I've been in one of the "Big 4" Consulting firms, and I can vouch for the article. As a "Senior" the Customer is charged 150-160$/hour and on top of that 25% for travel. The work that we did for these customers was lackluster. We used to come in as "experts", get all the technical work done from body shops in India and offshore. I was shocked to see that Customers just keep paying for these expensive services, and have no clue they are getting hoodwinked.
This was one of those big eye opening moments for me. Consultants are hired mercenaries in coporate warfare, they don't care about you, they don't care about your company or the rivalries or the squabbaling. You pay them a bunch of money to come run roughshod over your enemies by producing reams of analysis and Powerpoints, to fling the arrows of jargon, and lay siege to your enemies employees by endlessly trapping them in meetings and then they depart.
Consultants are brought in to secure your flank, to provide air cover and to act as disposable pawns in interoffice combat.
They are not brought in to solve problems, to find solutions, or because of their incredibly acumen. It's because they have no loyalty or love but money.
"Consultants are hired mercenaries in coporate warfare, they don't care about you, they don't care about your company or the rivalries or the squabbaling."
"They are not brought in to solve problems"
I've known people that worked for consultancies and the biggest value add they think they have brought is when the problem is the rivalries, politics, and squabbaling has led to inaction and they've needed outside support to come in who don't care about these things.
Perhaps we should hope for companies to have leadership teams where they are able to cut through this intransigence, but unfortunately all too often with old companies stuck in their ways this isn't the case.
They might see their role as brilliant mediators facilitating action by settling feuds using 2x2 matrices, but I think that's naive at best, disingenuous at worst.
They care about the agenda of the person they've been hired by. Usually a C-level agenda-setter or someone influential in the org, and often a McK "alum".
And speaking of action, they have zero stake in the actual implementation of what they proselytize.
All this isn't to say that they don't provide value. Exchange of money is usually is a reasonable signal of providing value, and these firms and its employees do reliably well in that area. However, the narratives around what value strategy consultants provide I find to be truthy, but not actually true.
I can vouch for this. I've done software consulting in corporates a few times throughout my career. Probably the highest value things I've done have been those times the team's organisational structure was a bit broken, and nobody in the company had the visibility, audacity and cover to call it out.
One team had no clear leadership, and there was an important milestone coming up that the team didn't seem to be orienting around. I started kicking up a fuss in meetings by constantly asking "Is this important for our April launch?". I know I upset at least one person, but with some help from management we ended up collectively getting the launch back on track.
At another company my perspective was relayed through my consulting company to the client's upper management, and that ended up being used to fire someone. It doesn't feel good - he was a nice guy. But he was genuinely useless. He spent about 90% of his attention brown nosing to upper management. Once or twice he even actively sabotaged the team in small ways so he could be seen stepping in and fixing the problem. I think they wanted to get rid of him anyway but they didn't have legal cover.
There's absolutely value for companies in having outside consultants sit amongst a team. But its a subtle kind of value. I thought I was brought in to write code. Hah!
I should clarify “value” is subjective. Value in this context doesn’t necessarily mean good, of value to society, aligned with your values, etc. Just that one party is willing to part with cash in exchange for something of value to them (presumably of value to them – unless they’re on drugs).
They’re providing value, just not to the company at large. But the specific person that hired them, and pays them with company fund, you can bet your ass they’re getting value.
I don't think they were saying they are mediators or settle feuds. I'm sure a bunch of people at the companies are pissed at the conclusions they come to. It's moreso though that precisely because they aren't tied to any feudal relationships within the organization they're able to be more impartial with their research and cut through bureaucracy.
Certainly though if all they're doing is parroting back conclusions backed by "research" that the exec who hired them wants to hear then they aren't providing much value, other than perhaps providing air cover when some decision, any decision, is better than no decision and gridlock.
Based on what? I’m close with a few higher levels at different strategy consulting firms, and most of their work at these firms we’ve talked about has been serious: how to respond to a firm you’ve heard of receiving backlash over a botched vaccine, balancing a pivot in their product line with their existing customer base, etc
Problems that will screw you royally (speaking of the firm here) if you get them wrong, so you bring in outside perspective that can pattern match your problem to real world examples (and get in the room with others who’ve navigated a similar problem) to make sure you take the best trajectory.
At worst, consulting is exactly what you say. Large firms, being so large, cover the gamut in their services (and so surely get some exposure to these more flippant projects). The bread and butter of consulting though is solving real problems.
From here, this perspective you have about consulting looks a lot like the mindset some people have around VC: “they just come in to pump companies and dump them in the public market / make an exit before the music stops and everyone realizes it’s bullshit”. Of course there’s some of that in VC, but by and large it’s legitimate and serious work, focused on legitimate outcomes, and done all around by genuine people looking to do a good job - all while creating real value for everyone involved.
Another value of consulting is getting advice from someone who has seen the same decisions play out elsewhere, including at competitors, and apply their secret information on your behalf. It is effectively non-public strategy information laundering.
I find that the people most critical of strategy consulting are often the ones with least experience in it—and tend to paint caricature and with a broad brush at that. Thank you for this more realistic comment.
AS someone who has both read the book and interacted with "big 4" names a few times this is going to be one of those "underrated" comments you sometimes see here.
At my previous place of employ they made some really terrible decisions which ended up costing a LOT of money later.
Their response was classic "the design was vetted by McKinsey"..
No.. you sent them what you wanted to do, they told you what you wanted/needed to hear and now you are deflecting your decisions.
I worked for a health insurance provider that paid BCG $1mil to confirm that we should be using agile in our org. It took BCG a month to do their "study."
We were already using agile in our org, but nice to know some incesteral relationship between directors/VPs were able to make a nice pay day.
> nice to know some incesteral relationship between directors/VPs were able to make a nice pay day.
you should read the book.. The industry is rife with this type of behaviour.
There are always stories about how "senior manager" X is basically a shadow employee. While they work for company "Y" their real job is to send business to the consulting mother ship.
It's not always so formal or sinister. I've seen consultants build relationships with younger managers and "rising stars" by buying them lunch and drinks, and even doing some free work that makes them look good. Then the consultant is an easy connection when there's some dollars to hire consultants.
I can't find the comment now, but there was a similar conspiracy about ex-Amazon Managers being paid to force their new employers to adopt AWS on one of the programming subreddits.
There is usually no forcing: they are typically hired because of their AWS knowledge - the business has already decided to go AWS, the new hire is doing what he's expected to do.
This really sounds like a conspiracy theory. That being said, McKinsey (and presumably BCG and Bain) very much embrace their employees leaving to join their clients. It creates a good "referral" network if you will. But more than that, I don't buy it.
The throwaways are likely shills (or charitably - ignorant employees that don't wish to dive into any claims about their employer?). There are actual cases involving big four and kickbacks/bonuses and corporate sabotage.
One example in the last few years: BCG and NCR Corporation.
"It is undisputed that Mr. Benjamin, as an officer of NCR, owed NCR a fiduciary duty that includes a duty of loyalty. The Counterclaims allege sufficient facts to show that Mr. Benjamin breached that duty by entering into a secret agreement with BCG to promote and expedite his candidacy for CEO. The Counterclaims further allege sufficient facts to show that BCG worked with Mr. Benjamin to negotiate a one-sided contract, and remove and replace employees who opposed adoption of the contract, and that BCG advocated for Mr. Benjamin’s promotion to CEO in hopes that he would award BCG with a discretionary bonus." [1]
I can only obviously speak to my own experience and I did not come across anything like this. There's no love lost between me and my former employer FWIW.
Apologies, "in my opinion and limited experience" it sounds like a conspiracy theory.
I'm not legally literate enough to understand the court opinion you attached. Regardless, of course there will be cases of bad players in any large company - that goes without saying. But its tiresome always hearing the same "McKinsey is the root of all evil and secretly influences governments and companies".
The opinion that most engineers have of MBB is often based on conjecture as they typically have only ever hard arms length exposure to such consulting firms. As a software engineer myself, working at both startups and FAANG before McKinsey, I was of the exact same opinion about McKinsey and these types of companies. The truth is much more mundane and boring though.
That's the best strategy to prevent the masses from investigating further. You shouldn't label something like you did if you haven't done your research.
> legally literate enough to understand the court opinion you attached
I think you are literate enough to read and understand the key part I included in quotes for you, from the ruling which completely refutes your prior position, and attitude, with hard evidence. It's as clear as day!!!
> McKinsey is the root of all evil and secretly influences governments and companies
Well they've had a lot of bad looks, especially with their role with Purdue Pharma and OxyContin. Their former alumni was CEO of Enron which they consulted for 15 years. "But up until the very end, it was promoting Enron’s business model, especially its off-balance sheet accounting practice, and encouraging others to follow suit." They "recommended ICE save money on food served to the detainees or send the migrants to facilities in rural areas to cut back on expenditure" They agreed to pay $100M to South African government in a corruption scandal [1]
Last year, one of their private investment funds agreed to pay $18M to settle an SEC issue regarding insider information gleaned from the corporate consulting business. [2] They have a hedge fund which makes bets on the advice they sell.
Here's another one regarding McKinsey & their investment office (MIO) and Valeant Pharmaceuticals which buys out other drugmakers and jacks up prices. "Four top Valeant officials, including Mr. Pearson, were McKinsey veterans, and the firm was advising Valeant on drug prices and acquisitions." Later in the article, "a federal judge in Virginia last month reopened a coal-company bankruptcy case after learning that McKinsey had not disclosed, as required by law, that it was also among the company’s secured creditors, through MIO". Further down: "An investigation requested by the oversight board found that MIO had five direct and indirect investments in Puerto Rico’s debt while McKinsey advised the island". [3]
So you start to look at all these big corporate consulting firms and if you are being unbiased, you can see it's systemic. They wield a lot of power and influence. They get their alumni and friends placed in government and huge companies and then make deals and institute their strategies to make a ton of money.
> The truth is much more mundane and boring though.
Yes from your position it would be. You aren't the one placing CEOs, making kick back deals, getting involved with foreign governments and corruption, writing strategy for Encron, ICE or OxyContin, investing in company government debt on one side and advising on it the other. The system isn't designed for people like you to be included in that part of the business.
In my opinion, people fall into one of these buckets - pawn, shill, or informed. In an information age, isn't it remarkable that most STILL fall into the pawn category?
It's fair to say my view would be biased. But probably not in the direction you would think.
I think we need to be more critical of what it means to see things "first hand". MBB are typically operating at the executive level and the motivations between executives decisions typically don't reach the "rank and file" of the organization (forgive the wording). In my response I mentioned that the cost of engaging McKinsey is so extremely high that there will need to be some type of rational justification for bringing them in (beyond just covering my ass).
That being said, I worked on a few projects where I wasn't sure whether the cost justifies the benefits but this was largely due to incompetence or overselling - never "pure graft".
> I think we need to be more critical of what it means to see things "first hand".
I think everyone needs to be more critical of "Shill" accounts such as yours.
You are fast to assume that i did not see it "first hand", slow to realize that this does take place and when provided new information (the lawsuit post) unwilling/unable to incorporate new information into your position.
What value do you feel you are adding to the conversation? You seem to be wearing your McKinsey hat "they never do anything wrong, it is all justified just not at your level"..
By first hand I mean you're the executive paying the bill and understand the motives behind hiring a consulting firm and the incentives such a firm is working under for the client. I'm doubtful most here have that experience (I certainly never did in 20 years of industry before joining a consulting firm). Having McKinsey or BCG walking around your office and telling you what to do is not first hand experience in my opinion.
I'm trying to offer a unique opinion of a software engineer who spent a short time working in this industry. If you're not buying it then no problem.
Personally, I would never invite McKinsey or any of these companies into my own company. But then again I don't run a 100k person company.
Running agile in a small team is one thing, having a company do "agile at scale" is quite another (yes I realise the contradiction in terms). As someone who worked at McKinsey, on several large scale "agile" rollouts the bulk of the work was on re-organising the company (this is not an easy thing to do in companies with thousands of employees - hence bring in the consultants). The driver behind these projects was almost always cost cutting or increasing efficiency. The agile part was mostly window dressing.
No not at all; this org had existed for two years already, was already using agile for said two years, and successfully delivered a multitude of projects using agile.
The driver to me seems to clearly increase complexity for the sake of it in order to push for more billable hours.
This was pure graft.
Honest Q since you're a throwaway but is this how consultants typically act? Justify simple things to be more complex to lay people and charge them out the wazoo?
I think I'm slowly starting to understand why some of my friends are creating their own dev agencies. This racket is rife with stupid money.
That's interesting. I'm curious to know how the internal sponsor of the project sold it internally. It generally takes a lot of motivation to convince your superior (and finance team) to pay the millions McKinsey would charge per week.
At the micro level, I would agree that in some cases there was a tendency of some to make things more complex than necessary. The implicit intent here was generally to demonstrate some type of credential to lay people.
That being said, at least in my personal experience, most of the actual recommendations were backed by as much data as possible. In the projects I worked on, I don't think a single slide went by without hours of debate and critique by the partners. It was a given that any recommendation should be supported by data.
That being said, there are also lots of cases where there is no right/wrong answer - especially given the timeframe (typically 4-8 weeks). Companies basically pay consultants to come in, analyse as much data as feasible and just make some type of informed decision. In most cases the company is either unwilling to make that decision themselves or does not have the ability to do so (i.e. organisation is too complex to tackle this problem within so just get an outsider to cut across the company and get it sorted as best as possible).
> It generally takes a lot of motivation to convince your superior (and finance team) to pay the millions McKinsey would charge per week.
And an insurmountable barrier to then declare it was a waste of money.
ie once these initiatives start - they are inevitably declared successes because too much has been invested ( literally ).
So the consultants always leave with success declared, whether it works out in the long run I suspect the consultants will hardly ever know - just moving on from one declared success to another.
Fully agree with this. That being said, a lot of companies are wising up to this and forcing consultancies to work "fees at risk" - where they are only paid based on some measurable success metric.
There are obviously lots of hacks and shenanigans around defining and negotiating these success metrics with various "levels" [1] of impact being defined and fees being released only when some stage is crossed.
You are danger close to seem like you are defending agile. I am all in on blaming kickback consulting. But we can't blame agile's failure on consulting companies.
There was a genuine and optimistic belief in agile among programmers and management. They tried and failed refusing to admit the mistake and doubling down on all the BS.
It works perfectly fine to hire consults to do welding courses for the employees. If agile was a good idea "agile consultants" would do fine to.
Another rôle they play is a kind of out-in-the-open corporate espionage. You pay them to come in and tell you what the "best practices" are in your industry (i.e. effective new things your competitors have been doing since the last time they came to visit you—and they'll learn some new ones from you to tell your competitors, next time)
Oh, so they increase productivity across the industry, thus leading to wage rises for employees, increased margins for company profits and a higher GDP for the country.... right?
(Off to dig my tongue out of the deep hole in my cheek.)
Didn't necessarily say it was bad. It's a bit like the Japanese R&D-pooling system post-WWII, in some ways, and AFAIK that worked great. Just unofficial, and with a profit margin.
[EDIT] Well, and also it's not kept within the host country, but exports those ideas & methods globally.
I had an Econ prof who described his consulting business as:
1. Coming into the company and gathering information from the low-level staff.
2. Presenting the information to management.
3. Collecting $1000/hr or more for his trouble.
Basically information washing to get execs to accept information that they would normally ignore. I wonder how much of this kind of thing goes on in industry.
Where I saw that work it was effectively routing around the middle layer: the guy bucking for a promotion based on some project isn’t going to let any report mention that the users hate it, but they’ll certainly tell the consultants that.
It worked but was a very expensive way to about fixing social problems.
This highly-paid factory efficiency expert was enthusiastically explaining how he works. "You just listen to the workers. They know where the inefficiencies are"
I've worked with senior managers who have zero regard for the knowledge of the people doing the work. It might be those workers don't have some over-arching conceptual framework for how the company works, but they do have intimate and sometimes deep knowledge of what they do all day. And not taking advantage of that is a huge blind spot.
I have worked as a consultant, but not for the one of the big 4. We understood that we were often being used to develop an 'independent' perspective that would support a decision that had essentially already been made or disprove a rival decision.
We also were fully aware of the old joke that a consultant is someone who borrows your watch and then tells you the time. We sometimes deployed this ourselves with customers, and extended it to say that unlike our rivals, we would actually point out how late you were and how to get back on track.
[Edit] We sometimes found ourselves supporting one of the big 4 companies (as domain experts). We were often amazed by the quality of the A team that they would deploy to win the work, compared with the B or C team that would then actually execute it (often bright but junior staff).
That's exactly my experience in Europe. We want to fire 50 people/close a factory/whatever without blowback...let's hire McK to tell us to do exactly that.
I've also had some experience working for a smallish company with very big clients and they sometimes insisted on having an IT-Consulting company like Capgemini as a middleman. That's the biggest nightmare because they were always a net-negative from my POV...integrating them was just extra work and they provided no value except for their brand name to make the client feel at ease.
I'd say companies like this are a scam, but they're only half a scam -- half the customers know exactly what they're getting.
The other half haven't figured it out and think they're getting top-tier stuff and end up with life destroying garbage like your employee performance system or a citywide trash crisis? [1]
Do you need to spend millions to justify an inevitable decision but blame the hired guns for it? Hire McKinsey.
Do you need to spend millions for severely overworked junior grade consultants and offshored "experts" to provide you with objectively terrible advice and create an opioid epidemic? Also hire McKinsey! [2]
I have worked in a third-grade infrastructure company in India. Everyone in top management (including founder) was corrupt. Their business practices were always about bribing, siphoning off investors money, inflating assets, money laundering and so on. When it was trying to go public, it hired one of 'big 4' to do the auditing and other due diligence. Once it went public, that agency was fired (2 years after going public). With in 6 years, that company became bankrupt.
Everyone knew that one of 'big 4' was hired to make the prospects of going public legit and credible. That consulting firm made things look right in exchange of big bucks.
This has been my experience when the company I work for engages with an external consultant. Managers look for validation from an external source so that:
- when things go well, they can take the credit, or
- when things go bad, they can blame the consulting company.
This. Big 4 consultants are also needed by law or by convention in a lot of places for auditing and such tasks. If it's for actual consultancy services, the decision has already been made. Having a Big 4 company "sign" and provide authority on a decision a manager has already made, just makes it an easier sell to his/her higher ups.
Furthermore, they're trying to convince someone else (usually a boss) of a theory/idea/strategy that they might have but don't have the resources/rapport/etc. to demonstrate it's effectiveness.
Paying $1B for a site that should cost $50M is 'hoodwinked'.
$150/hr is really not that much money, depending on the importance of the project, and having devs from India is fine.
Almost the entirety of the question in any given situation is 'Did it work out?'
Because if it did, it was worth it.
Companies are not interested in making 'great products' like a startup would, for some secondary thing.
Mostly, it's like construction: they need something built. That works. Not some kind of innovative thing.
They don't have a year to find 'top talent' and go through interesting architectures, or dynamic processes. They wouldn't even know how to do that.
You might be very well downplaying your input: if you are competent, know what you are doing, show up, and can solve the problem, you're probably worth every penny and much more. Now maybe that is or is not the case! Or maybe 'it depends' or maybe, some projects kind of necessarily require 'proper engineering'.
Now, all of what I just said would apply to normal circumstances. In Africa, it's so complicated. McKinsey is also very different office by office. Corruption is harder than we understand, because when it's a random event we can say 'oh, corrupt!' - but when it's normal trade practice aka 5% kickback for the buyer, well, it takes on a different characteristic.
your comment just establishes a spectrum- on one extreme, you have what is essentially a helpful project manager, on the other extreme you have a worse than useless middle man. I think the point might be that Mckinsey is more towards the bad extreme than people think.
For starters - 'McKinsey' actually doesn't do implementations. So you're not going to hire them to build something. Second, it's hard to fathom their value because it's very secretive. There's nary any real objective data.
Oh looks like they've changed their model. I would trust them to give strategic advice about something, or maybe some insights from an industry expert they might happen to have. Actionable or not, who knows. But I wouldn't trust them to 'build' anything.
I worked in McKinsey Digital. Here's an example of the typical type of project we did:
- Client is a legacy bank
- Client wants to be a fancy new cool digital bank like Revolut
- Client brings in McKinsey to help get them there
- McKinsey (traditional side) does a strategy engagement first (4-8 weeks) to define priorities, budget, etc
- McKinsey Digital + traditional consultants come in to do the implementation. This includes architecture, actual tech building (more on this below), assisting with hiring and HR, coaching, financials, integration/de-integration with rest of business. Essentially everything involved with starting a "new" business.
If you want a single company to come in and literally do everything to build and run a new business I do think you would need an MBB-type company as they can bring in all these different skills (business, people, tech, process etc). I'm very reluctant to praise my former employer.
On the actual tech building side, McKinsey would typically bring only 1-3 technical people as it's cost prohibitive for the client (I was one of those people). McKinsey would help the client hire new people or bring in contractors (i.e. Nagarro and the likes).
> Paying $1B for a site that should cost $50M is 'hoodwinked'.
That’s not being hoodwinked either. If you’re happy to pay $1B for something and get that thing, then that’s your fault for not shopping around for a better deal.
Bernie Madoff and SBF hoodwinked people. Somebody charging a premium for their services and getting willing customers isn’t.
I have worked with the big 4, and also been on the receiving end of their "work". I can vouch for this comment personally. I've never seen less effort put into something worth so much money. Reams and reams of documents, jargon, and other bullshit and some cheap, obviously outsourced, incredibly shitty, "wireframe" sold as an MVP of a product.
I would be impressed by them if I wasn't so disgusted.
I've also seen some of these expensive "strategic" documents. And they looked like they were written by a high schooler (not a top of the class student either).
Just how fast they can adopt their standardized, saying-nothing-of-value presentations to each client's internal jargon and "needs" is impressive so, I have to give them that.
Used to work as a sub-contractor for Deloitte, all the work was done by us, the Deloitte folk would spend 12 hrs a day at work - looking super busy, attending meetings, schmoozing with the client, go for lunches and dinners and building reports and spreadsheets.
They hired impressionable good looking young people who were good at selling, period.
Sorry, I should have been more clear. The acronym is MBB (McKinsey, Bain, and BCG) that I'm familiar with when referring to the top consulting companies. MBBD (McKinsey, Bain, BCG, and Deloitte) is a reddit joke that I've seen a bunch. The original commenter was using McKinsey, Bain, BCG, and Accenture to refer to the "big 4" consulting firms. I've worked with Accenture before, but I've never heard anyone group Accenture with those other consulting firms.
The Big 3 distinction isn't based on firm size (McKinsey, Bain, and BCG only have 38k, 25k, and 15k employees respectively) but rather on prestige and type of work done.
Dell is not lumped in with MAGMA even though they’re everywhere and everyone knows who they are because they have completely different business models, employee pools and compensation. They’re barely in the same industry, if you squint. Similarly with Accenture and prestige consultancies. If you were going to have a Big 4 the fourth would be AT Kearney, not Accenture.
If you redefine common terms as you go, you should at least give the reader a heads up. Nobody uses “big 4” for MBB and Accenture. Those are not the same type of companies.
The whole thread is debating who’s sitting in the BIG4 and all I see is companies trying to belong on musical chairs. What’s strangest to me is we’re not in an early-Schumpeter cycle, seats should be well-established by now, it’s been half a century.
Accenture aren't even in the Vault Consulting Top 50 rankings. I don't know how this list is calculated but people in consulting tend to refer to this (I used to work at MBB).
lol. McK isn't a body shop. McK = ivy league grads, olympic medalists, top PhD's from flagship state schools. I mean Chelsea Clinton worked at McKinsey. You think she's going to be managing some Indians on setting up SAP?
Big4 I used to work are fairly clear about who they call senior (consultant / senior consultant / manager / senior manager/etc) and I can rarely fault them.
Now for consultancies (Accenture and the like), the term is a bit more loose indeed.
Not exactly. The thing to keep in mind here though is that billable rate isn't necessarily 40 hours/week and you likely have some sort of salary component that requires you to hit a base amount of billable hours.
So something like (just making up numbers here)
$120,000/year
$170/hr for each billable hour over 20 hours/month
Sales/delivery bonuses, etc.
Plus, the Big 4 are, by law (SOX), forbidden from doing consulting work. Also, there are for, because public companies need someone to audit the books and someone to help them to prepare those books. Companies have to change auditors and the ones helping to prepare the books ever so often, and you cannot just stick with the same two simply switching chairs. All of that, of course, to avoid another Enron like disaster. Hence a pool of four big accounting firms most public companies, regardless if the fall under SOX or not, cycle through.
I've heard that curing internal myopia is a top priority for McKinsey this decade. Focus is on broadening gender/age/economic background and also broadening professional experience backgrounds.
They're hiring and developing a lot of top talent in "hard skills" (e.g., not MBA's) across different industries. From what I've been able to tell, it's paying off a lot with strategies that are grounded in reality and catching things that non-technical people would miss.
Really depends on the team you get assigned to your project though, as with any contracting/consultant situation.
Oh, glad McKinsey is going to ruin the psychology of a bunch of LGBTQ people with 80 hour work weeks while they union bust foreign nations. You aren't developing shit when every single person you hire leaves after 2 years, don't astroturf this garbage here.
What kind of weak political literacy do we have in America where agencies who literally aligned themselves with tyrannical oppressive dictators who behead rivals and loot the wealth of their own population get an ounce of room to "change" and represent "more diverse opinions". (Spoiler warning, it's one where everyone in power secretly agrees that profit triumphs over any other possible motivation)
Right, that's why the GP is sarcastically saying how awesome it that they're now going to expand that ruinous treatment to more people by hiring more minorities.
In my experience, Accenture is the big body shop. I've worked at companies that outsource tech strategy, new system requirements / scoping, delivery and development, and post deployment support and maintenance 100% to Accenture.
There are regional hubs they have (I've worked with Philippines and India and heard of Eastern Europe) for the support and maintenance.
There are some back office financial shared services (e.g., AP / AR / cutting POs) that they also support. I wouldn't be surprised if there was more.
Accenture can give you everything from the PowerPoint slides up to the people that will be seconded or placed in your organization as contingent workers / contractors.
That's Big 3 like McKinsey, and yes, notes sent to India, India turns them into powerpoints, team on the engagement has the powerpoints by the next morning (apparently execs don't even read something that's not in a powerpoint—they'll do this with stuff that's only ever going to be emailed, never presented)
Implementation: body leasing, offloading large projects. Larger teams, IT-heavy, longer timeframes. Actual coding / documentation, etc.
And no, your experience working on a 300-people core banking project at Accenture doesn't translate to a 5-people McKinsey project.
And while both types are "expensive", they are needed in the corporate world. Because work in that environment is more than just writing code in a text editor, it's mostly politics at the top.
The big problem with talking about consulting is that there are so many different people doing so many different things that are all called just "consulting". Everyone has a different idea of what consulting is since they worked with different types of consultants but it all just gets called "consulting". Even in this article they talk about McKinsey's strategy work and their tech work basically interchangeably, even though the two are very different things.
Thanks for saying that. I worked on a bunch of large transit fare-card implementation projects for accenture, over a decade ago. Having a large company, with people having some know how from previous implementations, and the ability to handle a project that was far, far beyond the capacity of the transit operators cautioning them, made TOTAL SENSE. We effectively shipped stuff, in a very political environment (as in, with actual politicians trying to dictate requirements so the schedule fits their re-elections and stuff like that), through lots of integration pains and issues with large scale hardware deployments. I'm pretty proud of those projects, I'm sure some of the code I wrote back then is still in prod. I never worked as a bodyshop, or sold useless erp replacement projects. The outcome was a working system that millions of users can use. It's palpable. It's concrete. It's useful.
It pains me that it's always seen as an evil, because sometimes it is the best option.
Was the use of your team necessary due to the political and regulatory capture, however?
I don't know what you did, and I don't want to besmirch it. So let's take a recent "successful" project: OMNY, the new transit fare system in NYC.
That system cost the New York Metropolitan Transit Authority over three quarters of a billion dollars. $772,000,000.
To put that in comparison, the point of sale payment processor Square raised 170 million fewer dollars over from seed to series E and does fifty times as much payment volume.
There is a staggering amount of inefficiency in these projects, and I suspect it's because of capture.
A lot of the comments make this mistake, but the article clearly talks about both. It snarkily says the Ivy League graduates end up doing strategy and everyone else ends up doing software implementations.
There is truth to that, because strategy is what sounds the most shiny, brings the most money, and is the most prestigious... Even when it's in fact either pure garbage or outright devilness.
I draw a parallel with some Asian cultures where being tanned is a sign that you're working in the field, so it's better to avoid the sun and stay as white as can be. When I was at accenture, there was a huge culture to "leave code" as soon as you could. Code is for people who do. Mere grunts. You gotta be a decider, a boss. The only career path (I think that's not true anymore) was management track. They even had a subsidiary called accenture technology services to recruit from universities with less reputation, but "keep the blood pure". It does make sense when you're in it, but golly am I happy I left that world.
Note that BCG also have BCG X (recent fusion of Gamma, Digital Venture and Platinion), a Data Science and Software arm that could be compared with Palantir in size and breath and depth, but are not working with the CIA.
So, they also do some -high end- implementation work as well :)
It’s not uncommon for firms that need to do big layoffs to not hire consulting firms, and then screw up the layoffs (multiple rounds, bad severance, etc.)
There’s a certain class of work that is (1) really critical to get right the first time and (2) only done once a decade. That’s the type of stuff where it’s good to hire an outside firm - the outside guys go from company to company, doing this one rare thing over and over.
Other examples might include M&A (eg divestitures), offshoring (eg standing up a factory in Mexico), or new market entry (eg launching a product in a brand new country).
Most strategy consultants are saying what management already knows but needs to confirm in case things go bad in order to cover their ass. Without the consultants they maybe wouldn’t make the “difficult” choice of laying people off or paying pharmacies to get people addicted to opiates and therefore the business would suffer.
The article doesn't mention it, but McKinsey in France is currently under judicial inquiries for at least two reasons:
- They worked on the presidential campaigns of Macron in 2017 and 2022, and were awarded huge government contracts with little or no bidding afterwards
- They didn't pay any taxes in France since 2011, sending money to the mothership instead to reduce taxable profits to zero; and their managing partner, who is accused of having lied to parliament about it, resigned in the wake of that discovery.
I worked at McKinsey for three years. Here are a few thoughts. Sorry it's so long, didn't have time to make it more concise.
- I'd guess >95% of people never run into anything morally questionable while there. My teams always tried to do their best and I never felt like we were helping achieve any sort of nefarious goal. Most of the time I think we were worth the money for our clients.
- I do think the culture makes it more likely for individuals to take risks that may end up getting them in trouble. There's a lot of pressure to succeed, and a lot of money (and prestige) at stake. It's easy to imagine individuals cracking under that pressure and making bad choices, and that the rest of the team might fall in line so that they can also succeed. I'd put most of the blame here on McKinsey and some on the individuals involved - maybe 70/30.
- I'd guess most other consultancies have bodies hidden somewhere that are similar to McKinsey's (questionable contracts, outright fraud, botched projects, moral failures, etc).
- The closest I got to something morally questionable was a project where we had a huge contract to help the client cut costs, including firing people. You'd think our budget would have been on the chopping block too, but I guess not. Obviously this left a bad taste in most of our mouths. I feel we tried to do our best, but I doubt we were worth our fees in that instance. The company eventually merged with another, so even more people were fired in the end.
- The 'internal firewalls' are real - if you've been on a project for one big company in an industry, they won't let you work for a project with another one. There were internal experts we couldn't talk to because of concerns in this area. I'm sure this hasn't been 100% true 100% of the time, but generally I think this is a real concern for McK (if they couldn't guarantee this they'd lose client trust) so they make a real effort to prevent it.
- While I was there, projects with the tobacco companies were famous for having better work/life balance than almost any other project. They were hard to staff because so many junior consultants refused on ethical grounds, so I guess this was a carrot?
- I can mostly only speak to the US. I heard some jawdropping stories about how reliant the Saudi government is on McKinsey and other consultants to get almost any work done, even the most basic things. But that's all secondhand gossip. In general, the sense I get is that the standard in the US offices doesn't carry over to every global location, but I don't have the personal experience to say that for sure.
Building a digital bank for farmers in Africa. Was all text-based (USSD) and for those without phones we used NFC key fobs. Several million DAUs within a year.
In my opinion, there will always be a need for large companies to bring in outside help to get very specific things done (largely due to their size and dysfunction). MBB are smart enough to generally move where help is wanted. Just in my time there I saw them hugely lean in to big data, design, cloud, AI etc. And when they invest they go big.
That being said I personally would never bring in MBB for a purely technical implementation project. Way too expensive and the value is not there right now.
Would it be fair to say that consulting firms could get the top (good) people in a developed country, but also is more likely to hire the smartest but corrupt people in a corrupt country? As that is the name of the game in those countries.
And the HQ not caring as much because those other countries bring in the 'franchise fee'. At the risk of a story like this.
In my experience McKinsey (like most consultancies) does almost all its hiring directly out of college or grad school. Hiring outside those pipelines was becoming a little more common when I left, but I'd imagine it's still probably <10% of the total.
I don't think there'd be much hiring of already 'corrupt' people, but it's pretty reasonable that when you have a very competitive and prestigious position, on average, you might find that more 'cutthroat' people are more willing to invest time and energy to getting hired.
The folks that work on tobacco clients need to go to tobacco clients. They smoke ALL the time there. I’ve heard it’s a terrible thing to get staffed on unless you’re a big smoker yourself.
The article starts with an Indian dynasty in South Africa is cought with the most brazen corruption. Around 10% of the annual gdp where stolen, with the help of mckinsey.
The rest is a history of consulting companies and their (criminal) endeavours
I'm of the age where, as a fresh grad, I was kind of impressed by the Big Consultancies in general and by McKinsey in particular.
Few of my viewpoints have changed more drastically in the last 30 years. Now, when I see someone has one of those firms on their resume or business card, I just assume they're not someone I want to hire or work with. Or even have a beer with.
Previous company of mine wanted to make drastic reorganization changes and so they hired McKinsey to simply echo what they already wanted to happen. This is to provide cover for upper management (a.k.a. the "wooden desks") who can then use the official McKinsey report as a shield against any backlash. They can simply point at the report and shrug their shoulders in apparent helplessness in the face of the recommendations of the "experts". It was quite the Office Space moment.
In case some you are not aware; McKinsey and similar companies have been progressively replacing public servants in government offices and administrations all over the world, for decades.
There was a relatively big scandal in France before the last election, as they crossed some lines, but this is far from over.
"The Department of Homeland Security and the Pentagon paid all three firms lavishly for `engaging human- centred design', developing a `culture of continuous improvement' and other meaningless bits of management-speak festooned with cryptic acronyms."
As a younger person, I recall being informed that a culture of continuous improvement originated in the manufacturing centres of Japan after WWII. They told us the term for it was "kaizen". I do not know if any of that was true, but it sounded sensible then and I always carried the idea with me.
Having used it in sports coaching and having seen the results on the playing field, I do not consider a "culture of continuous improvement" to be meaningless management-speak. Assuming one can get a team to buy-in, it works.
IMHO, the alternative to continuously trying to improve, complacency, mediocrity, laziness, or whatever we choose to call it, is nothing to celebrate.
Please note. Not intending to defend McKinsey here or clients who spend taxapayer revenue on vacuous consulting. But as a general principle, I would defend the idea of "creating a culture of continuous improvement". Same goes for the oft-used term "growth mindset". The terminology might sound silly, but the principles are sound, not to mention timeless, IMHO.
Maybe I misread the sentence in the context of the article. If so, pay no mind.
(I did peruse the book a while back and discussed it with a friend who used to work for a McKinsey competitor.)
I think the difference is one of introducing all the jargon and acronyms and vocabulary for something like "culture of continuous improvement" vs. actually implementing it.
It's easy to talk. It's easy to convice yourself that talking and ceremony == doing. But it's the doing that matters.
When I worked at PayPal, the Assistant Treasurer’s husband worked at Deloitte and then the Assistant Treasurer greatly expanded the number of consultants used by Deloitte (from the same team as her husband and many of them actually reported to her husband). They were usually working on unaccountable projects and billing us for work we did ourselves. Many of the consultants were fresh college grads with no relevant experience. Hilariously, one lived in Berkeley but would get a hotel in San Jose during the week to avoid commuting. I was always flabbergasted no one cared about how the budget was being spent. The people pushing consultant budgets are usually the worst sort of managers and doing it because of some ulterior motive in my opinion.
You hire agencies or consultants for 1 of 3 reasons.
1. You have no idea what you are doing. You like shiny things and the consultants are shiny, fancy, and use big words.
2. You know what you are doing and realize you have a gap in your org and it will take too long to fix it so you need outside help in the short term. This is the only good reason to hire an agency or consultant.
3. You are a bad actor. Work is a political game to you that you are trying to win. Fuck the organization. Fuck your colleagues. A consulting firm can be both a shield and a hammer. It provides plausible deniability for failure, it gives you a trump card in arguments with colleagues and it buries everyone in fancy presentations, reports, and jargon that no human has the time to sit down and parse.
the book that would factually describe the bizarro world of large corporations and the fungal ecosystems that have been structured around them has not been written yet and it won't be written for a while.
it would have chapters laying out the Kafkaesque, extractive bureaucracy, the amoral shenanigans concocted between lawyers, accountants and consultant suits in the remote top floors of tall glass buildings, the endless financial engineering, the non-stop cut-and-paste acquisitions and disposals, the vacuity of management fads and the zero signal-to-noise ratio of inane powerpoints regurgitating platitudes (the high-art of saying nothing because reality is too gross to discuss).
somehow we are supposed to believe that this is the pinnacle of successful private enterprise. the natural evolution of "best practice" as articulated in posh business schools
in fact historians of the future, with the independence and clarity granted by the passage of time would be very brutal about the type of social pathology this is.
As a former (briefly, due to an acqui-hire) consultant at one of the big companies mentioned, this was a really interesting read.
I never thought anything the company did was morally wrong per se, it was just a different business model that I didn't really want to be a part of. The role of most people in the U.S. was landing the big deal, talking the client down when things went wrong, and then winning an extension for additional services at the end. Actual implementation was just a cost to be minimized and handled somewhere at one of the company's offshore sites. Somehow it all worked out (usually) even for some truly massive projects.
Everyone is saying that ChatGPT is going to make homework & internet forums irrelevant. How about consultants? They're just putting words on a page anyway - you think that can't be automated?
Let's also not forget that one time when McKinsey advised their pharma customers to take advantage of the opioid crisis and got caught red-handed(1). It gets one to wonder, how many times did they do something similarly despicable and were not caught.
They basically played the role of willing useful idiot. A side story really.
The real story here is that it took a decade+ to arrest (not convict...arrest) the Guptas and the vast majority of the money is likely never to be recovered (disappeared into middle east). i.e. Functionally this was a successful heist of multi-generational wealth.
Same story on government enablers size - Zuma clan is now wealthy.
The will to go after players like this is simply not there - in SA or internationally. Good business breaking countries it seems
This is only one part of it, but pay grades for government employees in the US are far lower than private industry when it comes to things like software developers. Just look at the GS rates [1], why would a good developer choose to make 50% or less of what they could make in the private sector? It'd be hard to convince the general public that we should be paying $100k+ for young devs working directly for the government, which is already more money than most senior level scheduled gov employees.
So we then have this whole convoluted contracting process where consultancies run by people who know how to write and win bids, but know nothing about software engineering, end up being hired to write software systems. All because the government can't really build highly skilled teams on their own.
Again, it's not all of the problem (not by a long shot), but it definitely contributes. Plus, the government employing people directly is socialism, but paying an incompetent consulting firm that plays middle-man to the system isn't.
Make sure to drill into the pay scales by location... suburban DC gets a 30% bump. SV/Bay Area is >40% bump over base GS scale.
Why would somebody take the .gov job? Same reason anybody would take a .gov job...
Benefits (though that gap has closed).
Work/life balance.
Job security.
Interesting work (agency-dependent).
Inertia + location (many of my peers who are bureaucrats come from families of bureaucrats and are DC natives)
Anyways, the government can't hire developers not because the salary is too low but because the electorate has decided the government should be "small" which forces outsourcing to the big name consulting/contracting shops.
> the government can't hire developers not because the salary is too low but because the electorate has decided the government should be "small" which forces outsourcing to the big name consulting/contracting shops.
I wouldn’t say “not” because those are really the same problem from different angles. Keeping salaries low encourages attrition, not adding or backfilling positions makes it permanent. The best part is that this process reliably produces expensive failures to provide the pretext for repeating it.
I’ve worked for .gov, but not Federal. The appeal is:
- Sense of purpose. You’re working to perform some function with integrity and to the best of your ability. There’s no profit driven pressure.
- Career / Long Game. Typically you earn 50th percentile salary, but if you stay that doesn’t tell the story. In some places benefits are 50% of salary. That usually means best in class health benefits and often a defined benefit pension.
- PTO - the place where I was at I received 7 weeks of vacation and 3 weeks of sick time annually.
Government is a good place to start. McKinsey is a good landing zone for apprentice MBA types.
The money is real at some companies. We’re less than 100 people with more than 200m in yearly revenue. Market positioning is worth more than engineering excellence, but paying top salaries to reduce the execution risk is worth it.
I would expect the leetcoding and system design interviews across the industry to get much tougher and juniors to get squeezed out before top salaries drop.
Software has very high leverage in the right markets. It’s comparable to pro euro football where the teams that already have eyeballs will pay huge sums for top players in order to keep the eyeballs. Software salaries will only become more bimodal as VC money tightens.
No one cares about your revenue. So many startups purchase their revenue by essentially giving away their product at below-market prices, hoping to destroy the competition, like Uber did with taxis. It very rarely works. What's your company's net profit? Oh right, it's just around the corner...
Nobody trusts consulting companies, but they are like a notary service. The c suite wants a change, the big 4 will create a deck that supports that with their seal of approval. Then the c-execs can present it to the board and move on with their original plan.
Former McKinsey employee here. They have a large office in Silicon Valley and serve most of the big tech companies (largely on boring non-tech topics).
Most gov. work that MBB (McKinsey, Bain, Boston Consulting) works on is pretty boring stuff. It's mostly just lazy politicians offloading their work onto these firms, and unfortunately that kind of culture has been allowed to fester in far too many countries.
Fortunately, it seems like there's a growing focusing on consultancy use and frivolous spending. Hopefully lazy politicians will get called out more on this kind of stuff...even though it might just be the oppositions calling each other out, but more transparency is always good.
"In February 2021, McKinsey paid $600 million to settle investigations into its role in promoting sales of OxyContin and fueling the greater opioid epidemic"
There is quite a lot of overlap. For a while I was neighbors with bottom tier Russian mafia members working at McKinsey at do nothing jobs. They would tell me about their yearly Mea-Culpa whenever McKinsey was caught in yet another scandal.
If one was to scratch the surface of any given inept, wasteful government entity, I wager 7 delicious jelly-filled donuts they'd find the culprit is in fact some well-connected consultants or vendor.
All appropriations, budgets, bids, contracts, revenue, finances, and so forth, must be public by default.
I had the chance to work after this boys were hired by the client, they are good in consulting and strategy but at tech level they are really bad and always delegated to teams in India for pennies.
> One gets the sense that [the authors] think the consultants they write about are rotten apples, but [they are wrong]
OK I paraphrased the rest of the sentence into the last 3 words but if you bothered to read to the end, you see that the reviewer completely lost her way. Purporting to review a book, she concluded by the end that its authors are misguided because the real culprit is not the consultants, but rather, every pursuit of efficiency, including all "software development".
> software development [is] in fact focused on enabling capitalists to enrich themselves further without the inconvenient interference of workers, taxpayers or regulation
The chapter in Perkin's book on the post-oil shock economic entanglements with Saudi Arabia is very relevant. It's fundamentally about the establishment of the petrodollar recycling scheme that was intended to solve the balance-of-payments crisis - i.e. dollars flowing into Gulf Arab dictatorships represented a current account imbalance on the US/Europe side, which in turned required a capital account imbalance on the Saudi side. Thus, buying Saudi oil with dollars required the Saudis to invest those dollars back into the USA and Europe, and in exchange for agreeing to this scheme the House of Saud got military protection, engineering assitance, etc., with outfits like Chas T Main and McKinsey and Vinnell serving as the glue that held it all together (along with extensive arms sales). While many have forgotten, the Shah of Iran was also a key player in that system before the Islamic Revolution.
Notably, the vast majority of Saudi citizens live in near-Third World conditions, particularly the Shias in the east and the tribal groups in the south, not that this gets widely reported, while the 15,000+ members of the House of Saud and their hangers-on (the bin Ladens, bin Mahfouzes, etc.) collect the vast majority of the wealth that isn't re-invested back into the USA.
Understanding current world events really requires an understanding of this balance-of-payments dynamic, because that was essentially the same deal that was offered to Russia in the 1990s under Yeltsin, via the same entities, and which Putin eventually rejected after 2003 in favor of using Russian oil money to rebuild the Russian military and generally increase the general standard of living inside Russia. Prior to that, Putin was regularly praised in the US media (much like Syria's Assad before his 2009 deals with Iran and Russia).
This also accounts for the differential treatment of various authoritarian government leaders by the USA and its economic partners like Britain, i.e. Saudi Arabia is not treated like Iran or Russia. For example, if Putin had taken that deal, then today's war in Ukraine would likely be called 'a fight against neo-Nazi terrorist elements' in corporate media, much as the Saudi assault on Yemen is protrayed as a struggle against Al Qaeda and so on.
This is certainly no defense of Putin, who has held onto power for decades now - but there aren't really any 'good guys' in this storyline, the 'democratic norms and humanitarian values' claims are all nonsense. It's more like how the New York City mafia organizations or the Mexican drug cartels fought each other over access to territory and profits than anything else.
> Notably, the vast majority of Saudi citizens live in near-Third World conditions, particularly the Shias in the east and the tribal groups in the south, not that this gets widely reported
This is... just not true. There absolutely is poverty in KSA, and the wealth of the elite is obscene, but the average Saudi citizen lives a pretty cushy life of sinecure jobs and vast subsidies (gas is cheaper than water). The official median income is around US$50k, and while you probably shouldn't trust that number, I think we can safely say it's not more than an order of magnitude off.
The people really living in Third World conditions in Saudi are the vast armies of migrant workers, who make up something like 80% of the labor force and do all the literal heavy lifting at construction sites, service industry jobs, domestic work, etc.
What are your thoughts on Biden's efforts to force a move away from oil for much of the US energy needs.. will this/is this intended or related to an effort to eliminate or replace the petrodollar system in any way?
That looks more like political posturing, nothing more. Consider that 99% of US vehicles are gasoline/diesel powered, there's no move to end the fracking revolution, US oil & gas production levels are not projected to decline over the next decade by any credible analysts, US export terminals for LNG are being expanded, and so on.
Even a relatively modest proposal like a 3% per year replacement of fossil fuel production with renewable production is not at all likely, I mean look at EIA projections [USA] through 2023:
> "The EIA believes that oil production will hit 11.9 million barrels a day (b/d) by the end of the year. Next year, the agency expects the 2019 record of 12.3 million b/d to be shattered, with production hitting an average of 12.7 million b/d."
There are plenty of non-old-white-boys at McKinsey doing heinous stuff. I wish fixing things was as simple as increasing diversity, I really really do. Improving diversity is laudable goal in itself; don't count on it to fix these sorts of problems.
