scheme, it promises to boost economies and make the world a better place. But in reality, its formula for success tends to be quite reductive.

McKinsey’s typical playbook involves slashing costs, laying off workers, and cutting “unnecessary” safety measures. The results are often disastrous, especially for the workers. But even its elite clients sometimes find themselves worse off than before.

Let’s look at the example of the US Steel Corporation. Once the world’s most profitable steel company, by 2014 it was struggling – failing to keep up with innovation in the industry. The new CEO hired McKinsey to turn things around. As usual, McKinsey laid off dozens of workers. At first, stock prices rose. But by 2015, losses hit $75 million. Even worse, McKinsey made dangerous staff and maintenance cuts despite workers’ protests. Soon, two workers were electrocuted in accidents tied directly to the reductions.

At protests following the deaths, angry workers began chanting “McKinsey sucks!” But in the end, it was US Steel who paid a meager $14,500 in reparations; McKinsey consultants faced no consequences.

The same cycle repeated itself at Disneyland. McKinsey pushed major maintenance cuts to boost profits despite employee warnings about ride safety. Soon, accidents followed – including two tragic deaths. But again, McKinsey denied all responsibility.

This disturbing pattern reveals how McKinsey operates behind its prestigious image. It recommends harsh, cost-cutting measures to satisfy corporate interests. For McKinsey, this is just business. But for ordinary people, it can spell disaster and despair.

Putting profits over people

Now that we know what McKinsey actually does – versus what it claims to be doing – let’s answer another fundamental question: Who are the people working for McKinsey?

Most of McKinsey’s consultants are top prospects from elite business schools like Harvard and Stanford. Every year, over 200,000 applicants make a bid to join the prestigious firm – but McKinsey only accepts around 1 or 2 percent. Like many consulting firms, McKinsey sells ambitious graduates on wealth, prestige, and solving complex problems. But it also promises the chance to positively impact the world.

The company appeals to idealistic recruits who want purpose along with a paycheck. But recent media exposés have revealed a huge gap between McKinsey's supposed values and the shady reality of its operations.

Because McKinsey barely discloses its work, many young consultants learn about the firm’s dealings with corrupt governments and deeply unethical corporations only after they join. For instance, it was revealed McKinsey paid $600 million to settle probes into its role exacerbating the opioid crisis – but more on that later.

McKinsey's ethos of profits over people was baked in from the start. When hired by GM in the 1950s to study executive pay, the consultants found that wages were rising faster for workers than CEOs. The elite were outraged, so McKinsey swooped in to “help.”

It provided fashionable cost-cutting advice to reverse the trend, actively working against workers’ interests. By the 1980s, McKinsey openly advocated for layoffs as “increased efficiency,” gutting payrolls to pump up stock prices. Offshoring was touted as benefiting consumers despite harming workers. Unions declined as jobs moved south, then overseas. Even amid skyrocketing wealth inequality, McKinsey recommended higher CEO compensation.

The consultants did their job well. In 1950, CEOs made 20 times the amount that average workers did. By 2020, it was 351 times as much. McKinsey's role as capitalism's cutthroat cheerleader made some uneasy given its lofty principles. But for McKinsey, huge corporate profits eclipse any hypocrisy.

Theoretically, McKinsey lets its consultants refuse unethical projects. But in practice, saying no to big clients can be a death sentence for the consultants’ careers.

Draining the government

McKinsey doesn't just advise corporations – it also works extensively for the US government. This includes frequent consulting on health-care and immigration policies. But if you think it adjusts its profit-first approach for governmental work, you’re sorely mistaken.

For instance, McKinsey was a main architect of Medicaid’s implementation, often securing contracts through insider connections. In Illinois, it used its ties to initially consult pro bono, but eventually secured $75 million in state deals. Later, investigations struggled to understand what McKinsey’s costly work actually consisted of. Meanwhile, the state hospitals of Illinois remained direly underfunded, with many struggling to provide basic services.

Similar patterns occurred in Arkansas and Missouri, with early free advice opening the floodgates to precious state contracts. Nationally, McKinsey has received over $1 billion in federal contracts, typically without competitive bidding.

For instance, McKinsey regularly consults for the FDA – the Federal Drug Administration. At the same time, it works for the drug companies the FDA regulates. McKinsey has even hired former FDA officials to help its Big Pharma clients speed up drug approvals and avoid problems with the regulating body.

Beyond health care, McKinsey has also faced outrage for extensive work helping US Immigrations and Customs Enforcement (ICE) implement harsh Trump immigration policies. The firm played a role in expediting deportations as well as advocating for cost-cutting measures that risked creating humanitarian crises.

For instance, the company argued that ICE's food standards at their detention centers were “too high” and should be drastically lowered. When confronted by some of their own consultants, management defended the work as professional problem-solving, detached from politics.

These examples illustrate the huge gap between McKinsey's squeaky-clean image and controversial government work. In each case, its opaque culture has enabled the company to deny responsibility and downplay clear conflicts of interest.

A public health hazard

McKinsey hasn't just undermined public health services – it has also actively contributed to harming public health by working with irresponsible industries.

In the 1950s, McKinsey began working with tobacco company Philip Morris, providing manufacturing and research advice.

After the 1964 Surgeon General report confirmed smoking's links to cancer, there was no doubt McKinsey knew about the many harms of smoking. Yet it kept working with the tobacco industry, recommending ways for Philip Morris to keep profits up through targeted marketing. As public sentiment turned against Big Tobacco, McKinsey even took on more industry clients like RJ Reynolds and Lorillard.

It devised sales pitches aimed specifically at teens and minorities. In addition, McKinsey assisted “Project Cerberus,” a secret plan by three tobacco giants to defeat global anti-smoking efforts.

When e-cigarettes appeared, McKinsey jumped on the new trend. It started consulting for vaping startup Juul, using its ties to get the product past the FDA.

But it gets worse. In the early 2000s, McKinsey began advising Purdue Pharma, maker of OxyContin, a powerful and highly addictive opioid painkiller. McKinsey helped Purdue counter critics and reformulate OxyContin to sustain sales amid rising addiction levels.

By 2013, with declining sales, McKinsey pushed radical ideas to “turbocharge” Purdue's engine. It suggested focusing on areas like Fort Wayne, where opioid overdoses were already surging. It also proposed countering pharmacies that were trying to curb access by creating alternative opioid distribution channels.

In sum, the consultants did all they could to contribute to the ongoing opioid crisis – the most deadly drug epidemic in US history.

In the cases of tobacco and opioids, McKinsey worked both sides, advising the companies while also consulting for the FDA office on how to regulate the drugs. And both times, the conflict of interest was hidden for years.

In 2021, McKinsey paid $600 million to settle claims it fueled the opioid crisis, while still denying legal wrongdoing. But whether unlawful or not, McKinsey has repeatedly and knowingly aided companies peddling dangerous products. Nowhere is the firm's hypocrisy more glaring than in its work for industries that prey on vulnerable populations despite the deadly costs.

Preparing the biggest crisis of all

McKinsey doesn’t just meddle in politics – it also disrupts the financial sector.

The firm has longstanding ties to Wall Street, advising top finance leaders since the 1930s. Many former McKinsey consultants have ended up working for questionable finance firms like Goldman Sachs, and vice versa.

These deep ties helped McKinsey play an important but rarely discussed role in the 2008 financial crisis.

Decades before, McKinsey had counseled banks on restructuring their finance policies to increase risk and returns. In the 1980s, it began aggressively promoting a strategy called “securitization,” which bundles multiple loans into tradable securities.

Consultants touted securitization as a superior technology that was more efficient and safer than traditional lending. In reality, securitization is extremely risky. It fueled excessive speculation while simultaneously muddying transparency and ensuring a widespread domino effect of problems.

Nonetheless, McKinsey published how-to guides and articles on the concept, encouraging banks worldwide to adopt it. Energy giant Enron radically implemented McKinsey’s securitization strategy before its epic collapse in the early 2000s. But few people cared or understood what was going on.

By 2007, McKinsey veterans occupied top posts at Lehman Brothers, Morgan Stanley, and UBS. Their process of securitization had enabled subprime mortgages to be bundled, rated deceptively high, and sold globally.

The system soon imploded, sparking the 2008 financial crisis – the worst since the Great Depression. For Wall Street bankers, it was a game with minimal consequences. But millions of ordinary Americans never recovered, facing joblessness and foreclosure.

Once more, McKinsey escaped accountability, claiming the crisis involved instruments different from the early securitizations it promoted. But the truth is, it normalized reckless practices that fueled disaster.

Abetting authoritarian regimes

No matter where you go in the world, McKinsey’s impact is hard to escape.

A fresh wave of controversy hit the firm in 2018, when its dealings with corrupt firms and unstable government institutions in South Africa came to light.

After apartheid ended in 1994, the nation’s hopes for empowering Black South Africans quickly gave way to a wave of corruption. McKinsey entered the scene in 2005, advising state rail and port agency Transnet.

By 2015, it had a $700 million contract to restructure state power utility Eskom. But amid corrupt officials and dubious contracts, the firm soon proved to be in over its head.

To work in South Africa, McKinsey needed local Black-owned partner companies, but it repeatedly failed to vet these firms. Its first big partner, Regiments Capital, was linked to the Gupta family, which was accused of using connections to “capture” South African agencies and loot public funds. McKinsey dumped Regiments in 2016 and chose Trillian as a new partner – again without vetting. Trillian wasn’t even Black-owned. It also had clear conflicts of interest. In one case, it advised power company Eskom on the purchase of a new boiler – while also advising the Chinese seller of said boiler.

Facing scrutiny, McKinsey returned $74 million in fees from the improper deals. But the damage was done. Eskom was left with financial and operational troubles, leading to massive blackouts. To this day, South Africans still spend multiple hours without electricity on a regular basis.

This wasn't an isolated incident of McKinsey enabling greed and corruption. Since the 1970s oil boom, the firm has had longstanding ties to Saudi Arabia's repressive regime. By 2016, McKinsey had 137 active Saudi projects, advising government agencies and state oil firm Aramco.

In 2011, as Arab Spring revolutions swept the region, McKinsey worked with the royal family to quell unrest. It suggested implementing symbolic reforms like allowing women to drive, while upping repression of dissent. These strategies were then introduced by Crown Prince Mohammed bin Salman, who oversaw the Saudi war in Yemen and was implicated in the 2018 killing of journalist Jamal Khashoggi – among many other human rights abuses.

McKinsey has also expanded its work with Chinese government and state firms despite similar human rights criticisms. In 2018, the firm even held a lavish company retreat there, meters away from detention camps for the oppressed Uyghur Muslim minority.

Time and again, McKinsey has demonstrated its willingness to work with authoritarian regimes and support their antidemocratic agendas. It claims to improve the countries it works with. But its actions frequently empower corruption, graft, and oppression.

Not so green

One of McKinsey’s oft-touted values is sustainability. At forums like Davos, its consultants issue urgent warnings about climate change and emphasize their commitment to “protecting the planet.”

But in reality, McKinsey works extensively for major oil, gas, and coal companies worldwide – including top carbon emitters like ExxonMobil, Chevron, and Teck Resources. In China, McKinsey advised major steelmakers hungry for coking coal from Teck. In Indonesia, the world's second-largest coal exporter, McKinsey has counted two big coal miners as clients. As usual, McKinsey helps these companies cut costs, boost efficiency, and increase production.

The personal story of a former consultant illustrates the hypocrisy at play. As a young recruit, Erik Edstrom joined McKinsey in the hopes of working on projects related to sustainability. But once on the job, he found hardly any of these projects. Instead, there were abundant opportunities advising coal companies.

One day, Edstrom even received a peppy video titled “Turning a Coal Mine into a Diamond in 6 Months.” It was a motivational video about how McKinsey had helped a client increase coal production by 26 percent.

Despite coal's major contribution to carbon emissions, McKinsey partners celebrated the project as a big success. When Edstrom refused to work for fossil fuel clients, he found his career stalled. Today, he believes McKinsey’s opt-out policy is a way to avoid taking a clear stance on critical issues.

Recently, junior consultants protested McKinsey's hypocrisy in a letter signed by over 1,100 employees. But leaders defended working with polluters, explaining that “Companies can’t go from brown to green without getting a little dirty.”

The firm's climate rhetoric aims to have it both ways – sounding progressive on sustainability while guiding big polluters on wringing every last million from planet Earth. This allows McKinsey to keep climate-concerned young recruits in the pipeline without altering its actual work.

As of 2020, McKinsey still has no major green energy clients. Instead, it keeps reaping hundreds of millions in fees advising Big Oil and Gas.

It's hard to imagine the full extent of damage McKinsey is doing with its work behind the veil of confidentiality. Without transparency and accountability, McKinsey's pattern of calamitous advice seems poised to continue – human consequences be damned.

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What is When McKinsey Comes to Town about?

When McKinsey Comes to Town (2022) is a riveting deep dive into how the world’s most powerful consulting firm fosters inequality, corruption, and global instability. It examines McKinsey’s ties to controversial industries and governments, and reveals the stark contrast between the firm’s lofty values and its actions – from incentivizing opioid prescriptions to supporting authoritarian regimes.

Who should read When McKinsey Comes to Town?

Anyone interested in politics and policy
Fans of investigative journalism
Leaders trying to avoid similar missteps

About the Author

Walt Bogdanich and Michael Forsythe are investigative journalists renowned for their work at the New York Times, Bloomingdale, and many other prestigious outlets. Bogdanich, a multiple Pulitzer Prize winner, has exposed issues ranging from corporate misconduct to rail safety. Forsythe, who won a Pulitzer Prize himself, gained acclaim for his groundbreaking reporting on the wealth of Chinese leadership families. Their joint effort, When McKinsey Comes to Town, was named Book of the Year 2022 by both the New York Times and the Times.

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